The best estate plans build in flexibility because nobody knows what the law, the markets, or the family will look like at death. A well-drafted plan leaves the executor a set of elections—decisions made on the estate’s tax returns, often nine months or more after death—that can save a fortune. Know they exist, and draft so they remain available.
Within nine months of death, a beneficiary can refuse an inheritance under IRC §2518, “Disclaimers”; the asset then passes as if the disclaimant had predeceased. Done right (in writing, before accepting any benefit), a disclaimer redirects wealth without it being a taxable gift from the disclaimant. Plans exploit this deliberately: a disclaimer trust leaves everything to the surviving spouse but provides that anything the spouse disclaims pours into a bypass trust—letting the survivor decide, with nine months of hindsight on asset values and the law, how much to shelter.
Because the QTIP and bypass funding can be set on the Form 706 (section “Marital Trusts: The QTIP and the A/B/C Structure”), the executor chooses at filing whether to lock in appreciation in a bypass trust or rely on portability and preserve a second step-up. Run the numbers at death, not at drafting.
Missed the 706 deadline for a non-taxable estate? Rev. Proc. 2022-32 grants a simplified election up to five years after death to claim the deceased spouse’s unused exclusion—a frequent rescue for surviving spouses whose advisors assumed no return was needed.
Lets the executor treat a revocable trust as part of the probate estate for income-tax purposes, unlocking the estate’s more favorable fiscal-year and other rules for a period after death ( IRC §645).
Under IRC §2032, “Alternate valuation”, if asset values fall in the six months after death, the executor may elect to value the gross estate as of six months later—but only if the election lowers both the estate’s value and the estate tax. In a market crash right after death, this can cut the bill sharply.