The unified estate and gift tax credit can be used to shelter lifetime gifts or estates from taxes. The new law gradually increases the exemption amount to $3.5 million by 2009. These changes are subject to revisions in the new tax laws. The estate exclusion schedule is as follows:
Estate Exclusion Table
Year of Death
Estate Tax Exemption Equivalent
Highest Estate and Gift Tax Rate
2006
$2,000,000
46%
2007
$2,000,000
45%
2008
$2,000,000
45%
2009
$3,500,000
45%
The significance of this is that many wills and trusts should be reviewed and the language altered to refer to the Exclusion Amount which is in effect at the time of death.