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

The current proposed "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" contains details about numerous tax relief matters which, if enacted, may affect your estate plan. The Act specifically addresses, among other tax matters, federal estate and gift tax taxes, based on the compromises reached by President Obama and Republican leaders recently. Below sets forth a summary of certain proposed changes to federal estate and gift taxes and generation-skipping transfer taxes. Please contact me at 856-354-7700 to discuss how these proposed changes may affect your estate plan.

• Federal Estate Tax
  $5 million exemption; 35% estate tax rate (for 2011 & 2012; to be indexed for inflation beginning in 2012). Retroactive to January 1, 2010 (heirs of decedents who die in 2010 can opt to elect unlimited exemption using the modified carryover basis rules).
• Gift Tax & Generation-Skipping Transfer Tax
  $5 million exemption; 35% rate for both gift taxes & generation-skipping transfer taxes; 0% generation- skipping transfer tax rate for 2010.
• Portability of Federal Estate Tax
  Proposal allows married couples to combine any unused portion of estate tax exemption of the first spouse to die with that of the surviving spouse's estate tax exemption. Effective January 1, 2011.
• Filing Extension
  Nine month extension for filing estate and gift/generation-skipping transfer tax returns and paying taxes for heirs of decedents who die after December 31, 2009 and before enactment of the new law.

Read the full text of the bill: This Act may be cited as the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010."

IRS CIRCULAR 230 NOTICE: To ensure compliance with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this advisory was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.

DISCLAIMER: This advisory is for general information purposes only. It does not constitute legal advice, and may not be used and relied upon as a substitute for legal advice regarding a specific legal issue or problem. Advice should be obtained from a qualified attorney licensed to practice in the jurisdiction where that advice is sought.

Attorney Advertisement: Before making your choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If this information is inaccurate or misleading, you may report this to the Committee on Attorney Advertising, Hughes Justice Complex, CN 037, Trenton, New Jersey 08625.

This memorandum was written by Kevin J. Dimedio. Please see our Estate Planning & Administration practice page for more information.