Worth waiting for alternate valuation date?

[shortstop14]

But is it really possible or likely an estate with a value sufficient to trigger an estate tax even at the state level could be probated and closed within 6 months?

Not tax advice, just an interesting discussion.

Thanks ... yes, a good discussion and in my case, evaluating options. This particular estate may close quickly because there is no real estate, just the IRA and brokerage account which have designated TOD beneficiaries. These could have already been distributed if we weren't waiting for the alternate valuation date. My father-in-law had been in assisted living and then skilled nursing for over two years, but had his affairs simplified before that point. The house got closed up and sold a while back. But the final tax returns, federal and state, may take a bit of time.

 

[SecondCor521]

But is it really possible or likely an estate with a value sufficient to trigger an estate tax even at the state level could be probated and closed within 6 months?

Yes. Large does not have to equal complicated.

 

[Texas Proud]

Interesting... have not done estate taxes for 40+ years...

BUT, reading above the basis is upon distribution has a benefit... IF the asset goes down enough you can distribute it and lock in the value.. it is a hit or miss option, when you do it it is locked...

 

[all4j]

The estate tax is due 90 days after death,

I think it is actually 9 months instead of 90 days.

It sounds as if the 2 beneficiaries are cooperating, which isn’t always the case. They should be congratulated as some options maybe beneficial for one & adverse for the other.

Not to hijack thread away from avd, but thought I’d mention something else to consider. It may not be feasible as details really matter here & real answer is too far into weeds of ny tax law for me. The steepness of the ny estate tax cliff is a bit out of the ordinary.

I’m assuming this isn’t going through probate, but there is a will. Correct? If so, was will written by same lawyer being used now?

Concept is for the estate to make a charitable donation which has the effect of lowering estate value & thus keep from going over the cliff. Some wills have a “Santa” clause (or provision?) that empowers executor to do so. If true in this case, it may be best approach. If not, it MAY be possible for all beneficiaries to agree to authorize it. There are possibly gotchas in how this might impact both income and estate tax, source of $s, etc.

I would hope your lawyer would bring this to the table if viable, but you mentioned you might like a heads up…

 

[Montecfo]

It looks like no need to probate. TOD and beneficiaries.

 

[junkanoo]

Concept is for the estate to make a charitable donation which has the effect of lowering estate value & thus keep from going over the cliff. Some wills have a “Santa” clause (or provision?) that empowers executor to do so. If true in this case, it may be best approach. If not, it MAY be possible for all beneficiaries to agree to authorize it. There are possibly gotchas in how this might impact both income and estate tax, source of $s, etc.

I would hope your lawyer would bring this to the table if viable, but you mentioned you might like a heads up…

Great idea. BTW, did the O.P. state that this is a NY estate? I missed that, but see a lot of posts about NY so maybe I missed this.

*If* it is New York .... I think they don't allow last-minute gifting to avoid estate taxes. You *can* gift, but that amount will be clawed back for estate evaluation. Obviously, check with your estate lawyer for the facts.

 

[SecondCor521]

I think it is actually 9 months instead of 90 days.

Federal estate tax is 9 months. I assumed OP was referring to the New York state estate tax deadline, but I'm not familiar with NY state law.

 

[shortstop14]

I think it is actually 9 months instead of 90 days.

It sounds as if the 2 beneficiaries are cooperating, which isn’t always the case. They should be congratulated as some options maybe beneficial for one & adverse for the other.

Not to hijack thread away from avd, but thought I’d mention something else to consider. It may not be feasible as details really matter here & real answer is too far into weeds of ny tax law for me. The steepness of the ny estate tax cliff is a bit out of the ordinary.

I’m assuming this isn’t going through probate, but there is a will. Correct? If so, was will written by same lawyer being used now?

Concept is for the estate to make a charitable donation which has the effect of lowering estate value & thus keep from going over the cliff. Some wills have a “Santa” clause (or provision?) that empowers executor to do so. If true in this case, it may be best approach. If not, it MAY be possible for all beneficiaries to agree to authorize it. There are possibly gotchas in how this might impact both income and estate tax, source of $s, etc.

I would hope your lawyer would bring this to the table if viable, but you mentioned you might like a heads up…

Yeah, 9 months, not 90 days. I had a brain / finger disconnect there. And yes, there is good cooperation in this case, which helps a great deal.

The lawyer did mention the 'Santa clause', and we'll be discussing that. We should be avoiding probate, but the clause is not in the will, so might be a non-starter. It's a different lawyer, and the will may have been drawn before New York established the estate value cliff. It might be possible to impose retroactively as something a 'prudent' person would have done, especially since the value jumped over the cliff within the last year of life. But that would be a legal fight with the state, which would be painful. Apparently that clause is a part of newer wills. At this point the estate value might be high enough that even if the charitable donation was made, it would be higher than the estate tax amount.

Thanks for the heads-up. As I've said, being prepared is my goal here.

 

[shortstop14]

Great idea. BTW, did the O.P. state that this is a NY estate? I missed that, but see a lot of posts about NY so maybe I missed this.

*If* it is New York .... I think they don't allow last-minute gifting to avoid estate taxes. You *can* gift, but that amount will be clawed back for estate evaluation. Obviously, check with your estate lawyer for the facts.

Yes, New York. I confess to being a bit reticent in my first post to identify the state.

The interplay between the gifting addition to estate value, the 'Santa clause' and the AVD seems to get a bit complex. Guess that's what we pay the lawyer to help us navigate.

 

[shortstop14]

Quick follow-up. After discussion with the estate tax attorney, we will wait out the six months to see what valuation would be on the alternate valuation date. There's no real down side to waiting, other than no near-term access to the accounts - which isn't an issue here. However, the chances of it making any difference are small. The accounts would need to drop over 10% by November to have any reduction in estate tax. Given the S&P is up close to 9% year-to-date, the chances of a pullback of that size in this time window seem fairly small.