: Approximately 14 states have disconnected, or “decoupled” their state estate tax systems from the federal estate tax system. It is too early at this juncture to determine how states will react to the TRA and whether more states will decouple or whether states that have decoupled will abandon their estate tax systems. Decoupled states generally require that the federal estate tax return, Form 706, be attached to a state estate tax return. But considering that so very few estates will file federal estate tax returns with a $5 million exclusion, the cost in terms of money, frustration, and effort for executors of the vast majority of estates to prepare these filings will generally be outrageously unfair. Enforcement will be difficult for these states with so few state filers having real federal returns. On the other hand, revenue hungry states that have not decoupled may. Some already decoupled states may make their systems tougher. There are also complex issues in 2010 for how state law, and legislation many states enacted to address problems of 2010 estate tax repeal, will affect not just taxes, but how dispositive provisions in wills should be interpreted.
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