With the sunset of the 2001 Tax Act and reversion to the pre-2001 estate tax exemptions and rates looming (again) at the end of 2012, discussion at The American College of Trust and Estate Counsel (ACTEC) Annual Conference that I attended on March 6-11, 2012 turned to the Obama administration’s tax proposals contained in the Treasury Department’s so called “Greenbook”. Most of the proposals are similar to previous years’ proposals.

Without Congressional action, the top estate tax rate will revert to 55% and the estate and gift tax exemptions will revert to $1,000,000. The administration proposes a return of the estate, gift, and generation skipping transfer taxes to their 2009 levels, which would mean an essentially flat estate and GST tax rate of 45% with a $3,500,000 exemption, and an almost flat gift tax rate (starting at 41%) for gifts over an exemption of $1,000,000. This would represent a reduction in transfer tax exemptions from the current $5,120,000 level and an increase in tax rate from the current 35% level. The administration also wishes to make “portability” of unused estate tax exemptions between spouses permanent, although it is proposed that this should occur at the 2009 exemption levels of $3,500,000 for estate tax and $1,000,000 for gift tax.