The new tax bill signed into law last week affects estate planning in the following ways, effective January 1, 2011:
- The federal estate tax exemption is now $5,000,000 per person (but there is still no tax when property passes to a surviving spouse). This is the amount that can pass free of federal estate taxes. (This was $3.5 million in 2009.)
- The federal estate tax rate is now 35% (this was 45% in 2009).
- The New York State estate exemption remains at $1,000,000.
- The gift tax exemption amount has been raised to $5,000,000 as well, at the same rate of 35%.
- This law is only effective for 2011 and 2012.