Back in December 2010 there was a much reported flurry of work done on changes to the US Tax laws. One of the big changes was to increase the amount an individuals could pass free of estate or gift (“transfer”) taxes. The changes made it possible to pass during $5,000,000 you life or at death (or combination thereof) without paying either of the transfer taxes. This “exemption amount” was substantially more than in prior years. (The amount is adjusted for inflation and is $5,120,000 for 2012.) Additionally, the then new law made it possible for spouses to share this amount so that a surviving spouse could use any unused portion of a predeceased spouses $5,000,000.

This new exemption equivalent, along with the continued annual $13,000 annual exclusion, now made it possible for business owners and families with highly appreciated assets or businesses to pass substantial wealth to their families transfer tax free. That is not to say only people with more than $10,000,000 can benefit, but everyone with more than $1,000,000 in estate taxable items may find advantages. (more…)

Tags: Estate Tax, federal gift exemption, gift tax, gifting, lifetime gift, tax laws, transfer tax

Durable Power of Attorney: A Durable Power of Attorney is a legal document in which you appoint an agent to assist you with handling your financial affairs and to make financial decisions on your behalf during your lifetime, either for convenience or in the event you become incompetent or disabled. A Durable Power of Attorney can help avoid the necessity of a costly and protracted guardianship proceeding. A Durable Power of Attorney remains in full effect throughout your lifetime and terminates only upon your death or revocation.

Why do you need a Power of Attorney? (more…)

Tags: durable power of attorney, poa, power of attorney

The news is full of talk about President Obama wanting to repeal “The Bush Tax Cuts” for the wealthy. Also, the compromise tax law that passed at the end of 2010 is scheduled to expire or “sunset” on December 31 of this year – sort of automatically repealing the tax cuts for everyone. But what are the tax cuts? How will the changes look basically? That is the key.

1.  Income Tax:

The personal income tax rates would revert to 2001 levels, so:

• Current rates – 10%, 15%, 25%, 28%, 33%, and 35%
• Revert to old rates – 15%, 28%, 31%, 36%, and 39.6%

Capital gains rates would also revert to 2001 levels as well. Short term capital gains (assets held less than one year) would continue to be taxed the same as the ordinary rate. Long term gains (assets held a year or more) would see higher capital gains taxes. (more…)

Tags: adoption credit, bush era tax cuts, capital gain, dependent care credit, dividends, Estate Tax, income tax, marriage penalty, state death tax credit

Every person who lives in New York State dies in one of two ways: with a Will (testate) or without a Will (intestate).

If a person dies with a Will, that decedent leaves a document directing the disposition of what they own and naming a person to administer their estate (the Executor).  A Will can name a guardian for a child of the person signing the Will (the Testator), in case the child’s parents are deceased. It can provide for special administration of property for the benefit of a child or a disabled person. (more…)

Tags: intestate, last will and testament, living will, testate, testator, will

April 16, 2012 is “National Healthcare Decisions Day.” It is a day set aside to educate the public about the importance of health care planning and to encourage people to express their personal wishes regarding health care, in writing, before a health care crisis occurs.

Over 100 million American adults have not designated an agent to make medical decisions nor documented the type of medical care they desire. Although it is a difficult issue to address, it is important for adults of all ages and stages of life to consider who is best-suited to make medical decisions for them in the event they become too ill speak for themselves and convey their own wishes. Without such directives, these important decisions and related matters may be left to the control of medical professionals, estranged or inappropriate family members or even the Court, all of whom may know little to nothing about you, your values and morals, or your overall wishes. (more…)

Tags: Family Health Care Decisions Act, FHCDA, health care agent, health care proxy, living will, National Healthcare Decisions Day

Care for a disabled child after their parents have died is a significant concern for those parents. Often the disabled child is a recipient of public assistance and the assistance is desperately needed for medical care, group homes and/or other major costs of care. In order to keep the public assistance (or obtain it in the first place) those disabled children (and their parents) need to meet financial eligibility requirements. These requirements usually mean a very restricted amount of “available resources” and/or income to the child. For our discussion, that means the disabled child cannot receive an outright inheritance because it would render them ineligible or cause them to lose eligibility for the benefits they rely on. (more…)

Tags: inter vivos, snt, special needs trust, supplemental needs trust, testamentary

In New York State, everybody has a plan to pass assets on their death. Without a written Will your assets will pass on by what is commonly referred to as “Intestate Distribution” or “Intestacy.” More formally by Article 4 of the New York Estates Powers and Trusts Law (the “EPTL”) – Descent and Distribution of an Intestate Estate.

There are four ways to pass on property when you die: 1) By operation of Law –like joint tenants; 2) By contract – like a beneficiary designation; 3) By a Last Will and Testament – everything left after 1 and 2; or 4) Intestacy – which controls the same items as your Will. (All other states also have laws of intestacy with the same basic rules but may differ in who may inherit. Our focus is New York.)

Intestate distribution will be made to distributees, the nearest level of blood (including half blood) relative. So, unless you change it by a Will, your estate will pass as follows: (more…)

Tags: descent and distribution of an intestate estate, EPTL, Estates Powers and Trusts Law, intestacy, intestate distribution, last will and testament, will