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When Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001, it made many changes to the taxation of estates and gifts. The federal estate tax exemption allows individuals to pass a certain value of assets free from estate tax at death. For individuals dying in 2009, the exemption is set at $3,500,000. Under current law, there will be no tax assessed against the estates of individuals who die in 2010, but there will be a limited amount of basis step-up which can be applied to assets. In an interesting twist, in 2011 (unless Congress and the President act) the estate tax as it existed under the previous law returns, and the amount of the exemption will return to $1,000,000.
There has been much talk about Congress and the President permanently increasing the federal estate tax exemption amount. The estate tax situation is not addressed anywhere in the recently passed federal "Stimulus Package." In the President's recently proposed budget, the estate tax is only mentioned in a footnote to a Summary Table which reads "In continuing the 2001 and 2003 tax cuts, the estate tax is maintained at its 2009 parameters." Stay tuned to see what the President proposes and the action Congress takes with respect to the federal estate tax exemption. About Laura A. Lipinski, Esq.
In practice for over twenty years, Laura Lipinski provides estate and tax planning services to individuals, employing diverse techniques in drafting wills, trusts (revocable, irrevocable, insurance, charitable, personal residence), family limited partnership agreements, and powers of attorneys and living wills. She represents both fiduciaries and beneficiaries in probate and trust administration and litigation. Laura is a member of the National Academy of Elder Law Attorneys and is knowledgeable in the legal issues facing the elderly and the disabled. She serves as a court-appointed Guardian ad Litem in adult guardianship cases and represents guardians of minors and disabled persons in court proceedings, and assists parents of disabled individuals in drafting special needs trusts. Law Offices of Laura A. Lipinski, LLC (Website) 
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