No More Estate Taxes?

From: Jeff Salisbury <jeff.salisbury@xmission.com>
Subject: No More Estate Taxes?
Date: Tue, 23 Nov 1999 09:41:54 -0700

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This summer, Congress passed a tax relief bill that proposes to give
Americans $792 billion of tax savings.  This bill includes elimination
of the estate tax. Before you start jumping up and down on the sofa,
remember that a bill is not law and President Clinton has said he will
veto the bill.  And if you analyze how the votes tallied in Congress
along party lines, you can see that Congress will not have the needed
majority to overturn Clinton's veto.  So don't plan on the estate tax
disappearing.

In fact, if we have a democratic administration after the next election,
you might see estate taxes increase!  For politicians, estate taxes are
the easiest taxes to increase because they are collected from dead
people!  This is a voting block that doesn't complain much and certainly
does not affect the outcome at the polls.  Additionally, less than 4% of
the US households have a net worth large enough to pay estate taxes (US
Census Bureau, 1993).  So there are very few people to raise objections
to increases in the estate tax.

The bottom line is this--if you have an estate over $650,000, then you
need to be concerned about estate taxes.  In fact, people should use as
much of their $650,000 exemption as they can right now.  Once you have
used this tax break by removing assets from your estate, even if the
estate tax is reduced later, Congress cannot come back and take away the
assets you have legitimately segregated and protected from taxes.

It's simple to remove assets from your estate.  You can simply place
them in a trust (not a living trust a unless it has an "A/B"
provision).  If you later need to use those assets, you could still have
the flexibility to access those funds.  But the beauty of using your
exemption as early as possible is that you avoid $240,000 of taxes if
Congress ever decides to remove the exemption altogether.

As always, be well informed before taking any actions for your own
situation...

Best Regards,

Jeff Salisbury - persfin admin/owner

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