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Client Advisory for Tax Relief, Unemployment Insurance Reauthorization,and Job Creation Act of 2010 (the "Act")

December 2010
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On December 17, 2010, President Obama signed the Act. The Act greatly liberalizes the gift, estate, and generation-skipping transfer tax laws that apply through December 31, 2012. Changes that will have the greatest impact on estate planning include the following:

  • The amount exempt from federal gift tax is $5,000,000 (in addition to $13,000 per year per recipient and direct payment of tuition and medical expenses).
  • The amount exempt from federal estate tax is $5,000,000.
  • With respect to a married couple, when the first spouse dies, if the $5,000,000 exemption from federal estate tax is not fully used, then the unused portion carries over to the spouse that has survived (referred to as "portability").
  • The amount exempt from the federal generation-skipping transfer tax is $5,000,000.
  • The tax rate on taxable gifts and on taxable estates is 35% of the value of the assets subject to the tax.

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