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The financial crisis, coupled with possible changes in the estate tax law, make this a good time to review your estate plan. The future of the estate tax will likely be up for debate in Congress soon.  One of the priorities of the Obama administration is making the estate tax permanent. Given the uncertain climate, it is important to make sure your estate plan does what you want it to do.

Under current law, the estate tax rate is 45 percent for 2009, but the estate tax will be eliminated in 2010. The tax is scheduled to return in 2011 at a rate of 55 percent. The amount of an estate that is exempt from taxes also changes under current law. It is now $3.5 million, but will drop to $1 million when the law is reinstated in 2011. The Obama administration would like to eliminate the one-year repeal of the estate tax. It isn't clear what the permanent rate would be, but according to an article in the New York Times, most tax experts believe the exemption will be kept at $3.5 million and the rate will stay at 45 percent.

The Times article identifies several things to consider when reviewing your estate plan:

• Formula clauses in wills. Wills that give specific amounts to trusts can be problematic given the change in the estate tax. Instead of naming a specific sum to go into a trust, your will could name a percentage of whatever limit is currently in place.
  
  
• Bypass or credit shelter trusts. Bypass trusts allow you to put any money up to the exemption amount into a trust. Your spouse would receive income from the trust and the remainder would go to other family members after your spouse dies. The problem with this is that with the exemption being so large, most of your estate could go into a trust, thereby limiting your spouse's inheritance. You may need to make sure the trust is structured in a way that allows your spouse access to the funds.