DEALING WITH DECOUPLING AND OTHER DILEMMAS-- ESTATE PLANNING AFTER EGTRRA.

The article discusses how life insurance and planning techniques should be considered in post-Economic Growth and Tax Relief Reconciliation Act (EGTRRA) estate planning, in the United States. Some states, such as California and Florida, are constitutionally prohibited from legislating a state death, inheritance, or estate tax not tied to federal law. It remains to be seen whether the state electorate would overcome such constitutional prohibitions if states find themselves unable to pay for teachers, firefighters, or other necessary services a civilized society provides its citizens. Reacting to actual or anticipated lost revenue, remaining states decoupled. States approached decoupling in different ways, some by adopting the federal code as of a date prior to EGTRRA, and others adopting EGTRRA with variations. In a decoupled state, drafting a will these days creates a major dilemma. Despite today's challenges, knowledge of EGTRRAs consequences can assist a planner to help his clients plan with flexibility.