It's time to catch up on some of the questions that readers have sent me.

Q: Have they done anything with the federal estate tax yet?

A: I'm not sure what you mean by "have they done anything." Substantial changes were made to the Federal Estate Tax in the terms of the Economic Growth and Tax Relief Reconciliation Act of 2001.

The act substantially changed the federal estate tax, at least temporarily. In addition to reducing the estate tax rates, it increased the Unified Credit, thus increasing the excludable amount for estates. Currently, the excludable amount for taxable estates is $2 million. In 2009, the excludable amount increases to $3.5 million. In 2010, the Estate Tax essentially will be repealed. However, in 2011, with sunset provisions, the excludable amount returns to $1 million.

What I think you are asking is whether the estate tax still is subject to the sunset provisions? The answer to that question is, yes. However, I still believe that the powers that be are going to make permanent changes. I don't think they will repeal the estate tax entirely, but hopefully permanently increase the excludable amounts. If changes aren't made and you want to minimize death taxation, try to die in 2011. Just kidding.

Q: I thought there was a way to roll maturing U.S. Savings Bonds into anther type of bond so that you could avoid having to recognize the income. However, I can't find the type of bond that you roll into. Do you know?

A: I think you are referring to HH Bonds. At one time, you could exchange EE and E bonds for HH bonds and put off recognizing the accrued interest until the HH bonds matured. HH bonds worked differently than EE and E bonds, but they were a really nice way to delay taxation

Unfortunately, after Sept. 1, 2004, you no longer could convert E and EE bonds to HH bonds to delay income recognition. If you have maturing E or EE bonds, you essentially have two choices. You could cash in the bond and recognize the income or continue to hold the bond without earning interest.

Q: Do stepchildren still pay more Inheritance Tax than biological children?

A: The Indiana Inheritance Tax is a distributive tax which has different exemptions and tax rates based upon the relationship of the recipient to the decedent. Class A beneficiaries were typically lineal descendants and ancestors. Class A beneficiaries received the most favorable tax treatment.

However, most stepchildren were not treated as Class A beneficiaries.

Fortunately, a few years ago Indiana expanded the definition of a Class A beneficiary to include stepchildren and descendants of stepchildren.

Personally I think it was long overdue. Blended families are as common today as nuclear families. Although I still think it's fun to say 2.5 children.

Opinions expressed solely are those of the writer. Christopher W. Yugo is a member of the Indiana Bar and a vice president and senior trust officer for First National Bank's Trust Department. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN 46321. The information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate-planning specialist.