We Practice Law for Your Peace of Mind

No Deal Likely on Federal Estate Tax Extension

Author: Hogan Willig

December 22nd, 2009


While the House recently passed a bill to reinstate the estate tax in 2010, last week the Senate rejected a measure to temporarily extend it.

As we previously announced, the House of Representatives voted to permanently extend the present 45% estate tax rate, and the $3.5 million (per person) exclusion from estate taxes.

However, arguments over the tax rate and the exclusion amount developed in the Senate. Democrats in general were ready to approve the House version, while some Republicans preferred a lower tax rate of 35% and a higher exclusion of $5 million. Therefore, as a result of a deficit of 60 supporting votes, the Senate did not pass an estate tax extension.

If the Senate adjourns without getting an extension before January 1st, Congressional leaders have said they plan to enact a retroactive fix early next year. Generally, when a law is passed, it becomes effective on the date of passage. However, this law would be an exception. In order to avoid a complete repeal of the estate tax in 2010, this law is expected to contain a provision making it retroactive to Jan. 1, 2010.

Even when setting aside the issue of the constitutionality of a retroactive tax, the possibility of imposing an estate tax retroactively would create administrative and planning headaches for financial planners, accountants, lawyers and heirs of estates.

However, given that there are not 60 votes yet in the Senate to support a temporary extension of the estate tax, it is not clear whether there will be a sufficient number of votes next year either. We will certainly keep you up to date as this matter develops. However, in the meantime, you should keep in mind that the current legislation and 2010 repeal does not mean that there won’t be any tax consequences for those who inherit assets or receive gifts.

The good news is, if Congress doesn’t act, there will be no federal estate taxes for 2010. Businesses, stocks, and other assets can be passed on to heirs without being hit with tax rates as high as 45%.

The bad news is that there are still state estate taxes to consider. Further, there will be only a limited step-up in basis. Under current federal estate tax laws, the assets of the deceased get a step-up in basis to the fair market value at date of death (or 6 months later). The benefits to the step up in basis are realized when heirs sell assets with little to no capital gains tax consequences. In 2010, if the estate tax is repealed, the step-up in basis is limited to $1.3 million for the overall estate, plus $3 million for assets transferred to a surviving spouse. According to a Congressional Joint Committee on Taxation, it is estimated that losing the step up in basis would affect a projected 71,000 estates in 2010.

Additionally, there will also be changes in gift tax rates, which are 45 percent in 2009 but will be reduced to 35 percent if estate taxes lapse in 2010. Finally, and most importantly, if Congress doesn’t take any action at all, in 2011, the former law regarding estate tax levels is reinstated, meaning that all estates over $1 million will be taxed, with federal tax rates up to 55%.

Again, we will certainly keep you up to date on these issues as we move forward into the New Year. However, you should also consider the various other benefits to estate planning beyond the strategy to minimize or eliminate estate tax. Other issues such as asset protection, dysfunctional family situations, disabled beneficiaries, disposition of retirements assets and business succession issues can be just as important, if not more so, than the traditional transfer tax issues.

Please feel free to contact our office if you would like to discuss these matters in further detail.

HoganWillig welcomes Thomas R. Cassano

Author: Hogan Willig

December 16th, 2009

HoganWillig is pleased to welcome Thomas R. Cassano as Executive Counsel to our firm’s Matrimonial and Family Law Department. Mr. Cassano has limited his practice almost exclusively in the area of matrimonial and family law for more than thirty years. He was recently appointed to the New York State Matrimonial Law Advisory Committee and serves on the Executive Committee of the Family Law Section of the New York State Bar Association. Since 1981, Mr. Cassano has been a Certified Fellow of the American Academy of Matrimonial Lawyers and a former Vice President of the organization’s New York Chapter. He has also been named as one of the “Best Lawyers in America” in the area of family law every year since 1993.

Breaking News

Author: Hogan Willig

December 7th, 2009

House Cancels Estate Tax Repeal, Extends Current Tax Rate

Last week, the House voted 225 to 220 to permanently extend the estate and gift tax in its current form. This means that the first $3.5 million of an individual’s gross estate – and the first $1 million of gifts made during an individual’s lifetime – would be exempt from tax. The highest rate applied to the taxable portion of an estate would remain at 45%.


At first blush, it appears that no decision has been made concerning the potential repeal of the step up in tax cost basis. However, we are continuing to monitor this matter and we will continue to update you as we receive more information.


You may be aware that the step up in tax cost basis currently minimizes the potential for capital gains taxes. This occurs whether or not an estate is subject to federal estate tax. Stocks and other appreciating assets can benefit from the step up in tax cost basis, with the exception of stocks and other assets inside of IRAs or similar qualified retirement accounts. As you can see, almost all estates benefit in some way from the step up in tax cost basis benefit the tax code bestows. Taking away the step up in tax cost basis could result in one of the largest tax increases in estate tax law history, and would likely affect a majority of all estates that have appreciated assets or property, no matter their size. Again, we will keep you apprised of any changes.


If you have any questions or concerns about the extension or about step up in tax cost basis, please contact estate planning attorney Linda Grear at 716-636-7600.


Author: Hogan Willig

November 10th, 2009

The Million Dollar Advocates Forum is pleased to announce that attorney Corey J. Hogan of the law firm of HoganWillig has been certified as a member of the Multi-Million Dollar Advocates Forum.

Mr. Hogan is presently a Life Member of the Million Dollar Advocates Forum, one of the most prestigious groups of trial lawyers in the United States. Membership in the Million and Multi-Million Dollar Advocates Forum is limited to attorneys who have acted as principal counsel in at least one case which has resulted in million and multi-million dollar verdicts, awards and settlements. The organization was founded in 1993 and there are approximately 3,000 members located throughout the country. Fewer than 1% of U.S. lawyers are members.

Mr. Hogan received his bachelor’s degree from Notre Dame University, Master’s of Business Administration from the University at Buffalo and his Juris Doctor from the University at Buffalo Law School. He is the founder and majority owner of the law firm of HoganWillig, based in Amherst, New York, where he is the firm’s lead litigation attorney.

The Eco-Friendly Firm

Author: Hogan Willig

October 27th, 2009

From www.buffalolawjournal.com

Buffalo Law Journal

Though “going green” was once seen as a niche concept reserved for a small segment of the business population, area law firms are seeing the value in adopting green policies.

One Amherst firm has taken green to the extreme, constructing an 80,000-square-foot new building that, when completed in December, will be LEED (Leadership in Energy and Environmental Design) certified. HoganWillig PLLC is constructing the facility across from its current location on John James Audobon Parkway in Amherst, under the direction of Iskalo Development Corp. President and CEO Paul Iskalo.

“When we started working with HoganWillig, the desire was for us to research and find out what productivity-enhancing features we could incorporate into the building,” Iskalo said. Highlighting those features: an under-floor heating and cooling system that, in addition to producing healthier air to breathe, is green.

“By introducing the air under the floor and through natural convection, it allows the air to rise up and then be exhausted at the ceiling,” he explained. “This requires less energy to heat and cool the space because we aren’t forcing air in.”

The building is also being fitted with low-flow fixtures that are expected to be 22 percent more efficient than those commonly installed in office buildings. Thanks to a design that will allow every person working in the building to have a view of the outside, natural lighting will reduce energy waste as well.

“We are using ambient light sensors in the lighting so when you have a nice bright day outside, the lighting in the building is dimmed so you are using less energy and relying more on the natural light,” Iskalo said.

The HoganWillig building is reaping green benefits before it is even occupied, with a construction plan that has reduced landfill waste by recycling construction materials and reducing environmental impacts by using a minimum of 20 percent of constuction materials from regional sources.

The whole article:


August Firm News

Author: Hogan Willig

August 31st, 2009

August 1st – HoganWillig is pleased to announce its merger with the law firm of Lorenzo and Cohen. This merger marks the most significant growth in the firm’s history as we crest the 30-attorney marker. HoganWillig is suburban Western New York’s largest full service law firm with 31 attorneys and a total staff of 90 employees.


We Practice Law for Your Peace of Mind