The new tax measure that made its way through Congress at the end of the year is being termed the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.” It is interesting to consider this juxtaposed alongside the act that was passed in the beginning of the last decade that was deemed the “Economic Growth and Tax Relief Reconciliation Act of 2001.” The latter legislative action has since come to be known as the “Bush tax cuts.”

So when the matter of possible tax relief in 2010 was being discussed on Capitol Hill and being broadcast through the media you heard about a possible “extension of the Bush era tax cuts.” But now that we have the official Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 there are going to be those who refer to it as the “Obama tax cuts.” It will be interesting to see the taffy pull with regard to how various political factions try to take credit for the measure and how it is referred to going forward.

From whatever perspective you choose to view the new act it contains provisions that are very relevant to the field of estate planning. As has been widely publicized, the estate tax exclusion is now $5 million rather than the $1 million that had been anticipated and the rate of the tax has been whittled down to 35%. In addition, the generation skipping transfer tax exemption has also been upped to $5 million, and this is consistent with previous years when it has been in line with the estate tax exclusion.

The lifetime gift tax exemption has also been elevated from the $1 million that had been in place up to the $5 million mark to match the estate tax. The difference never made much sense in the past, but now the estate tax and gift tax are truly unified, with the same rate of 35% and the same exclusion amount. But don’t get too comfortable just yet; these parameters are only in effect through 2012, which is of course an election year.