Statement of the problem

On April 5 the Chairman of the ABA's Section on Taxation, Stuart M. Lewis, sent a letter to key Congressmen urging prompt resolution of the federal estate tax, together with repeal of carryover basis ("poorly understood") clarification of the ambiguities we have in the EGTRRA language that suspends the estate tax this year.  Lewis identified many practical problems, but perhaps the most important is the trouble in settling estates with a cloud of retroactive taxation hanging over them:

The executor (or trustee) of someone who has died in 2010 does not know if the estate will face a federal estate tax obligation, does not know the income tax consequences if assets are sold to meet whatever the estate's obligations are, and may not even know who the beneficiaries of the estate are (if the disposition of the estate is governed by formulas that rely on tax concepts). In light of the executor's fiduciary duty to be prudent and impartial, these uncertainties create extraordinary pressures on the executor and hardship and exasperation for beneficiaries. Executors by and large try to do a conscientious job consistent with their fiduciary duties. Executors generally do not try to take advantage of the tax rules or the uncertainty about those rules. As a result, executors arguably are the most sympathetic group in need of relief. In contrast, it would be understandable if Congress did not provide as much relief to individuals who may have taken opportunistic inter vivos actions in 2010.