It’s been three months since Congress extended the estate tax uncertainty for two more years. On December 17, 2010, President Obama signed the new Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 20101 (TRA 2010) into effect. The return of the pre-Bush estate tax levels is now scheduled for January 1, 2013. Absent further Congressional action, at that time the estate tax exemption will be $1 million and the maximum tax rate will be 55%.
For the rest of this year and next year, however, there is a $5 million exclusion from gift, estate and generation-skipping transfer (GST) taxes and the maximum rate of tax is 35%. Congress also added the new concept of estate tax exclusion portability between spouses – i.e., one spouse’s unused estate tax exclusion can be used by the surviving spouse against gift or estate taxes.