FENTON, MISSOURI - President Obama has signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The key highlights of that act affecting estate planning are as follows:

Charitable IRA rollover extended - A donor older than 70½ may make charitable contributions of up to $100,000 per year directly from the donor’s traditional IRA to certain qualified charities. This is available for contributions made by a donor in 2010 or 2011. Due to the late enactment of this law, there is a special rule for January 2011. The donor may treat those as occurring either in 2010 or 2011. This ability to direct IRA distributions directly to a charity sunsets on Dec. 31, 2011.

Gift tax credit increased - Effective for 2011 and 2012 only, the gift tax credit increases from $3.5 million to $5 million. If you wish to make a substantial lifetime gift, it would be best to make that gift in 2011 or 2012. After 2012, the gift tax credit is scheduled to decrease to $1 million.

Estate tax credit and GST tax exemption increased - The estate tax credit or exemption has been increased from $3.5 million per person in 2009 to $5 million in 2011. This amount may pass tax-free to persons other than your spouse at your death. The Generation-Skipping Transfer (GST) tax exemption that applies to gifts or bequests to grandchildren has also been increased to $5 million. Both of these increases sunset Dec. 31, 2012, at which point the estate tax credit is scheduled to decrease to $1 million and the GST tax exemption is set to decrease to about $1.4 million. Portability of the unified credit between spouses may be possible in a particular situation, but is subject to limitations.

The new act contains favorable provisions for the next two years which will provide planning opportunities for many individuals.

Source: North American Equipment Dealers Association