Q: I'm wondering about the repercussions of the break in the relationship between gift and estate taxes. If I make a $1 million gift in 2004 and pay no gift tax by using up my gift-tax exemption, will I still have an unreduced estate-tax exemption of $2 million in 2008? L.S., New York, N.Y.
A: No. It's true that the federal gift-tax exemption is locked in at $1 million per year through 2009, while the estate-tax exemption gradually climbs to $3.5 million. But the estate-tax and gift-tax systems are still technically unified until 2010. For example, if you've used the $1 million gift-tax exemption and you die in 2008 when the exemption is $2 million, only $1 million will be left to cover your estate. Tip: While the estate tax expires in 2010, the gift tax remains in place with a top tax rate of 35 percent.