Estate Tax Changes for 2010

As I write this there are only 14 days left in 2009 and Congress has yet to take action to prevent the massive changes in the estate and gift tax laws that are to take effect on January 1st, 2010. The two biggest changes will be the elimination of the federal estate tax altogether, and its replacement with a new income tax framework which would eliminate the so called "stepped up basis" rule and implement a "carryover basis" scheme. 

The radical changes in the tax law will makes things difficult for professional advisors and their clients for a while as everyone learns the new rules, discards old planing tools, and reorients themselves.  Unfortunately, without Congressional intervention, such difficulties will be compounded just one year later (Jan. 2011) when the laws change again and the estate tax returns in full force and the "carryover basis" scheme goes away.  To add insult to injury, the renewed estate tax will be higher (up to 60% vs. 45% today) and the personal exemption amount will drop significantly (to $1 million from $3.5 million today)!

There is some small hope though.  As of December 3rd, the House has passed a bill extending the current estate tax regime ($3.5 mill exemption, 45% rate, stepped up basis rule) permanently. Unfortuantely, the Senate seems too locked in the Health Care Debate to pay much attention.

So what are estate tax experts doing? We're working hard to prepare ourselves and our clients for the worst.  Regardless of what happens, you can rest assured that those of us dedicated to this practice will be ready to provide the highest quality advice and counsel. As always, we will ensure our clients save taxes, protect their families and safeguard their assets.

If you have any questions about estate tax planning, please don't hesitate to call me (Joseph P Donlon, Esq.), or visit our website at www.donlonlaw.com.

2010 New York State Medicaid Resource & Income Allowances

NURSING HOME CARE
                                    Applicant             Community Spouse
Resource Allowance:  $   13,800               $  109,560 (maximum)
Income Allowance:     $         50/month     $      2,739/month

HOME CARE
                                    Applicant             Community Spouse
Resource Allowance:  $  13,800              $  20,100
Income Allowance:     $      767/month    $    1,117/month


The New York law firm of Donlon & Associates, PC focuses exclusively on:
Estate Planning
Elder Law
Asset Protection Planning
Family Business Planning

Donlon & Associates, PC
www.donlonlaw.com

EstateTax Planning News 12/09

IRS releases AFRs for December 2009:

Short Term: .69%

Mid Term: 2.64%

Long Term: 4.17%

The 7520 rate will be: 3.2%

For more information about Estate Tax Planning, visit us at http://www.donlonlaw.com

Big Changes in New York's Power of Attorney law

The recent changes in the law provide greater clarity and protection to clients. Key changes include:

• The new form must be signed and notarized by both the principal and the agent (the person named in the Power).
• The principal may appoint a “monitor” to review records of transactions by the agent.
• The agent has specific legal responsibilities, including a “prudent person standard of care.” He/she must maintain records of all transactions, and make them available upon written request.
• The law explicitly requires banks to accept the new Power and forbids them from requiring their own forms.
• The agent is limited to making small gifts (up to $500) unless the principal also signs a “Statutory Major Gifts Rider” which must be signed by two witnesses.
  

Old Powers (signed pre-Sept. 1st) remain effective despite the new law. However, you should consider executing a new Power to take advantage of these increased protections.

Both current and prospective clients are advised to call us immediately to discuss how this new law impacts your situation. Please review our website for more information or to schedule an appointment. 

Donlon & Associates, PC

IRS Issues AFRs for September 2009

The IRS has issued the minimum required interest rates for loans made in September 2009:

-Short Term (demand loans and loans up to 3 years): 0.84%

-Mid-Term (3-9 year loans): 2.87%

-Long-Term (9+ years): 4.38%

The Section 7520 Rate is: 3.4%

IRS Issues AFRs for August 2009

The IRS has issued the minimum required interest rates for loans made in August 2009:

-Short Term (demand loans and loans up to 3 years): 0.83%

-Mid-Term (3-9 year loans): 2.80%

-Long-Term (9+ years): 4.26%

The Section 7520 Rate is: 3.4%

IRS Issues AFRs for July 2009

The IRS has issued (Rev. Rul. 2009-20) the minimum required interest rates for loans made in July 2009:

-Short Term (demand loans and loans up to 3 years): 0.82%

-Mid-Term (3-9 year loans): 2.76%

-Long-Term (9+ years): 4.36%

The Section 7520 Rate is: 3.4%

AFRs (annual) for June are:

Short Term: .75%
Mid Term: 2.25%
Long Term: 3.88%

The Sec. 7520 Rate is: 2.8%

This is a slight rise from last month's rates.

IRS releases new mortality tables

These new mortality rates are effective for transfers on or after May 1, 2009.

A comparison of this new table (2000CM) with the old table (90CM) shows an increase in expected survival rates at almost all ages.

The new rates can be found on the IRS website, HERE.

May 2009 AFRs

The AFRs (annual) for May are:

Short Term:      .76%
Mid Term:      2.05%
Long Term:    3.58%

The Sec. 7520 Rate is:    2.4%

New website

Welcome to our new website. In the coming weeks, watch this space for information about our upcoming seminars on Estate Planning and Asset Protection. We will also use this blog to keep you informed of important and interesting developments in the law.

Thanks for stopping by. Please CONTACT US if you have any questions or would like to schedule a free consultation.