302(a)(1) and (2) of the 2010 Tax Act

The 2010 Tax Act sets the estate, gift, and GST exemption at $5 million per person and $10 million per married couple. Section 302(a)(1) and (2) of the 2010 TRA: Modifications to estate, gift, and generation-skipping transfer taxes. $5,000,000 Applicable Exclusion Amount.—(2) Applicable exclusion amount.—(A) In general.—For purposes of this subsection, the applicable exclusion amount is $5,000,000. The exemption changes apply for 2010 going forward, except that the gift exemption remains at $1 million for 2010. Everyone should review his or her will, revocable trust, and other dispositive arrangements to be certain that their plan will work as intended with this dramatic increase in the estate tax exemption A tax rate of 35 percent will apply for all the federal transfer taxes: the estate tax applicable at death, the gift tax applicable onto lifetime (inter-vivos) transfers, and Generation Skipping Transfer (GST) tax beginning in 2010 (except that the GST tax rate is zero in 2010, as discussed in Chapter 3). The 35% rate had already applied to taxable gifts in 2010. If the executor of an estate for someone who died in 2010 chooses to be subject to the estate tax instead of the carryover basis rules, the 35 percent rate will apply as well.