The federal estate tax was repealed for just one year—2010—before being reinstated. Now the new 2010 tax law (SBTS, January 2011) provides some relief going forward. And, if a relative passed away in 2010, your family still can benefit from the one-year repeal.
Strategy: Bypass this estate tax break. Under the new 2010 Tax Relief Act, you can choose to have the rules taking effect in 2011 apply to the estate of someone who died in 2010. In the majority of cases, the heirs will come out ahead.
Of course, you must crunch the numbers to ensure that this option makes the most sense for your family.
Here’s the whole story: The massive 2001 tax law known as EGTRRA (the Economic Growth and Tax Relief Reconciliation Act) gradually raised the federal estate tax exemption from $1 million to $3.5 million, while lowering the top estate tax rate from 55% to 45%. Under EGTRRA, the estate tax was repealed for 2010 in conjunction with the i...(register to read more)