The new estate gift tax laws are part of the Economic Growth and Tax Relief Reconciliation Act of 2001. The new legislation basically provides for reductions in estate and generation-skipping tax transfers beginning in the year 2002 and continuing through the year 2009. In the year 2010, the estate tax and generation-skipping tax are eliminated, but in the year 2011, the estate tax and generation-skipping tax are restored as it existed before the passage of the Economic Growth and Tax Reconciliation Act of 2001.
There are also changes to the gift tax provisions but unlike the estate tax, the gift tax is not eliminated at any time.
Between the years 2002 and 2010, the top estate tax bracket gradually gets reduced to forty-five percent (45%) and federal exemption increases to three and one-half million dollars ($3,500,000.00).
Another complication is the fact that there are limits that will be placed upon assets that may qualify for the stepped up basis for treatment of capital gains tax.
In summary, the changes are varied and complex and require review with a qualified estate tax planner in order to maximize the advantages that are derived from the new tax law.
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