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Friday, December 28, 2012

Will 'Fiscal Cliff' Accelerate Millionaire Deaths?

There is good evidence that there is some "elasticity" in the timing of important decisions about life and death.

"Death elasticity" does not necessarily mean that greedy relatives are pulling the plug on the dying or forcing the sickly to extend their lives into a lower taxed period. According to a 2008 paper from University of Pittsburgh Medical Center Doctor G. Stuart Mendenhall, while tax increases give potential heirs large economic incentives to limit care that would prolong life, distressed patients may "voluntarily trade prolongation of their life past the end [a low tax period] for large financial implications for their kin.

"Whether these incentives are explicitly specified in wills or communicated to their power of attorney over the dinner table, they are clearly present and affect the ability of all involved parties to make unbiased decisions," Mendenhall writes.

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