It is interesting to observe the manner in which wordplay is used in the popular lexicon in an effort to take ownership of popular measures or attach blame for unpopular ones. The term “Bush tax cuts” has been universally used to describe the Economic Growth and Tax Relief Reconciliation Act of 2001, and talks on Capitol Hill in 2010 about a new tax relief measure revolved around a possible “extension of the Bush era tax cuts.”

Now that a new measure has been passed with bi-partisan support, the idea that this package is nothing more that an “extension of the Bush tax cuts” is not going to fly in some quarters. So the new act has its own title: the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. In a few months there is little doubt that this mouthful will be referred to as the “Obama tax cuts,” at least by those who have a vested interest in such a designation.

Whatever you want to call it, this measure has a major impact on estate planning. Instead of the $1 million estate tax exclusion we had been expecting, it has been raised up to $5 million, and this is a per-person exclusion so a married couple would have a $10 million exclusion to work with. In addition, the max rate of the tax, which had been set at 55% for 2011, has been reduced to 35%, which is frankly exorbitant but a reduction nonetheless.

There have been some additional changes that came in under the radar that also impact estate planning. The generation-skipping transfer tax exemption and the lifetime gift tax exemption have both been raised to match the $5 million estate tax exclusion, and the rate of taxation in each instance has been reduced to 35%.

It should be emphasized that all of these changes are in place for 2011 and 2012, and since 2012 is an election year we will probably see these tax issues tossed around as a sort of political football once again when the next election season starts to heat up.