The 2001 tax act provided for a total repeal of the estate tax in 2010 and a reinstatement of pre-2001 tax laws in 2011 and thereafter. It was assumed by everyone that Congress would act to either permanently repeal the estate tax or to otherwise modify the law prior to 2010. No one would have guessed that on December 17, 2009 we would still be waiting for Congress to act. If Congress does nothing before the end of the year, there will be no estate tax next year (2010). Wealthy people with greedy heirs and beneficiaries may have to hire bodyguards next year.
On December 3, the House of Representatives passed legislation that would continue the status quo indefinitely, but the Senate has not acted. To avoid an estate tax repeal for 2010, the Senate must act, the differences in the House and Senate versions must be reconciled in conference, and the President must sign the resulting legislation. Whether or not that happens within the next two weeks is anybody’s guess.