The 2001 Tax Act reduces estate, gift, and generation-skipping taxes between 2002 and 2009, repealing the estate and generation-skipping taxes entirely in 2010. After the repeal, only the gift tax will remain.

During the phase-out period, the amount that can be passed without incurring estate or gift tax will gradually be increased and the estate tax rates will be reduced. The amount of wealth that can be passed free of estate tax will increase over the next nine years. Once the estate tax is repealed in 2010, traditional estate planning strategies may shift from lifetime giving to after-death transfers.

Bear in mind that the new tax law provisions are automatically slated to expire at the end of 2010, so if Congress does not take steps to re-enact the provisions before then, the estate tax as we knew it before the 2001 Tax Act changes, will spring back into effect.

As a result, most estate plans and documents will have to be revamped to take the new law into account. This would be best done in the first quarter of 2002 and reviewed at a minimum every two years thereafter.

For further information, contact Diane M. Pearson, CFP™ at (412) 635-9210 or mailto:legend@legend-financial.com