Date of this Version
Estate planning is a very important topic for farm families. In 2001, President Bush signed legislation that reduced the federal estate taxes up until 2010, when the federal estate tax was reduced to zero. If no new federal legislation had been enacted, the Federal Estate Tax Exemption would have fallen from unlimited to $1 million on January 1, 2011. However, on December 17, 2010 President Obama signed HR 4853, which extended the Bush tax cuts through the end of 2012. This means that from January 1, 2011 through December 31, 2012, the Federal Estate Tax Exemption is $5 million, but once again falls to $1 million on January 1, 2013. This means that unless Congress acts before the end of 2012, the Federal Estate Tax Exemption will drop from the current $5 million to $1 million, and the maximum estate and gift tax rate will rise from 35 to 55 percent.