Alternate Valuation Date:

Usually when someone dies you value the estate assets at the date of death for tax purposes. A special election permits you to value all assets six months after death. A useful rule when the stock markets are tanking. More than a score of states of decoupled their estate taxes from federal law so you could owe state tax even if your estate is less than the $2 million required to file a federal estate tax return. So how do you make the election for a state return when no federal return is filed? The State of New York Department of Taxation, Estate Tax Department advised that you can elect the alternate valuation for New York tax purposes, even if there is no federal return filed. However, you have to prepare a federal estate tax return using the alternate valuation.  This "mock" federal return must be filed with New York, even though it is not required to be filed with the IRS.

GRAT Operations:

No, this is not a new form of surgery. Grantor Retained Annuity Trusts (GRATs) are a great tool to leverage gifts to children. Word on the street is the IRS is planning greater audit scrutiny of the operations of these trusts. This means the periodic annuity payments must be properly and timely made, and this should be documented. Other trust provisions will likely be considered. Get an annual GRAT checkup. Have counsel review the trust document and coordinate with your CPA and wealth manager to assure that all formalities are met. Get an investment policy statement. If the GRAT owns closely held business interests, be sure the trustees sign shareholder agreements and minutes to prove they're acting like real shareholders.