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Davidow, Davidow, Siegel & Stern, LLP
Long Island's Elder Law, Special Needs & Estate Planning Firm

Thursday, November 29, 2007

Buffet Testifies Against Estate Tax Repeal Which Appears Dead

Billionaire Warren Buffett urged Congress to preserve the estate tax, saying that plans to repeal it would benefit a handful of the richest American families and turn the country into a "plutocracy."
Buffett, the chairman of Berkshire Hathaway and the second-richest man in America after Bill Gates, according to Forbes magazine, testified before the Senate Finance Committee on Nov. 14, 2007. He told the panel, which is exploring ways to replace the ever-changing rules of the current estate tax system, that advocates of repeal are "dead wrong" to call the tax a "death tax."
Buffett said it would be more appropriate to call it a "death present" because heirs get to calculate their capital gains on inherited assets based on the price when they inherited them rather than when the decedent originally bought them.
Buffett noted that so few Americans are subject to the estate tax that "you would have to be at 200 funerals to attend one where the decedent paid the tax."
"Dynastic wealth, the enemy of a meritocracy, is on the rise," he went on. "Equality of opportunity has been on the decline. . . . We ought to do more for [low-income Americans] and take more out of the hides of people like me."
Those who support repeal claim that the estate tax sometimes forces the heirs of family businesses and farms to sell pieces of the business just to pay the tax bill. Testifying in favor of repeal was Dean Rhoads, a rancher and state senator from Nevada, who said when his in-laws died, the family had to sell land to pay the estate taxes and are now paying $18,000 in taxes, plus interest, every year. "We have had to borrow money to make these payments," Rhoads said.
Currently, only estates worth more than $2 million are taxed by the federal government. The threshold is scheduled to rise to $3.5 million in 2009. For the year 2010, estates will be entirely free from federal taxation. However, the law that includes this provision expires at the end of 2010. Thus, unless Congress acts in the interim, the estate tax exemption will then revert to $1 million.
Buffett said he would raise the amount of estate assets exempt from the estate tax to $4 million. He also said he might include an exemption for small family-owned businesses.
Senators on both sides of the aisle agreed that complete repeal of the estate tax is not in the cards now. "I think everyone in this room knows we're not going to repeal the estate tax. It's not going to happen in the foreseeable future," said Committee Chairman Max Baucus (D-MT).
"We can't get [repeal] done," said Sen. Jim Bunning (R-KY). "We ought to be able to come to a compromise."
Source: www.elderlawanswers.com

Friday, November 2, 2007

Transfer Penalty no longer applies for Lombardi Program!

On September 24, 2007, the New York Office of Health Insurance Programs issued a directive stating that the penalty period for gifts will no longer apply to applicants for the Lombardi program. "Effective immediately: if an individual applies for Medicaid coverage of home and community-based waiver services, the applicant is only required to provide documentation of his/her current resources. The individual is not subject to a transfer of assets look-back period nor is the individual subject to a transfer penalty period. Spousal impoverishment budgeting continues to apply to a waiver A/R who has a community spouse."

The Long Term Home Health Care Program (LTHHCP), also known as "The Lombardi Program" or "Nursing Home without Walls" provides eligible patients and their families with a popular alternative to institutional care. Based on an individualized plan of care, a comprehensive package of coordinated services is designed to meet the specific needs of eligible patients in their homes. The program serves chronically ill and disabled persons over the age of 18 who have ongoing health care needs. The hallmark of this program is case management by a Registered Nurse. An interdisciplinary team of health care professionals provides assessments, visits and delivery of ongoing quality care in the home. Services may include but are not limited to Nursing Care; Physical, Occupational and Speech Therapy; Personal Care Aides; Transportation; PERS, etc.

The elimination of the penalty period for the Lombardi Medicaid program is a brand new development. In recommending transfers prior to application for the Lombardi program, there still remains the concern that a recipient of the Lombarid program may need nursing home care in the future. Gifts will be reviewed and possibly penalized for the nursing home applicant even though they were not considered in the Lombardi application. Therefore, prior to planning for and applying for the Lombardi program, legal advice from a certified elder law attorney should be sought.