Beware, the $5 Million exemption is Federal only. You need to look at your state laws to see if there is a State Estate tax and what the exemption amount is. Many states decoupled from the Federal Estate tax. So, let’s say pops dies in 2011 owning $10 Million in property. He leaves it all in a credit shelter trust. Let’s assume that he lives in a state with a State Estate Tax, he’s going to be subject to that tax (perhaps as much as 20% in some states) on $4 Million. With the new Act allowing the wife to tack on the Husband’s Federal Estate Tax exemption, it is better to make the Family Trust limit be the $1 Million amount with the rest being put in a qualified terminable interest trust (QTIP) for Moms. That way when Mom dies, it she can add together the exemptions and delay the estate tax in the estate. Many states do not have a gift tax, so if Mom and Dad are willing to make huge gifts in 2011 and 2012, and trust their kids (a huge assumption), this could be a strategy especially early in 2011 before such laws are enacted to close that “loophole”.