Was that the sound of another volcanic eruption from Eyjafjallajokull in Iceland? Was it a lingering echo of vuvuzelas from the World Cup of 2010 in South Africa? Or was it an enthusiastic cheer from the Bronx at the news that no estate tax would apply to the estate of billionaire George Steinbrenner? No, that “thud” was the sound of Congress closing the book on its experiment with estate tax repeal. The estate tax is back.
On December 17, 2010 President Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the “Act”). The Act substantially modifies federal taxation of income, gifts and estates, which impacts estate planning for many of our clients, and presents significant estate planning opportunities. The Act temporarily reinstates and modifies the estate and generation-skipping transfer (GST) taxes retroactive to the beginning of 2010, and modifies the gift tax beginning in 2011. Importantly, while the new estate tax regime will be effective in 2010, estates of decedents dying in 2010 can elect out of the Act’s regime and use former 2010 estate tax law – a zero rate and modified carryover basis rules.
This blog series summarizes the Act’s key changes and provides you with our observations about the Act’s impact from an estate planning perspective. Please note that there are several important changes made by the Act that this blog series does not summarize.
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