Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

Tax law passed in December 2010 that dramatically revised the estate tax. It increased the estate and GST tax exemption amount for 2010-2012 to $5 million and the gift exemption for 2011-2012 to $5 million and added a new concept called “portability.” The result of these massive changes is that only about 5,600 estates per year are expected to pay a federal estate tax. The changes, however, can create upheaval with a typical estate plan. For example, if clauses in your will to distribute assets on your death were drafted as formulas based on prior law, they all must be revisited. The new law has also created a tremendous window of planning for those willing to take advantage of the $5 million exemption.