Obama proposes $3.5 estate tax exclusion

President Obama's current proposal in his budget is a permanent the estate, and gift tax parameters as they applied during 2009. The top tax rate would be 45 percent and the exclusion amount would be $3.5 million for estate and $1 million for gift taxes. As reflected in the Administration’s adjusted baseline projection, the portability of unused estate and gift tax exclusion between spouses would be made permanent. The proposal would be effective for the estates of decedents dying, and for transfers made, after December 31, 2012.

This may be a position to negotiate. That is, the administration may agree to the $5 million of estate and gift tax but a 45% tax rate. That was a the Democratic party's position in the last election. Only time will tell, but generally, this is good news because it looks like we will not be going back to the $1 million exemption.