Currently there is uncertainty regarding application of the federal estate and gift tax laws as of January 1, 2010. Legislation originally passed by Congress in 2001 made sweeping modifications to the rules that apply to estate and gift taxes. Among those changes were gradual increases in the amount of property that may be passed free of estate tax as well as reductions in the maximum tax rate. In 2009, the amount that each individual could leave tax-free to heirs had increased to $3,500,000 (or a total of $7,000,000 for both spouses with proper estate planning). The 2001 law also repealed the federal estate and generation-skipping transfer (GST) taxes, effective January 1, 2010. However, that repeal is scheduled to last only one year. Without congressional action, beginning in 2011, the law as it existed prior to the 2001 legislation will be reinstated. As a result, among other effects, the federal estate exemption equivalent will be reduced to $1,000,000 and a top tax rate of 55% will apply.
Please see full publication below for more information.
