The new tax law signed by the president on Dec. 17 finally resolves the uncertainty over federal estate taxes … at least for the time being.
Alert: The new law increases the estate-tax exemption and lowers the top estate tax rate for a two-year period. It also includes several other changes that will be beneficial for families of decedents who die in 2011 or 2012.
But the estate tax relief is only temporary. These changes are scheduled to “sunset” after 2012, so we’ll be facing uncertainty again in the near future.
Here’s the whole story: Prior to 2001, the estate-tax exemption could shelter only up to $675,000 of assets left to beneficiaries other than a surviving spouse. This exemption equivalent amount was gradually increased under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) until it topped out at $3.5 million in 2009. At the same time, the top estate tax rate declined from 55% to 45%.
The estat...(register to read more)