President Clinton's estate tax proposals require immediate response. Did you know that even though the Taxpayer Relief Act of 1997 has received a lot of attention in the press and the marketing media, the president has made some more proposals that could drastically affect estate-planning opportunities if the proposals become law?

The president's new proposals have, perhaps, been overshadowed by the news-breaking developments surrounding Iraq or the White House intern scandals, but Clinton's proposed overhaul of several key estate planning techniques may affect your pocketbook and your ability to preserve and pass on your assets to heirs.According to recent reports in the Wall Street Journal, the proposed changes affect the ability of taxpayers to use what estate planners call "transfer and valuation techniques" to reduce estate and gift taxes.

For example, a case called Crummey vs. the Commissioner of the Internal Revenue Service gave estate planners a way to set up an irrevocable trust for the benefit of a child so that a parent could restrict a child's access to cash gifts made to the trust by the parent, yet assure that the gifts were made tax free to the donor and the donee.

You can see why a parent might want to do both. Well, federal law allows a taxpayer to give $10,000 annually to any single donee without the imposition of gift taxes. To qualify, the recipient must receive what is called a "present interest" in the gift.

In the tax law, "present interest" means the recipient has access to the gift. But parents may be concerned that their children will not be mature enough to handle the money. The Crummey case allowed estate planners to give the beneficiary child the opportunity to demand access to the gift for a short period of time; and, even if the access was never taken advantage of, the "present interest" rule was satisfied and the taxes were saved. The Crum-mey case has provided for legal tax-free gifts for many years.

The IRS has argued against this technique unsuccessfully in the courts and, through the president's proposals, is attempting to do legislatively what it was unable to do judicially.

Another of Clinton's proposals would reign in the valuation techniques available in the use of Family Limited Partnerships (FLPs) - a business entity designed to keep family businesses running from generation to generation.

Simply put, assets in a Family Limited Partnership can be discounted by 30 percent or more because the restrictions inherent in getting access to FLP assets make them less attractive to investors as well as creditors and claimants. Therefore, the value of the assets is discounted and taxes are saved.

The IRS and the president do not seek to eliminate the valuation discounts of FLPs but to limit the discounts to only FLPs holding "active businesses" as opposed to investment assets. There is no definition, though, of "active business."

If the loss of the foregoing tax opportunities concerns you, exercise your rights to make your wishes known to your elected officials. In this instance, a letter or phone call to your U.S. senators or members of Congress will let them know that you do not agree with the president's proposals and that you expect them to oppose the passage of the proposed legislation.

While the president's estate planning proposals are bad news for taxpayers, the good news is that the legislation would apply only to transfers made after the proposed legislation is passed and becomes effective.

This means there is still a window of opportunity for taxpayers to consult with their estate planning attorney and accountant to take advantage of the tax-saving transfer and valuation techniques discussed in this article.