As a result of an eleventh-hour compromise between President Obama and Congressional Republicans regarding the Bush Tax Cuts, the federal Estate Tax will continue for years 2010 through 2012, with a new exemption amount and a new top tax rate. Additionally, the federal Gift Tax and GST Tax will be reunified with the Estate Tax after 2010.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”) repealed the federal Estate Tax (the “Estate Tax”) and the less discussed federal Generation-Skipping Transfer Tax (the “GST Tax”) for calendar year 2010. EGTRRA also replaced the income tax basis rules with respect to the assets of decedents dying in 2010. For 2010 decedents the “stepped-up basis” rules (which provided that the basis of assets received from a decedent was the value of such assets on the date of the decedent’s death) were replaced with modified “carryover basis” rules (which provide that, subject to certain adjustments, the basis of such assets is the adjusted basis of the assets in the hands of the decedent at the time of death).