The recently enacted "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" has completely changed the gift and estate situation for many people. The media focused on the fact that the estate tax exemption was increased to $5,000,000 and made portable, which means a surviving spouse automatically gets any unused exemption from their deceased spouse.

What has received less attention is that the gift tax exemption was reunified with the estate tax. This means that the life-time gift tax exemption has increased from $1,000,000 to $5,000,000 per person for 2011 and 2012.

The increase in the estate and gift tax exemption requires individuals to rethink their gift and estate strategies. Anyone who had previously "maxed out" their life-time gift tax exemption now has an additional $4,000,000 ($8,000,000 for a married couple) that they can gift tax free. It is important to remember that the new legislation did not change the rules for minority and lack of control discounts. This can be especially important in considering succession planning for a family business or a family limited partnership.

We strongly recommend that you visit with an estate tax planning attorney to determine if your estate planning documents need to be updated for these new rules.