By Matt Brown on 1/27/2011 1:27 PM
Estate planning just got a lot more powerful. We all remember the Congressional fight over tax legislation last year. Democrats wanted unemployment benefits extended, and Republicans wanted massive tax cuts. President Obama’s compromise included a provision nobody anticipated – a $5 Million gift tax exemption. It is precisely the no-fiscal-analysis-whatsoever, horse-trading approach to these negotiations that suggests that this is a short-term deal that will not outlast the next two years.

This is extraordinary because the gift tax exemption has never been higher than $1 Million. The power of gifting early, before assets have a chance to appreciate, is a favorite tool of estate planning attorneys. Congress has indeed opened the estate planning floodgates.

There is a catch. This opportunity will only last for two years.

Everyone should be updating their estate plans to deal with some very serious issues created by this new law. Blended families may inadvertently give more or less than...