On December 17, 2010, President Barack Obama signed into law the creatively titled “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (the “Act”). Although the income tax provisions that were extended under the Act garnered a much greater level of interest in the press, the estate and gift tax changes are much more important in that they do not merely extend current law, but fundamentally change the operation of the US federal transfer tax system. As such, the Act will have a substantial impact on UK-based clients with US connections.

Highlights of the US federal transfer tax provisions of the Act include...