Another aspect of the "cliff:"

Death and (estate) taxes sometimes go together

John Carney, CNBC.com
28 December 2012

Because the "fiscal cliff" will not stop for death, it looks as if death's carriage may make a "kindly" stop to pick up some American millionaires this year, to paraphrase Emily Dickinson.

In 2010, after a year in which the estate tax was zeroed out altogether, Congress passed a law that set the estate tax at 35 percent and exempted all estates under $5 million, adjusted for inflation. That law expires in January 2013 when the exemption will fall to $1 million and the tax will rise to 55 percent.

Many families are faced with a stark proposition. If the life of an elderly wealthy family member extends into 2013, the tax bills will be substantially higher. An estate that could bequest $3 million this year will leave just $1.9 million after taxes next year. Shifting a death from January to December could produce $1.1 million in tax savings.

...

It's well-known that people can delay death, for example, in order to live through significant dates—birthdays, holidays, anniversaries. In the first week of 2000, local New York City hospitals recorded an astonishing 50.8 percent more deaths than in the last week of 1999, according to the New York Times. Apparently, a significant number of people delayed their deaths in order to see the new millennium.

...

Economists Wojciech Kopczuk of Columbia University and Joel Slemrod of the University of Michigan studied how mortality rates in the United States were changed by falling estate taxes. They note that while the evidence of "death elasticity" is "not overwhelming," every $10,000 in available tax savings increases the chance of dying in the low-tax period by 1.6 percent. This is true both when taxes are falling, so that people are surviving longer to achieve the tax savings, and when they are rising, so that people are dying earlier, according to Kopczuk and Slemrod.

[A little more at the link]

John