"Federal Estate, Gift and GST Taxes Temporarily Repealed in 2010"

In 2001, Congress passed sweeping tax legislation that modified the estate, gift and generation-skipping transfer (“GST”) tax regimes.  As we reported in June 2001, the 2001 tax law repealed the estate and GST taxes effective January 1, 2010, but only for one year.  Many practitioners, ourselves included, anticipated that before the end of 2009 Congress would enact permanent estate tax legislation or at least temporary legislation maintaining the status quo ($3,500,000 exemption and a 45% tax rate).  In fact, we reported on one such proposal in March 2009 and on another proposal in April 2009.  To our surprise, Congress has failed to enact legislation addressing the one year of estate and GST tax repeal in 2010.  As a result, if there is no legislation before the end of 2009, the Federal estate and GST taxes will be temporarily repealed effective January 1, 2010.

This Stroock Special Bulletin reviews the upcoming repeal and the potential for retroactive reinstatement of these taxes.