TRUCKEE, Calif. — The federal estate tax is levied upon a person’s estate at the time of their death. Currently estates under $5 million are not taxed; estates above $5 million are taxed at a rate of 35 percent. Estate planning now is difficult because we are at a time of real uncertainty about what the future holds for estate tax rates, which may make 2012 a good year to do some gifting if you’re fortunate enough to have a sizable estate.For 2012, the lifetime gift and estate tax exemption will rise to $5.12 million for singles and $10.24 million for married couples. The gift tax exclusion had been frozen at $1 million for many years, so this could make 2012 an excellent opportunity to distribute assets from an estate free from tax.What may make gifting this year a strategy worth considering is the uncertainty we face in 2013 and beyond. The way the law stands now we will revert back to the $1 million gift and estate tax exemption with a tax rate of 55 percent and a surcharge of 5 percent on taxable estates between $10 million and $17.184 million. Congress may act to change this, but what they will ultimately do is unknown. President Obama has indicated that he would like to see a return to the $3.5 million estate tax exemption as it was in 2009, but the gift tax exemption would likely fall back to $1 million.In 1999, the estate tax exemption was just $670,000 — it went up to $3.5 million in 2009, up to an unlimited amount in 2010, fell back to $5 million in 2011 and will stay there for 2012. All of these levels are temporary. We are now in an election year and unless congress acts we go back to the $1 million limit. It’s hard to predict what congress is going to do especially in an election year and with the debt issues the country faces. Revenue increases are needed and the trend that we have seen since 1999 of rising exemption limits is likely to change.Taking advantage of the higher gift limits this year may prove to be a good tax reduction strategy. While we can’t be certain what the limit will be in 2013 and beyond, there is a very good chance that it will be lower and it could be wise to do some gifting this year before the law changes.Kenneth Roberts is a Truckee based Registered Investment Advisor. Ken has been in the securities business since 1992, has worked as a branch manager for a major Wall Street firm, and is currently a portfolio manager for Fusion Asset Management. Information on his money management service can be found at www.fusiontargetretirement.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.