As the year 2010 enters its final month, with no federal estate tax in effect,1 no generation skipping transfer tax in effect2 and a federal gift tax at a rate of 35 percent,3 the temptation is to make major gifts late in 2010 if that is a step the donor would like to take. Such a move is particularly attractive under the assumption that the Congress will not enact legislation that will be retroactive to January 1, 2010 and impose a federal estate tax and a generation-skipping transfer tax for 2010 and that would also modify the federal gift tax rate for 2010, up from the 35 percent level. Although there are opinions to the contrary, there is substantial authority that enactments on a retroactive basis are constitutional. However, the agreement announced on December 6, 2010, between The President and negotiators from Congress, referred to a two-year extension of the federal estate tax (apparently for 2011 and 2012). Until legislation is actually enacted into law, it is hazardous to opine about the effective date and the term of the extension as well as the provisions included therein.



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