Estate Tax

A number of complicated, but generally favorable, changes were made to the federal estate and gift tax rules. The 2010 Tax Releif Act gives estates of decedents dying in 2010 the option to elect not to come under the revised estate tax. The new law gives those estates the option to elect to apply (1) the estate tax based on the new 35% top tax rate and $5 million exemption with stepped-up basis or (2) no estate tax and modified carryover basis rules. For 2010, the lifetime gifts tax exemption is $1 million. For 2011, the gift tax and estate tax exemptions are unified at $5 million. For 2012, the gift tax and estate tax exemptions are each $5,120,000.

           
  Estate Tax   Highest Estate  
  Calendar Year   Applicable Exclusion Amount   and Gift Tax Rate  
  2005   $1.5 million   47%  
  2006   $2 million   46%  
  2007   $2 million   45%  
  2008   $2 million   45%  
  2009   $3.5 million   45%  
  2010   $5 million   35%  
  2011   $5 millon   35%  
  2012   $5 million   35%