Estate Planning Update: The 2010 Tax Relief Act

On December 17 the President signed Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "2010 Tax Relief Act"), previously negotiated between President Obama and Republican leaders. The estate, gift and generation-skipping tax provisions of the 2010 Tax Relief Act introduce substantial changes to the law that affect most estate plans. 

Among these changes are a reduction in the federal estate, gift and generation-skipping transfer tax rates to 35%, an increase of the amounts that can be transferred free of estate, gift and generation-skipping transfer tax to $5,000,000, the introduction of the concept of "portability," which permits married couples to share their estate tax-free amount in a more flexible and efficient way, and the restoration of "stepped-up basis" for inherited assets.