How did the law passed in 2001 affect estate planning?
Generally, the 2001 Tax Act provides the largest tax cut since 1981 for individuals, mainly in the form of tax benefits (i.e., income tax rate reductions; increases in the child tax credit; decreases in the federal “death tax”; greater retirement savings incentives, including increases in the contribution limits to individual retirement accounts (IRAs); employersponsored retirement programs, such as 401(k) plans; several education related tax benefits; and individual alternative minimum tax (AMT) relief). Under the 2001 Tax Act estate tax rates are reduced and the exemption amount is increased between 2002 through 2009. In 2010 there is complete repeal of the estate tax; however, as discussed below, the current estate tax systemwill be reinstated in 2011 due to the “sunset” provision.
