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 Once the estate tax is repealed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