As client pressure to minimize legal fees continues to mount, estate planning lawyers must reexamine their billing practices. Increased computer capability has led to drafting efficiencies, which have allowed estate planners to focus more on estate tax planning and less on actual drafting. This approach affects a traditional strategy used to mitigate tfle burden of estate planning fees: deducting a portion of those fees for income tax purposes.
Underlying the basic premise of the Internal Revenue Code-the desire to raise revenue for the federal government-is a congressional desire to achieve policy objectives through the enactment of specific tax legislation.
An individual's death does not terminate federal tax return filing requirements. In fact, subsequent to a decedent's death ("postmortem") income tax returns may be required for the decedent, the decedent's estate, and certain trusts established by the decedent.
Prior to Chapter 14, a commonly-recommended estate tax reduction strategy was what practitioners and others referred to as "corporate estate freezes." This strategy was pertinent to families with substantial wealth that were involved in one or more closely held businesses. In the corporate context, it typically involved recapitalization of a family business to a multi-stock corporation, followed by the transfer (either by gift or purchase) of one class of stock, the perceived growth stock, to children and grandchildren.