Estate Taxes Good?

In the midst of war, the Washington Times ran an editorial about Bill Gates' position on estate taxes.

Since this is well within my professional expertise as an estate planning attorney (trained in multi-millionaires' planning techniques by the Esperti Peterson Institute at Michigan State University), let me make a simple point: multi-millionaires can easily pass the entire assets of their estate to their children intact. One oft-used technique is the Charitable Lead Trust linked with a charitable foundation. The millionaire or billionaire can pass his entire estate tax-free. Admittedly, he must put restrictions on the money for 18-22 years, but it works. (If you are curious about how this works, send me an email at jheck@hecklaw.com.) Most estate planners consider the estate tax an "optional tax." Good planning eliminates the tax in its entirety.

Simply put, while I do not question Bill Gates' personal altruism (since most published reports indicate his children will only be decamillionaires and not billionaires, by Bill's and Melissa's estate plan). I do question the soundness of their logic. If the estate tax can be so simply circumvented, why puts so much emphasis on giving money to the government as sound policy.

Where I do see the value of the estate tax is as a motivator. My professional experience is that most persons do not plan for a future that is more than 15-20 years away. The estate tax in its pre-reform model was an excellent motivator for the middle class and upper class to spend time thinking about the next 10 to 50 years, no matter the person's age. The value of this is that it allowed these persons to creatively provide for family members according to the family member's individual skills and problems and to seriously consider healthy doses of long-term charitable planning.

With the loss of a real threat of estate taxes for the middle class and a serious bear market, the numbers of persons considering these altruistic aspects of planning have plummeted.

I will skip further comment on this matter until the war closes. Suffice it to say, beware of the wealthy seeking more taxes; there is usually more to the story.