Estate Tax Repeal for 2010 goes into effect due to Congress's inaction.

Contrary to all expectations, Congress did not fix the Estate and Generation Skipping Transfer Tax sunset provisions. As a result, for 2010 there is currently no Federal Estate Tax or Generation Skipping Transfer Tax, although both are set to come back into effect in 2011 at unfavorable levels. While the Gift Tax is still in place, the rates have been reduced from a top rate of 45% down to a top rate of 35%. In addition, a new carryover basis regime has replaced the traditional “stepped-up” basis for property in the hands of a decedent at death. There is an expectation that Congress will attempt to fix this lapse by enacting retroactive legislation sometime in 2010 but there are concerns over both the constitutionality of retroactive legislation as well as its practical effects on estate administration. For more information on the details of the effect please contact Warren Baker.