The Economic Growth and Tax Relief Reconciliation Act of 2001 signed into law by President Bush on 6-7-01, contains the most sweeping changes to the estate, gift, and generation - skipping transfer taxes in 20 years.  However, under the much-discussed “sunset provisions” of the 2001 Tax Act, virtually all the changes will be undone on 1-1-11 unless a future Congress and President extend the Act’s provisions or make them permanent. 

Estate Planners and their clients should take into account the possibility of permanent repeal, however, assuming that it will occur is dangerous.  We should all plan on the higher exemptions taking effect (this year, 2002, the Estate and Gift Tax Exemption is $1,000,000), but estate plans will have to be monitored more closely than ever for new legislative developments.  In the last quarter-century, no nine-year period has gone by in which Congress did not make significant changes to the transfer tax provisions of the Code.  There is no reason to believe the next nine years will be any different.