Careful tax planning is necessary to provide the best mix of flexibility and tax relief for heirs. Potential federal and state inheritance taxes, federal gift and generation skipping taxes, federal and state income and capital gain taxes, and step-up in basis rules, all need to be balanced against each other. Possible changes in the estate amount and tax laws, flexibility of pre- and post-death planning, and the under-appreciated problems of post-death family dynamics, all need to be carefully considered.
