OBAMA ESTATE TAX PLAN

President-elect Obama has included estate tax reform in his "middle class" tax cut plan. His estate tax reform plan would (1) eliminate the scheduled repeal of the estate tax in 2010 (and the return of the pre-2001 rates and rules in 2011), (2) preserve the present rules for determining the basis of property received at a decedent's death (step-up in basis), rejecting the application of carryover basis at death, (3) set the applicable exclusion amount at $3.5 million, indexed for inflation after 2011, (4) make the unused applicable exclusion amount of a deceased spouse available to the surviving spouse, and (5) set the top estate tax rate at 45%.