The new federal transfer tax law provides unprecedented planning
opportunities for 2011 and 2012.
On December 17, 2010, President Obama signed into law the Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation
Act of 2010 (2010 Tax Act). In addition to extending Bush-era
income tax cuts, the 2010 Tax Act resolves some of the uncertainty
surrounding the future of the federal transfer tax system. By
increasing exemption amounts, the 2010 Tax Act provides taxpayers
over the next two years with both planning opportunities and cause
to reexamine their estate plans.
For 2011 and 2012, the 2010 Tax Act makes the following changes
to the federal transfer tax system:
- Estate Tax. The top estate tax rate is now 35
percent (down from a top rate of 45 percent in 2009), and each
taxpayer will have $5 million of estate tax exemption (which is
reduced to account for prior use of exemption to shelter lifetime
taxable gifts). An individual's unused estate tax
