Effective January 1, 2010, the federal estate and generation-skipping transfer (GST) tax laws were repealed. The repeal is in effect for all of 2010, although Congress may re-enact the estate and GST tax laws during this year. Estate plans that reference these tax laws may be adversely affected by their repeal. The absence of these tax laws may cause an unintended shifting of distributions among beneficiaries. Certain beneficiaries may now receive less while other beneficiaries may now receive more of an interest than was initially contemplated.
To address these potentially undesirable results, Maryland and Virginia have enacted laws providing that references in wills and trusts to federal estate and GST tax laws shall be deemed to refer to those in effect as of December 31, 2009. The provisions of these new laws are effective retroactively to December 31, 2009, but do not apply to wills or trusts executed or amended after that date or that manifest a contrary intent. The D.C. Council is expected to consider similar legislation for the District of Columbia in the near future.
The laws enacted by Maryland and Virginia may still not enable your estate plan to accomplish the objectives that you desire. If your wills or trusts reference estate or GST tax laws, you will want to have them reviewed and, if necessary, updated to prevent any unintended disposition of your assets.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues.
If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or any of the following individuals:
Jay W. Freedman
John M. Lynham, Jr.
Internal Revenue Service regulations generally require that, for purposes of avoiding United States federal tax penalties, a taxpayer may only rely on formal written opinions meeting specific requirements described in those regulations. This newsletter does not meet those requirements. To the extent this newsletter contains written information relating to United States federal tax issues, the written information is not intended or written to be used, and a taxpayer cannot use it, for the purpose of avoiding United States federal tax penalties, and it was not written to support the promotion or marketing of any transaction or matter discussed in the newsletter.