Starting Jan. 1, the estate tax — which can erase nearly half of a wealthy person’s estate — goes away for a year. For families facing end-of-life decisions in the immediate future, the change is making one of life’s most trying episodes only more complex.
“I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days,” says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. “Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?”
The Australian experience when the same thing occurred on 1st July 1979 demonstrated that 5% of deaths were delayed, seemingly to avoid this tax. This is more significant when you recognise that 9% of people were liable for the tax in the first place. It looks like the US is set to give Andrew Leigh and I another set of data by studiously ignoring that experience. But, of course, there is more:
As part of the changes taking effect in January, Congress also dramatically lowered the taxes on gifts to grandchildren. But all the uncertainties — Will the law be changed? Will it be retroactive? — are forcing family legal advisers to craft various provisional financial-planning strategies that can be undone later if the rules do change.
The situation is causing at least one person to add the prospect of euthanasia to his estate-planning mix, according to Mr. Katzenstein of Proskauer Rose. An elderly, infirm client of his recently asked whether undergoing euthanasia next year in Holland, where it’s legal, might allow his estate to dodge the tax.
His answer: Yes.