In the year 1900, the majority of people in this country took care of themselves! They worked hard to grow their own food, make their own clothing, and sustain their own lifestyle. Since that time, beginning with the Industrial Revolution, we have progressively relied upon the government for our support, especially once we reached retirement. And the government has stepped up amazingly to accommodate the seniors of our country who have given their life in service for others, whether they have saved money to retire comfortably, or not. This especially since the Social Security Act of 1935 was inaugurated. The Tax Relief Act of 2000, provided an increasing exemption to the Federal Estate Tax each year, for the ensuing 10 years, and was also designed to keep more money in the pockets of our U.S. Citizens. When first studying the Tax Relief Act of 2000, it was easy to assume that sometime before it’s conclusion in 2010, Congress would act to establish at least a modification of the return to a paltry $1,000,000 exemption per individual, from the Federal Estate Tax. Now I am not so sure! Just look at the demographics of the population that will remain in the workforce, once the “Baby Boomers” – those born between 1946 and 1964 have retired! It has already begun!

Although $2.1 trillion is about to change hands, where will it change hands to? And, how will these “Boomers” survive into their 80’s and 90’s, with all of our increased medical technology, but no monetary support? “Generation X” is “supposed to” support The Baby Boomers! Right? One generation pays in and another draws it’s golden year’s support. Right? There will not be enough population to accomplish this in our immediate lifetime. If the $2.1 trillion that is passing from the Baby Boomers to Generation X is tapped into by the government now, as the “Boomers” begin to pass away, ..ah now we have an economic flow that will comfortably care for our elderly generation! The Federal Estate Tax is a logical place for this to be derived from. I imagine Congress will be taking a hard look at this. And for those who do not receive education on the possible implications of a hefty 55% tax being levied against their hard-earned Estate, millions of dollars will be absorbed into the government immediately. Hopefully, programs will remain that encourage ways to split Living Trusts, or continue to make available Non-Revocable ways of gifting and income preservation, to lighten the burden of this tremendous gnawing away of one’s lifetime livelihood.

In the year 2008, the Federal Estate Tax exemption is $2 million for an individual. In 2009, the exemption will increase to $3.5 million. And if I had to pick the year to pass my Estate to my heirs, it would have to be 2010! That year the tax is repealed! In recent years, where did the argument on the depletion of Social Security go? We haven’t made any reform in that area as well! Hopefully these two very different subjects will not find a common ground, with one feeding off of the other! I grew up thinking that Social Security was a tax! We are already taxing Social Security! Wouldn’t tapping the Estate Tax to fund Social Security, that is ultimately taxed again, be a four or five times tax? Whoa! One thing is for sure; nothing is ever for certain and everything changes!

As families, we all need to think about our own investments, and our own accounting methods to hedge the threat of taxation. It’s a dependence on other individuals and countries that has caused the budget and trade deficits, while we await the government to care for us in retirement! Whether it is an Estate Tax exemption, a Social Security check, Medicare, or any other supposed entitlement, we should all strive to take care of ourselves! Now, an old General Store with a side business of horseshoeing and 100 acres of vegetables doesn’t sound too terribly awful!