For individuals who die in 2010, the estate tax rate is zero (0). However, under the current law, if an individual dies in 2011 (or one minute after midnight on January 1, 2011) the tax rate increases to 55% with an exemption of $1,000,000.00. The failure of congress to act creates great uncertainty for individuals with estates that exceed $1,000,000.00 or couples with estates that exceed $2,000,000.00. See the following link for an interesting article from the Wall Street Journal.
It is becoming increasingly likely that Congress will not act before the end of the year. Thus, in 2011, the estate tax becomes roaring back with a vengeance. Most estate planners (I would have to include myself) were convinced that even our dysfunctional Congress would not let this happen. However, it is prudent at this point to plan for the worst and hope for the best. Individuals and families with estates that would have been sheltered under the old law should have their estate planning reviewed especially if the individual or family will owe estate taxes if the current law scheduled to take effect in 2011 is not changed.