Last week a proposal for a kind of prepaid estate tax was made by Sen. Jon Kyl. The proposal would permit someone to establish a "prepayment trust." The person with a taxable estate could put asssets into such a trust for 5 years and pay a 35% capital gains tax on the gains of the asset. The assets would then passs to heir without any estate tax when the person died.
Republicans are also trying to prevent the estate tax from rolling back to 2001 levels on Jan. 1, 2010. They've proposed a $5 million exemption, rising with inflation, with a cap of 35%.
As for the retroactive federal estate tax in 2010, it could still happen, but most pundits agree that with the passage of time it gets less and less likely.
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