The new estate tax top rate is 35% on anything above $5 million. Also, a person who dies and leaves everything to his or her spouse, and does not use up the $5M exemption, can also pass on the unused portion of the exemption to the spouse. Formerly this was done by setting up trusts, but the new law may make such trusts less necessary.
For executors and family of a person who died in 2010, the option exists to apply the new law as outlined above, or the law that existed during most of 2010, which was quite different. Under that law there was no estate tax, and the basis of inherited assets was treated differently.
Under the new law, the gift tax also has a $5M exclusion, as opposed to $1 million before.
Unfortunately the new estate tax law expires in 2013, unless Congress acts.
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