Planning Ahead
You should consider spending your annuities or IRAs while you are living, and let your other property grow in value. As you have now learned, most of the other property you own, such as a home, stocks, and art, will receive a new cost basis equal to the value of property when you die. There will be no income taxes owing on those properties when your heirs receive your property as there is with a traditional IRA or annuity.
Keep in mind that Congress may well change the laws regarding estate taxes or tax rates at any time. Although the rates for 2009–2011 are currently known, be aware that the unified credit and tax rates could be changed by the time of your death.
If you follow the recommendation about how to analyze the property you own, you will be determining whether your estate has a federal estate tax exposure. You will also be thinking about which properties will create the least tax for your beneficiaries or heirs. Remember, you don't have a crystal ball. If you knew when you and your spouse were going to die, you would know exactly how much to withdraw from each asset to minimize the taxes owing by you or your heirs. You can only make an educated guess. This is why it is important that you review your plan at least every year to see if it still meets your needs.
