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Estate tax repeal, just like getting older, is gently creeping up on us at about the speed of a Lear Jet. In 2010, if congress doesn’t do anything the estate tax will disappear until, of course, reinstated by a congress and president of sound mind. Most of those with taxable size estates are still taking the prudent route of insuring the interest of whatever family business or fortune they have been blessed with.

There are a couple of reasons that I believe are valid to consider in favor of overturning the federal estate tax repeal, but first let’s talk about why it’s prudent to act as if it will never happen.

Probably the most compelling argument for not pulling the plug on estate tax protection, such as second to die universal life insurance, or not moving ahead with estate tax protection is that, in all likelihood it repeal will never happen. Change may occur but I am hard pressed to find anyone that believes it will be repealed. Under current law, in 2009 the estate tax exemption will raise from $2,000,000 this year to $3,500,000. Remember, this is up from the overbearing exemption of the year 2000 of just $600,000. We’ve come a long way. This has paved the way for especially small business owners to be able to pass on the fruit of their life long labor to their family without the government taking a giant bite out of that piece of fruit. So, reason number one, I just don’t see it actually happening.

Reason number two not to abandon estate planning is that if, for someone unfathomable reason, the federal government does allow estate tax to lapse to nothing, fully expect individual states to fill that void just as surely as one wave follows another on the beach. Many states, such as Washington with their 17% “death tax” have already jumped the gun in anticipation.

So, it likely won’t happen. Here’s a couple of practical reasons why it shouldn’t happen. Anyone that has been paying attention at all to the national debt and deficit knows that this past 8 years has been a bit like handing a teenager (the government) a limitless credit card with no guidance and expecting a good outcome. Repealing estate taxes would be a huge revenue hit at a time when they can ill afford it.

The other impact of estate tax repeal would be a drought in charitable giving that is so huge that it would seem almost un-American in its’ magnitude. Currently an overweight estate can be purged through charitable giving to avoid taxation. A good thing for the family and the charity. If there is no tax, there is no incentive to give prolifically. Now I know this crushes the idea that all charitable giving is heart driven. Well, it’s not really crushed. I happen to think it is a noble and heartfelt thing when a family or person happens to choose a charity over the federal government.

Bottom line. Rather than a time to give up on estate tax protection and sack any efforts at new planning, today is a time when well thought out estate planning is as important, if not more important, than at any time in our past. In another post I will cover current proposed estate tax bills floating around congress. It doesn’t appear as though anyone is waiting for 2010 to deal with the poorly thought out repeal issue.