by KYW's Salil Gutt

Many of us have put off planning for the federal estate tax due to the uncertainty of the economy in this election year.  However, there is movement in this area and here's what the pros expect to have happen.

The current exemption is $2 million per person. This means a couple can pass along $4 million in inheritances without Uncle Sam taking any of it. This exemption increases to $3.5 million per person in 2009, the estate tax disappears
completely in 2010 and the exemption goes back to $1 million starting in 2011 if Congress does not act.

There is an expectation among estate lawyers of a $3.5 million exemption becoming pennanent starting 2010. This means a couple can pass along $7 million. This will be politically acceptable as the bulk of estate taxes are paid by families with more than $7 million of assets.

One important point to note.

States are not bound by the federal exemptions. If you live in the northeast or other high tax states it may be smart to do some tax planning even if your family wealth is well below $7 million.