The "Economic Growth and Tax Relief Reconciliation Act of 200l" that was signed into law on June 7, 2001 made significant changes to the estate and gift tax laws. Under the new law, the individual estate tax exemption will increase beginning with the year 2002 as shown on the following chart:
Estate Tax Exemption Amount
Year of Death
Estate Tax Exemption
2002 – 2003
2004 – 2005
2006 – 2008
Estate Tax Repealed
In addition, the new law will reduce the maximum top estate tax rate from 55% to 50% beginning in 2002, and will gradually reduce the top estate tax rate to 45% in 2009. However, the repeal of the estate tax does not take effect until 2010, and the repeal may last for only one year. If, in 2011, Congress does nothing the estate tax will be reinstated and the estate tax exemption will return to $1 million. This automatic "sunset" provision was put in place in case the anticipated budget surpluses do not materialize on schedule or fall short of what was projected.
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Geraldine E. Champion, Attorney at Law The Law Offices of Geraldine E. Champion 182 South 10th Street Grover Beach, CA 93433 Tel: (805) 473-4747
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