For 2009, the Federal Estate Tax exemption amount is set at $3.5 million dollars. This means that every individual can pass to heirs an amount less than or equal to that amount without incurring federal estate taxes. In 2010, the federal estate tax is repealed and for that one year, there are not going to be any estate taxes. However, in 2011, the federal estate tax exemptions is set back to $1 million dollars – so estates totaling over $1 million would have the estate tax imposed on the excess.

It is very likely that Congress will enact new legislation prior to the end of 2009 that will change all of this – it would be a major revenue loss for the federal government if there were no estate taxes next year. No one is certain what the federal estate tax exemption amount will be set at in the future, but many have indicated that it is likely to stay at the 2009 amount ($3.5 million) and then increase yearly for inflation.

If these anticipated changes are made, then many estate plans will need to be reviewed and possibly revised due to the higher permanent exemption amount. Next year we may be discussing estate planning in more detail than we have in the past few years if these laws are changed.

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