"Each year, about 75,000 people die in New York without a health care proxy and lacking the capacity to make their own health care decisions. The Family Health Care Decision Act would enable a patient's family member - including his or her domestic partner - to make health care decisions when the patient is not able to do so. This legislation passed the Assembly today, by a vote of 132 to 4. The Family Health Care Decision Act is sponsored by Assembly Health Committee Chair Richard N. Gottfried and Senate Health Committee Chair Thomas K. Duane. The Senate bill, 3164-B, passed the Senate Health Committee earlier in the day unanimously. In July, the bill passed the Senate 57 to 0, but must come before the Senate again this session.
"The Family Health Care Decisions Act is about people who are sick and dying, unable to make their own health care decisions," said Assembly Member Richard N. Gottfried, chair of the Assembly Health Committee and author of the bill, A.7729-D. "Under New York law, a spouse, domestic partner, or other family member has no legal authority to make those decisions. And because they have no decision-making role, Federal law makes it difficult for doctors to even share medical information with them to get their advice."
"Some incapacitated patients are denied appropriate treatment, while others are subjected to burdensome treatments that violate their wishes, values, or religious beliefs," Gottfried added.
A decision to place a patient in hospice care - which means switching from acute care to palliative care - is one of those decisions. If the patient is one of the 75,000 with no signed health care proxy, and did not previously provide 'clear and convincing evidence' of his or her wishes, in New York there is no legal way to get that patient into hospice care.
The bill is supported by: the Hospice and Palliative Care Association of NY State, the American Cancer Society, the NY State Breast Cancer Network,the Cerebral Palsy Association of NY State, the NY Academy of Medicine, the NY Association of Homes and Services for the Aging, the NY Civil Liberties Union, the New York State Right to Life Committee, the Alternatives to Marriage Project, Empire State Pride Agenda, 1199/SEIU, AARP, Consumers Union, the NY State Family Decisions Coalition, the Greater New York Hospital Association, the NY State Academy of Family Physicians, the Mental Health Association in New York State, FRIA of New York, Statewide Senior Action Council, the Medical Society of the State of NY, the NY State Nurses Association, the Visiting Nurse Service of New York, the Interagency Council of Mental Retardation and Development Disabilities Agencies, the American College of Physician Services of New York, the Healthcare Association of NY State, the NY State Health Facilities Association, the Alzheimer's Association, Family Planning Advocates of New York, the Westchester End-of-Life Coalition, the Continuing Care Leadership Coalition, the NY City Bar Association, Women's Bar Association of NY, and the NY State Bar Association. The bill was originally drafted by the Governor's Task Force on Life and the Law.
Be sure that you have proper planning put in place. Come to one of our upcoming seminars and discover the benefits of planning in advance: 2/25 at The Milleridge Inn in Jericho at 10am OR 2/25 at The Islandia Marriott at 10am or 7pm.
Friday, February 12, 2010
Thursday, January 28, 2010
NEW TAX LAW FOR 2010
Dear Clients and Friends,
A NEW LAW has taken effect on January 1, 2010 that affects the vast majority of our clients. Changes to the federal estate tax will affect our estate planning clients, while changes to the way capital gains will be calculated will affect all of our clients, including our elder law clients.
FEDERAL ESTATE TAX
As of January 1st, 2010, the federal estate tax in this country has been repealed for one year. As of January 1st, 2011, the federal estate tax is scheduled to return with a vengeance. While this possibility has been on the books since 2001, the overwhelming conventional wisdom was that it would never happen. It simply did not make sense to eliminate the federal estate tax for just one year!
So what is going on? Over the last decade, the federal estate tax has been phasing out, first by increasing the exclusion, then by full repeal this year. The exclusion meant that a decedent’s estate would pay no federal estate tax unless the total estate exceeded the exclusion in the year of death. The tax would only be assessed on the excess. The exclusion got as high as $3.5 million in 2009. In 2011, the federal estate tax is scheduled to return with about a $1 million exclusion. This will have a devastating effect on the middle class. Nevertheless, it is currently the law.
The overwhelming prevailing thought in our profession was that our Congress would never let this happen and would either fix the exclusion at a certain level or repeal the tax. This still may happen at some point this year, perhaps retroactively.
Many estate plans were written in such a manner as to shelter the exclusion at the first death, usually by placing such excluded amount into a trust (called a “by-pass” or “credit shelter” trust) and having the balance either pass outright or in trust (called a “Q-Tip” trust) to the surviving spouse (or to the children of a first marriage).
The language of the new law as applied to these plans may cause assets to pass in ways that were wholly unintended. For example, the “by-pass” trust may either be under or over funded, or perhaps not funded at all because no exclusion amount applies in 2010. Several problems could arise if the “by-pass” trust is not funded.
1. With the return of the estate tax in 2011, failure to shelter assets at the first death will cause more assets to be taxed at the second death, for both federal and state purposes. (New York currently has a $1 million exclusion).
2. Some estate plans (especially with second marriages) were written so that the exclusion amount would go to one set of beneficiaries (usually the spouse) and the balance to another set of beneficiaries (usually the children). If zero is allocated to the first set of beneficiaries, then all will go to the second set of beneficiaries, which certainly was never intended, and can be quite disruptive to an otherwise properly planned estate.
A “disclaimer plan” may be an appropriate response to this new law and its inherent problems. A disclaimer plan is one where the beneficiary is the surviving spouse, but the surviving spouse can disclaim (divert) the estate (or part) to a “by pass” trust. This allows for last minute fine tuning. While not right for everyone, a disclaimer plan may be something to consider at this uncertain time.
CAPITAL GAINS TAX
The trade off for the elimination of the federal estate tax, was the elimination of the “step-up” in tax basis. In simple terms, your basis is the amount of money you paid for an asset over time. For example the purchase price of real property or stock is the basis. Any amount you sell your real property or stock above the basis is subject to capital gains tax (about 15% federal and 7% New York State). The step-up in tax basis meant that at death, the basis of all assets automatically rose to the value upon the date of death, essentially wiping out all capital gains. However, in 2010 upon death, the basis will remain the same or go down (if the fair market value of the asset on death is less than the basis before death). For most clients this means that your basis will remain the same, before and after death, guaranteeing capital gains tax when the property is sold.
There is some relief. A decedent's estate is permitted to increase the basis of assets transferred by up to a total of $ 1.3 million plus an additional $3 million for assets passing to a spouse. Actually, the decedent’s Executor has the power to allocate the increase in basis to any particular eligible asset or the decedent’s will can so provide.
Lastly, if you protected your assets with the use of a life estate or an irrevocable Medicaid family trust, this new law may have a negative impact. Previously, homes transferred with a retained life estate or any assets held in our irrevocable Medicaid family trust would enjoy a complete step-up in tax basis at death thereby eliminating all capital gains at death. Today, if you were to die in 2010, this may no longer be the case.
THE BOTTOM LINE
The bottom line is that your situation should be immediately reviewed, especially if you are concerned about your short term health. Please call our office immediately for a consultation to address your current options and/or attend our SPECIAL CLIENT SEMINAR on Tuesday, March 2nd at The Islandia Marriott, 3635 Express Drive North, at either 10am or 7pm. Please call JoAnn at 631-234-3030 or email her at JGrisolia@Davidowlaw.com to reserve a seat for yourself and a friend. The seminar is FREE but reservations are required.
We shall continue to post updates regarding this matter and other pertinent issues
throughout the year on our website at www.Davidowlaw.com.
I am,
Very truly yours,
Davidow, Davidow, Siegel & Stern LLP
Lawrence Eric Davidow
Managing Partner
A NEW LAW has taken effect on January 1, 2010 that affects the vast majority of our clients. Changes to the federal estate tax will affect our estate planning clients, while changes to the way capital gains will be calculated will affect all of our clients, including our elder law clients.
FEDERAL ESTATE TAX
As of January 1st, 2010, the federal estate tax in this country has been repealed for one year. As of January 1st, 2011, the federal estate tax is scheduled to return with a vengeance. While this possibility has been on the books since 2001, the overwhelming conventional wisdom was that it would never happen. It simply did not make sense to eliminate the federal estate tax for just one year!
So what is going on? Over the last decade, the federal estate tax has been phasing out, first by increasing the exclusion, then by full repeal this year. The exclusion meant that a decedent’s estate would pay no federal estate tax unless the total estate exceeded the exclusion in the year of death. The tax would only be assessed on the excess. The exclusion got as high as $3.5 million in 2009. In 2011, the federal estate tax is scheduled to return with about a $1 million exclusion. This will have a devastating effect on the middle class. Nevertheless, it is currently the law.
The overwhelming prevailing thought in our profession was that our Congress would never let this happen and would either fix the exclusion at a certain level or repeal the tax. This still may happen at some point this year, perhaps retroactively.
Many estate plans were written in such a manner as to shelter the exclusion at the first death, usually by placing such excluded amount into a trust (called a “by-pass” or “credit shelter” trust) and having the balance either pass outright or in trust (called a “Q-Tip” trust) to the surviving spouse (or to the children of a first marriage).
The language of the new law as applied to these plans may cause assets to pass in ways that were wholly unintended. For example, the “by-pass” trust may either be under or over funded, or perhaps not funded at all because no exclusion amount applies in 2010. Several problems could arise if the “by-pass” trust is not funded.
1. With the return of the estate tax in 2011, failure to shelter assets at the first death will cause more assets to be taxed at the second death, for both federal and state purposes. (New York currently has a $1 million exclusion).
2. Some estate plans (especially with second marriages) were written so that the exclusion amount would go to one set of beneficiaries (usually the spouse) and the balance to another set of beneficiaries (usually the children). If zero is allocated to the first set of beneficiaries, then all will go to the second set of beneficiaries, which certainly was never intended, and can be quite disruptive to an otherwise properly planned estate.
A “disclaimer plan” may be an appropriate response to this new law and its inherent problems. A disclaimer plan is one where the beneficiary is the surviving spouse, but the surviving spouse can disclaim (divert) the estate (or part) to a “by pass” trust. This allows for last minute fine tuning. While not right for everyone, a disclaimer plan may be something to consider at this uncertain time.
CAPITAL GAINS TAX
The trade off for the elimination of the federal estate tax, was the elimination of the “step-up” in tax basis. In simple terms, your basis is the amount of money you paid for an asset over time. For example the purchase price of real property or stock is the basis. Any amount you sell your real property or stock above the basis is subject to capital gains tax (about 15% federal and 7% New York State). The step-up in tax basis meant that at death, the basis of all assets automatically rose to the value upon the date of death, essentially wiping out all capital gains. However, in 2010 upon death, the basis will remain the same or go down (if the fair market value of the asset on death is less than the basis before death). For most clients this means that your basis will remain the same, before and after death, guaranteeing capital gains tax when the property is sold.
There is some relief. A decedent's estate is permitted to increase the basis of assets transferred by up to a total of $ 1.3 million plus an additional $3 million for assets passing to a spouse. Actually, the decedent’s Executor has the power to allocate the increase in basis to any particular eligible asset or the decedent’s will can so provide.
Lastly, if you protected your assets with the use of a life estate or an irrevocable Medicaid family trust, this new law may have a negative impact. Previously, homes transferred with a retained life estate or any assets held in our irrevocable Medicaid family trust would enjoy a complete step-up in tax basis at death thereby eliminating all capital gains at death. Today, if you were to die in 2010, this may no longer be the case.
THE BOTTOM LINE
The bottom line is that your situation should be immediately reviewed, especially if you are concerned about your short term health. Please call our office immediately for a consultation to address your current options and/or attend our SPECIAL CLIENT SEMINAR on Tuesday, March 2nd at The Islandia Marriott, 3635 Express Drive North, at either 10am or 7pm. Please call JoAnn at 631-234-3030 or email her at JGrisolia@Davidowlaw.com to reserve a seat for yourself and a friend. The seminar is FREE but reservations are required.
We shall continue to post updates regarding this matter and other pertinent issues
throughout the year on our website at www.Davidowlaw.com.
I am,
Very truly yours,
Davidow, Davidow, Siegel & Stern LLP
Lawrence Eric Davidow
Managing Partner
Friday, January 22, 2010
2010 Update
With consumer prices down over the past year, Social Security and Supplemental Security Income (SSI) benefits will not increase in 2010. With no increase to the SSI benefit levels, the medically needy income and resource levels will not increase effective January 1, 2010, and will remain the same as in 2009. As a result, the Mass Rebudgeting that is normally performed in November for January 1, 2010 budget changes will not occur. There will also be no increase in the spousal impoverishment standards for 2010.
The Medicaid Eligibility Resource Allowance level remains the same at $13,800 for a single person and $20,100 for a couple. The maximum Federal Community Spouse Resource Allowance remains $109,560 and the minimum State Community Spouse Resource Allowance remains $74,820. Medicare Part A co-insurance is now $137.50 per day for days 21 - 100.
In order to calculate the Medicaid Transfer Penalty for Suffolk County, we take the value of the transfer and divide it by the new figure of $11,227 to calculate the number of months of the penalty.
Help us make a difference!
Make a difference in the lives of critically ill children by joining the Walk/Run for Friends of Karen at the Long Island Marathon taking place with a 5K Run/Walk on Saturday, May 1 and 10K, Half and Full Marathons on Sunday, May 2 at Eisenhower Park, East Meadow. New runners and walkers welcome to join the Friends of Karen team, volunteers are needed at the event. For a brochure and donor and sponsor opportunities, please contact Patricia Conway at Friends of Karen at 631-473-1768, ext. 303 or email her at patriciaconway@friendsofkaren.org
The Medicaid Eligibility Resource Allowance level remains the same at $13,800 for a single person and $20,100 for a couple. The maximum Federal Community Spouse Resource Allowance remains $109,560 and the minimum State Community Spouse Resource Allowance remains $74,820. Medicare Part A co-insurance is now $137.50 per day for days 21 - 100.
In order to calculate the Medicaid Transfer Penalty for Suffolk County, we take the value of the transfer and divide it by the new figure of $11,227 to calculate the number of months of the penalty.
Help us make a difference!
Make a difference in the lives of critically ill children by joining the Walk/Run for Friends of Karen at the Long Island Marathon taking place with a 5K Run/Walk on Saturday, May 1 and 10K, Half and Full Marathons on Sunday, May 2 at Eisenhower Park, East Meadow. New runners and walkers welcome to join the Friends of Karen team, volunteers are needed at the event. For a brochure and donor and sponsor opportunities, please contact Patricia Conway at Friends of Karen at 631-473-1768, ext. 303 or email her at patriciaconway@friendsofkaren.org
Thursday, December 17, 2009
ESTATE TAX UPDATE
WASHINGTON, Dec 16 (Reuters) - An effort by Democrats to stop the repeal of a tax on wealthy estates in the United States has failed in the Senate, as Republicans blocked a renewal of the tax that expires in 15 days.
Senate Finance Committee Chairman Max Baucus failed on Wednesday in a procedural move to introduce a measure that would have extended the tax for two months, to give lawmakers more time to work out a deal.
Without action, the 45 percent tax on estates after a $3.5 million exemption disappears for a year and then jumps to 55 percent, with an exemption of $1 million, in 2011.
The tax has divided Democrats, with conservatives from the party teaming with Republicans to propose a lower tax with a greater exemption level.
"Americans, even after informed that the estate tax may not apply to them, object to it on principle," argued Senate Minority leader Mitch McConnell as he blocked Baucus's effort.
Democratic leaders had hoped to permanently extend the tax, and the House of Representatives passed a bill to do that earlier this month.
But the Senate is mired in its health-care debate, so floor time is scarce.
"We're a little concerned that if it's allowed to disappear (for a year), some lawmakers will be more tempted to make that permanent," said Steve Wamhoff, legislative director for Citizens for Tax Justice, a group that calls for a more progressive tax system.
Once the tax expires, those inheriting estates after Dec. 31 will have to pay capital gains taxes on any asset sold. The cost will be based on the original price of the property, which could mean record-keeping headaches and bigger tax bills for some people.
"If we do not extend our estate tax law, all taxpayers, all heirs will be subject to massive, massive confusion in trying to determine the value of their underlying asset," Baucus argued on the Senate floor.
The estates of about a quarter of 1 percent of Americans would be subject to the tax under the House bill, according to the the Brookings Institution-Urban Institute Tax Policy Center.
Senate Finance Committee Chairman Max Baucus failed on Wednesday in a procedural move to introduce a measure that would have extended the tax for two months, to give lawmakers more time to work out a deal.
Without action, the 45 percent tax on estates after a $3.5 million exemption disappears for a year and then jumps to 55 percent, with an exemption of $1 million, in 2011.
The tax has divided Democrats, with conservatives from the party teaming with Republicans to propose a lower tax with a greater exemption level.
"Americans, even after informed that the estate tax may not apply to them, object to it on principle," argued Senate Minority leader Mitch McConnell as he blocked Baucus's effort.
Democratic leaders had hoped to permanently extend the tax, and the House of Representatives passed a bill to do that earlier this month.
But the Senate is mired in its health-care debate, so floor time is scarce.
"We're a little concerned that if it's allowed to disappear (for a year), some lawmakers will be more tempted to make that permanent," said Steve Wamhoff, legislative director for Citizens for Tax Justice, a group that calls for a more progressive tax system.
Once the tax expires, those inheriting estates after Dec. 31 will have to pay capital gains taxes on any asset sold. The cost will be based on the original price of the property, which could mean record-keeping headaches and bigger tax bills for some people.
"If we do not extend our estate tax law, all taxpayers, all heirs will be subject to massive, massive confusion in trying to determine the value of their underlying asset," Baucus argued on the Senate floor.
The estates of about a quarter of 1 percent of Americans would be subject to the tax under the House bill, according to the the Brookings Institution-Urban Institute Tax Policy Center.
Thursday, December 3, 2009
UPDATE
UPDATE to our last newsletter entitled:
“House Reportedly Set to Vote on Estate Tax Bill Permanently Setting 2009 Levels”
By a vote of 225-200 the House has just passed H.R. 4154, which would make “permanent” the current $3.5 million exemption and 45% maximum estate tax rate.
“House Reportedly Set to Vote on Estate Tax Bill Permanently Setting 2009 Levels”
By a vote of 225-200 the House has just passed H.R. 4154, which would make “permanent” the current $3.5 million exemption and 45% maximum estate tax rate.
Wednesday, December 2, 2009
HOUSE REPORTEDLY SET TO VOTE ON ESTATE TAX BILL PERMANENTLY SETTING 2009 LEVELS
The U.S. House of Representatives will vote during the week of November 30th on a bill recently introduced by Rep. Earl Pomeroy (D-N.D.) That would make permanent the 2009 estate tax rules.
The House vote will come Wednesday, December 2nd, “at the earliest,” according to Dow Jones Newswires. It is assumed that by “The House” the news service is referring to the House Ways and Means Committee, to which the bill was referred when it was introduced November 19.
Pomeroy’s Permanent Estate Tax Relief for Families, Farmers and Small Businesses Act of 2009 (H.R. 4154), which is backed by the Obama administration, would set the exclusion amount at $3.5 million and freeze the estate and gift taxes rate at 45 percent. H.R. 4154 is Rep. Pomeroy’s second legislative initiative aimed at fixing the federal estate tax. H.R. 436, which he introduced in January 2009, would also extend the 2009 rules indefinitely but in addition would have a “far reaching effect on gift and estate tax valuation,” according to a paper by Jonathan Blattmachr and Scott Nammacher. Emory law school professor Jeffrey N. Pennell has reportedly said that “H.R. 436 is ‘garbage.’ It has been introduced in the last two Congressional sessions, has no other sponsors, and has gone absolutely nowhere.”
The new Pomeroy bill would cost $233 billion more than current law over the next 10 years. Dow Jones reports that “In addition, there are enough opponents of the Pomeroy bill to block action in the Senate.”
Source: www.elderlawanswers.com
The House vote will come Wednesday, December 2nd, “at the earliest,” according to Dow Jones Newswires. It is assumed that by “The House” the news service is referring to the House Ways and Means Committee, to which the bill was referred when it was introduced November 19.
Pomeroy’s Permanent Estate Tax Relief for Families, Farmers and Small Businesses Act of 2009 (H.R. 4154), which is backed by the Obama administration, would set the exclusion amount at $3.5 million and freeze the estate and gift taxes rate at 45 percent. H.R. 4154 is Rep. Pomeroy’s second legislative initiative aimed at fixing the federal estate tax. H.R. 436, which he introduced in January 2009, would also extend the 2009 rules indefinitely but in addition would have a “far reaching effect on gift and estate tax valuation,” according to a paper by Jonathan Blattmachr and Scott Nammacher. Emory law school professor Jeffrey N. Pennell has reportedly said that “H.R. 436 is ‘garbage.’ It has been introduced in the last two Congressional sessions, has no other sponsors, and has gone absolutely nowhere.”
The new Pomeroy bill would cost $233 billion more than current law over the next 10 years. Dow Jones reports that “In addition, there are enough opponents of the Pomeroy bill to block action in the Senate.”
Source: www.elderlawanswers.com
Monday, November 9, 2009
Representative Berkley Introduces H.R. 3905 to
Under current law, the estate tax is slated for one year of repeal in 2010 (approximately two months from now), with a return in 2011 at the rates and exemption level that were in effect in 2001 ($1 million exemption). Recently introduced H.R. 3905 would eliminate 2010's one-year repeal, and would gradually increase - over a 10-year period - the Federal estate and generation-skipping transfer tax exemptions to $5 million. The bill also would reduce - again over a 10-year period - the maximum rate of tax (now 45%) to 35%. The deduction for state death taxes would be phased out over the same period. In a bipartisan effort, H.R. 3905 was introduced by Rep. Berkley (D-NV) who was joined by co-sponsors Brady (R-TX), Davis (D-AL) and Nunes (R-CA).
The increase in the amount of the Federal estate tax exemption would be phased in at the rate of $150,000 per year as follows:
2009 $3,500,000
2010 $3,650,000
2011 $3,800,000
2012 $3,950,000
2013 $4,100,000
2014 $4,250,000
2015 $4,400,000
2016 $4,550,000
2017 $4,700,000
2018 $4,850,000
2019 and thereafter $5,000,000
In the case of any decedent dying after 2019, the $5,000,000 exemption amount would be indexed for inflation. The amendment would apply to estates of decedents dying and gifts made after December 31, 2008.
The maximum estate and gift tax rates would be reduced at the rate of 1 percent per year over 10 years as follows:
2009 45%
2010 44%
2011 43%
2012 42%
2013 41%
2014 40%
2015 39%
2016 38%
2017 37%
2018 36%
2019 and thereafter 35%
The deduction for state death taxes would be phased out over 10 years by reducing the allowable percentage of the current deduction over that period as follows:
2009 100%
2010 90%
2011 80%
2012 70%
2013 60%
2014 50%
2015 40%
2016 30%
2017 20%
2018 10%
2019 and thereafter 0%
It remains to be seen if this will pass. We’ll keep you posted!
The increase in the amount of the Federal estate tax exemption would be phased in at the rate of $150,000 per year as follows:
2009 $3,500,000
2010 $3,650,000
2011 $3,800,000
2012 $3,950,000
2013 $4,100,000
2014 $4,250,000
2015 $4,400,000
2016 $4,550,000
2017 $4,700,000
2018 $4,850,000
2019 and thereafter $5,000,000
In the case of any decedent dying after 2019, the $5,000,000 exemption amount would be indexed for inflation. The amendment would apply to estates of decedents dying and gifts made after December 31, 2008.
The maximum estate and gift tax rates would be reduced at the rate of 1 percent per year over 10 years as follows:
2009 45%
2010 44%
2011 43%
2012 42%
2013 41%
2014 40%
2015 39%
2016 38%
2017 37%
2018 36%
2019 and thereafter 35%
The deduction for state death taxes would be phased out over 10 years by reducing the allowable percentage of the current deduction over that period as follows:
2009 100%
2010 90%
2011 80%
2012 70%
2013 60%
2014 50%
2015 40%
2016 30%
2017 20%
2018 10%
2019 and thereafter 0%
It remains to be seen if this will pass. We’ll keep you posted!
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