The estate tax is currently set to expire at the end of 2009 and then return to 2001 levels in 2011. At this level, a tax as high as 55% is levied on any estate to the extent that estate’s value exceeds $1 million

However, the budget resolution recently adopted by Congress would abolish the return of 2001 rates, yet nonetheless extend estate taxes permanently so that the tax is levied to the extent an estate exceeds $3.5 million (or $7 million per couple) with a tax rate of 45 percent. The issue is not yet entirely resolved as the Senate narrowly approved an amendment to its original version of a resolution that would have weakened the estate tax even further. This amendment, called the Lincoln/Kyl amendment, would raise the exemption to $5 million ($10 million/couple) while lowering the tax rate to 35 percent.

In other words, the estate tax will probably not revert to 2001 levels, but wealthy individuals still need competent estate planning.