The only two sure things in life are death and taxes. The image of the Grim Reaper and the taxman showing up at your door in tandem can strike fear in the bravest of hearts.

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Both top presidential candidates have vowed to reform estate-tax laws to varying degrees. Whether the new president will be

Al Gore

or

George W. Bush

, we'll know soon. In the meantime, because estate tax has been a pivotal wallet issue this campaign season, voters and nonvoters alike should take a look at the current state of their estate planning and how it might change under either leader. Most importantly, because it's fair to say the candidates don't always deliver on the promises made in campaign season once they are elected, it's high time to check what you need to do regardless of who occupies 1600 Pennsylvania Ave.

The Death Tax

Under current provisions, estate taxes -- or "death" taxes, as their critics deem them -- are levied on estates valued at more than $675,000. This amount is slated to increase to $1 million by 2006. Currently, federal estate tax rates range from 37% to a high of 55% for property valued above $3 million. Although less than 2% of estates have assets meeting this threshold, those that do generate around $30 billion in federal tax revenue annually. A few states also impose an estate tax (paid by the estate) or an inheritance tax (paid by the inheritors); the highest rates here reach 16%.

There has already been a flurry of activity on Capitol Hill aimed at amending or eliminating the federal estate tax. After debating proposals from both Democrats and Republicans, Congress approved HR-8 earlier this year. The bill, which was vetoed by

President Clinton

, would have gradually eliminated the federal estate tax over a 10-year period.

The Candidates

Both presidential candidates want changes to the federal estate tax law, with Bush's proposals far more sweeping. Gore's proposal is aimed at the middle class and would increase the exemption allowed from $1.3 million to $2.5 million (or a $5 million portable exemption for a couple) when passing on a family farm or business. A family property, he reasons, may have little cash on hand but a high assessment value due to assets in property and equipment. Under current law, family members may be forced to sell the farm or business simply to pay the estate taxes. Gore's plan seeks to address this while preserving much of the federal revenue derived from larger estates.

Bush, on the other hand, wants to repeal the estate tax altogether. This cut, in fact, would count for close to 20% of Bush's total tax-cut package, thus fueling the charge that his economic policies benefit the rich. But while the plan Clinton vetoed would have phased out the tax over a 10-year period, Bush's plan would do it in eight.

We spoke with several estate-planning and tax-policy experts trying to gauge the likely outcome in the estate-tax debate. All agreed that regardless of who wins in the election, change, if not all-out repeal, is likely.

"Nobody's married to HR-8," says Sandy Schlesinger, partner and chairman of the wills and estates department at the law firm

Kaye Scholer Fierman Hays & Handler

. He points out that there have been other estate tax-repeal proposals, including the Democrats' alternative to the Republican bill, which was proposed by New York Democratic Rep. Charles Rangel last spring but not approved. This would have provided a 20% across-the-board cut (lowering the maximum rate to 44%) and raised the exclusion for family farms and businesses to $4 million per family.

Democratic Tennessee Rep. John Tanner recently proposed a similar bill this fall that would gradually increase the unified tax credit to $4 million per couple, indexing the credit for inflation, and provide an immediate 20% across-the-board cut in the estate-tax rate, eventually reducing the top rate to 39.6%.

Clint Stretch, director of tax policy at

Deloitte & Touche

, thinks that even a

Congress

controlled by Democrats would approve a substantial increase in the personal exemption and a decrease in the top tax rates. The Gore proposal he describes as modest, saying, "I don't think Congress will be that stingy." But, he warns, "In the interim you have the same problem -- you might die before they do it, so you ought to make sure you have a sensible estate plan under present law."

In the Meantime, In-Between Time

So what approach should you take if estate planning is on your agenda? The bottom line: everyone, regardless of his or her assets, should have an estate plan. According to Laura Peebles, a director in the national office of Deloitte & Touche specializing in estate planning and charitable giving, there are three basic estate planning documents that everyone should have:

A will;

A durable power of attorney, which designates someone who will manage your affairs and make decisions for you should you become incapacitated;

And an advanced directive (though the name varies from state to state), which spells out what extraordinary measures you want taken to preserve your life, should you be unable to communicate your wishes yourself.

"Beyond that," says Peebles, "what is stipulated in the will and whether you should establish a trust will be determined by the complexity of your life and your disposition plans."

A single person with few assets, for example, who plans to leave everything to a nephew, would need a fairly simple will. But a couple on their second marriage, for instance, with children from both their previous marriages and property one spouse is inheriting from their parents, will require a more complex plan.

This is true whether the estate has taxable assets or not, contends Peebles: "Complexity tends to come from meeting family goals, and it should come from meeting those goals with an appropriate overlay of pass techniques -- not the other way around. That's when people start mistaking estate planning for estate-tax planning."

Strategies some people choose for reducing estate-tax consequences include reassigning assets, setting up various types of trusts, and making charitable donations. While Peebles says it's all right for people to make financial decisions for tax reasons, this should not be the sole motivation. Trusts, for example, are often formed to preserve assets for future generations or to protect people, whether or not there's a tax advantage.

But trying to protect assets for their heirs is what leads many aging Americans to surrender control of much of their estates. Ron Roge, a financial planner based in Bohemia, N.Y., would welcome a repeal of the estate tax. "What that would do is eliminate a lot of very painful decisions that people are forced to make. Having to give up control of their money as they age in order to get it out of their estate is a terrible, terrible thing to do to elderly people."

Even if the federal estate tax is repealed, tax consequences will not go away, Peebles says. "Keep in mind that no one is talking about repealing the income tax and many states will still have their estate tax. You'll still have all the planning that has to be done for IRAs and other qualified plans because these will remain as income tax considerations." Peebles' fear is that people will use the repeal of estate tax as an excuse to ignore estate planning.

With fewer than 30% of people dying with a will in place, they'll have plenty of company.