2010 Tax Relief Act Alters Estate and Gift Taxes: Reduced GST

The 2010 Tax Relief Act made some changes to the estate and gift tax.  Prior to the new law, there was no estate tax, however some beneficiaries faced possible increases in their taxes due to unfavorable income tax rules. The prior law also allowed for a substantial rise in the estate and other transfer taxes for post 2010 transfers.

Among other changes,the 2010 Tax Relief Act provides for reduced estate, gift and generation-skipping transfer (GST) taxes for 2011 and 2012. The estate tax repeal for 2010 has been kept, but estates wanting zero estate tax for 2010 must elect that option.   The modified carryover basis rules that were set to apply for 2010 were also preserved. If the estate does not elect the zero option, the estate tax is calculated using a $5 million exemption, a top tax rate of 35%, and a step-up in basis.

If you have any questions regarding GST, or on tax planning in general, please contact our office.

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