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For those who were really thinking that the government would allow the estate tax repeal to continue into 2010, the year that estate taxes would simply disappear, it’s time to exhale.

The House of Representatives has voted to keep the current estate tax exemption and taxation levels in place permanently. That bill has been forwarded to the Senate. While there isn’t a clear consensus in the Senate for keeping the proposed Congress parameters, there does seem to be a resolve to at least pass a band aid bill that would keep the current rates in place for another year, allowing time for debate.

With the current levels being a $3.5 million exemption and a 45% tax, there is a growing bipartisan support, since their fix will likely be at least called permanent, to raise the exemption to $5 million and lower the tax rate to 35%.

What would happen if the Senate didn’t act would be a complete repeal of estate taxes in 2010, making it as the financial adviser jokes goes, “a good year to die”. In 2011 the estate tax would return to 2001 levels with a $1 million exemption. You can rest assured that the government doesn’t want to let that happen.

Bottom line. With the repeal on its’ way out of the picture it is once again time for those with larger estates to evaluate the need for estate preservation 2nd to die life insurance. Given the brutal payment rules on estate taxes and the generally large amounts of tax to be paid it simply makes financial sense to have life insurance in force to pay the tax.