Nobody knows. Congress has yet to take up the issue of extending or amending the current law, which is set to expire on December 31. If no legislation is forthcoming, then the lifetime exemption will fall to a million dollars, presumably ensnaring a large swath of the upper middle class– and even some of the house-poor or farm-poor in places that have seen property values skyrocket over the last generation. Simultaneously, the top rate on taxable assets will jump to 55 percent. The smart money is on some kind of legislative action after the election. My suspicion is that Congress will remain split, and the exemption will come down from its current $5.12M, but will still be set high enough to avoid hitting the vast majority of taxpayers. Beth Cohn has a nice overview of the current legal framework, and possible 2013 scenarios, over at JD Supra.