The federal estate tax exemption is currently set at $5 million ($10 million for married couples), with a 35% rate. This law is set to expire on December 31, 2012, with the exemption reverting to $1 million (and a 55% rate) on January 1, 2013.
This has made planing for those with assets of between $1 million and $5 million or so challenging, but I have been telling my clients that I believed that Congress would ultimately continue the $5 million exemption. Congress is now beginning discussions on the future of the estate tax, and early indications are that a $5 million exemption would be acceptable to both parties. Democrats, however, would like to see the rate increased to 45%.