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WILL THERE BE REPEAL OF THE ESTATE TAX?
AND IF SO - WILL THERE NO LONGER BE
A NEED FOR ESTATE PLANNING?

Predictions in general are, of course, dangerous. Remember the prediction of Wilbur Wright who said, "I confess that in 1901, I said to my brother Orivlle that man would not fly for 50 years. Ever since then, I've distrusted myself and avoided all predictions."

Factors favoring repeal of the estate tax are:

1. The House has already passed many estate tax repeal bills. 2. The Senate, which requires a 60 vote "super majority," probably can find sufficient votes for passage.
3. Making tax cuts permanent was a major campaign theme.

Factors against repeal of the federal estate tax are:

1. The deficit in 2004 exceeded $415 Billion and it's climbing!
2. The accumulated deficit is over $1/2 Trillion.
3. The cost to repeal the estate tax would be over $200 Billion.
4. The dollar is in a free fall vs. the euro.
5. There are massive demands on social security - and personal investment accounts would significantly increase those fiscal woes.
6. The costs of war in Iraq and war on terrorism continue to increase.
7. The President has other priorities in spending political capital.
8. Senators may be reluctant to support repeal in face of record deficits.

Pundits have predicted:

1. Permanent repeal - but not until 2010.
2. A 5-year extension of the repeal - but not starting until 2010.
3. A compromise solution with a significant drop in rates down to as low as 35 percent and exemptions as high as $3,500,000 - to $5,000,000.

Estate Planning Lives!

No matter what happens, estate planning is alive and well - since estate planning is not - and never was exclusively about saving or paying federal estate taxes. Even if there IS "permanent" repeal (it's been repealed and reinstated several times before), it will not occur until at least one more Presidential election has taken place).

Here are some questions to ask yourself - that would be relevant even if there is complete repeal of the federal estate tax:

• At my death, will there be sufficient cash to maintain my family's standard of living, put my children through school, and keep up with inflation - after paying off debts, administrative costs, and state death taxes?
• Do I personally have sufficient income and capital if I become disabled? At retirement?
• If I died today, will the assets I own pass outright to my spouse, children, and grandchildren - and are they mentally, emotionally, legally, and intellectually equipped to handle an outright immediate disposition?
• Have I stabilized and maximized the value of my business and other key estate holdings? Am I using my business or professional practice as effectively as possible to solve my personal financial problems?
• Is there a better way to share, promote, and preserve my family values and encourage my children and grandchildren to carry on my ethical and philanthropic goals?
• Can I cut down my own income tax burden and pass more wealth and work toward greater financial security for those I love?
• Do I have special needs such as a spouse who can't - or doesn't want to be bothered - handling an investment portfolio, a handicapped or emotionally troubled child or grandchild, or a strong desire to "give back" to a specific college or charity?
• What do I need to do to protect my loved ones from creditors, predators, in-laws, and "outlaws"?
• These are just a few of the ongoing issues involved in estate planning. And they will be important long after the estate tax repeal is settled!

AS ALWAYS, FEEL FREE TO CALL TO DISCUSS THESE OR OTHER ISSUES OF IMPORTANCE TO YOU!