The Current Status of Federal Estate Planning Laws


Congress’ failure to act has created much uncertainty.

The law currently provides that with respect to persons dying in 2010, there is no Federal estate tax or Federal generation-skipping tax. The Federal gift tax remains applicable. Earlier this year, key lawmakers indicated that Congress would reenact the estate tax and generation-skipping tax during 2010 (on terms similar to the 2009 laws) and apply such reenactment retroactively to January 1, 2010. While still a possibility, Congress has yet to reach an agreement on this matter. Thus, it is unclear whether retroactivity will be a part of such legislation and, if it is, whether it would withstand a Constitutional challenge.

What happens if someone dies in 2010, and his/her estate planning documents use estate tax terms such as "unified credit" or "marital deduction"? Because the estate tax law is repealed for 2010, it may be difficult to determine how to allocate property under estate planning documents that contain such terms. To address this issue, Indiana enacted a new law on April 13, 2010, that provides that such documents will be interpreted in Indiana as if the 2009 federal estate tax law applies. No federal estate tax will be payable, but allocations will be made as if 2009 law applied.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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