Increased Estate Tax Applicable Exclusion Amount
The applicable exclusion amount is the amount on which the unified credit (applicable credit amount) is based. An estate tax return for a U.S. citizen or resident needs to be filed only if the gross estate exceeds this amount. For Tax years 2006 and 2007, this amount was increased from $1.5m to $2.0m. The table below will show that this amount has been gradually increased over the years. Further increases are planned for future years beyond 2007.

Year Amount
2002 $1,000,000
2003 $1,000,000
2004 $1,500,000
2005 $1,500,000
2006 $2,000,000
2007 $2,000,000
2008 $2,000,000
2009 $3,500,000

Increased Annual Exclusion for Gift
The annual exclusion for gifts of present interests made to a donee during the calendar year is increased to $11,000.

Reduction of Maximum Estate and Gift Tax Rate
For estates of decedents dying, and gifts made, after 2001, the maximum rate for the estate tax and the gift tax will be reduced as follows.

Year Tax Rate
2002 50%
2003 49%
2004 48%
2005 47%
2006 46%
2007 45%
2008 45%
2009 45%

Increase in Generation Skipping Transfer (GST) Exemption
The generation-skipping transfer (GST) lifetime exemption increased by $40,000 to $1,100,000. The annual increase can only be allocated to transfers made during or after the year of the increase.

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