SPEAKING ENGAGEMENTS by Mary WanderPolo, CELA
Thursday, November 4, 2010
Presentation for the National Academy of Elder Law Attorneys in San Diego.
NEWS ALERT
Does your will take into account current estate tax law???
Congress failed to prevent the repeal of the estate tax for 2010 only. This means that, unless Congress acts this year the estate tax will be reinstated on January 1, 2011 with only a $1 million exemption. There is talk that Congress may even retroactively reinstate the estate tax sometime in 2010. Estate tax repeal could hurt the surviving spouse of someone dying in 2010 if the couple has a Marital Trust/Bypass Trust plan (also known as an A/B plan) in their Wills. The wording of the Will may result in all of the assets being placed in the bypass trust, cutting out the surviving spouse.
BEWARE OF NEW IRC SECTION 1022 AND ITS REPEAL OF THE STEP-UP IN BASIS UPON DEATH!!!
The 2001 tax act provided that on January 1, 2010 new Internal Revenue Code Section 1022 replaced former Internal Revenue Code 1014. Under the new Code Section 1022 there is no longer a step-up in basis for capital assets acquired from a decedent. Many read Section 1022 to only allow a step-up for property acquired from a decedent, revocable trusts, jointly held property, and community property. Some practitioners believe section 1022 denies a step-up for life estates, all irrevocable trusts and all retained and granted powers of appointment.
CHECK WITH YOUR ESTATE PLANNING ATTORNEY ON HOW THIS MAY EFFECT YOUR OWN ESTATE
IMPORTANT INFORMATION
Attention Social Security Beneficiaries
Are you confused about the various healthcare proposals?
H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007
Attention Social Security beneficiaries:
Social Security beneficiaries are not expected to receive a cost-of-living adjustment for the next two years. Advocates for older adults and people with disabilities are concerned about the impact of this freeze on beneficiaries, especially as health care costs, including Medicare Part B premiums, continue to rise and income from retirement savings decreases. Critics dismiss concerns citing larger-than-normal increases in January fueled by high energy costs. See this op-ed from the Washington Post: www.washingtonpost.com/wp-dyn/content/article/2009/08/24/AR2009082402654.html, and this information bulleting from the Center for Medicare Advocacy:http://www.medicareadvocacy.org/PartB_09_08.27.PremiumsandCOLA.htm.
At what age should you begin claiming Social Security benefits?
If you’re approaching retirement, it’s the most important financial decision you’ll likely make. The Social Security Claiming Guide sorts through all the options near-retirees need to consider. Presented in an easy-to-read, colorful format, the Claiming Guide shows you where to begin, spells out how much you can get, and answers frequently asked questions about how the claiming process works. A must read for those nearing the age of 62! Source: CRR (December 209) Get it: http://crr.bc.edu/social_security_guide
Confused about health care reform?
Are you confused about all the different reports about the proposals for health care reform? The Center for Medicare Advocacy has prepared an update aimed at correcting misinformation, check it out at www.medicareadvocacy.org/Reform_09_08.13.WhyItWorks.htm.
The ABLE Accounts Act of 2009:
“New federal legislation has been introduced which would expand the use of special needs trusts and allow families with children with special needs to save, tax-free, for disability-related expenses. The ABLE Accounts Act of 2009 (S. 493) combines the idea of a tax free vehicle similar to 529 savings plans with special needs trusts. Under current law, disabled individuals under the age of 65 or their families can put aside funds in a special needs trust for the supplemental needs of a disabled child without impacting the disabled child’s eligibility for SSI, Medicaid and other government benefits. However, there is currently no tax incentive for funding special needs trusts. The new law, if enacted as presently drafted, would essentially exempt the ABLE accounts from all income tax, including on contributions and distributions. The legislation as presently drafted would also expand the needs which can be funded through trusts to allow assets to be used for education, housing, transportation, employment support, health and wellness, assistive technology, personal support services and life necessities. Under present law assets from a special needs trust cannot be used for food or shelter (housing) costs.”
Congress passed H.R. 3648, the "Mortgage Forgiveness Debt Relief Act of 2007" and President Bush signed it on December 20, 2007.
This bill will benefit senior home owners by providing a larger credit against capital gains taxes on the sale of the primary residence where one spouse is fairly recently deceased. Prior to the enactment of this bill, a married couple was allowed to apply each of their credits of $250,000 against the capital gains tax on the sale of their primary residence. If one spouse died before the sale, the surviving spouse could only use the deceased spouses credit if the sale of the property closed within the tax year in which the deceased spouse died. H.R. 3648 included a provision which liberalizes this tax law so that, beginning with sales on or after January 1, 2008, surviving single spouses will qualify for the $500,000 (and not just $250,000) home-sale exclusion if the sale occurs not later than 2 years after their spouse' s death and the requirements for the $500,000 exclusion were met immediately before the spouse's death. Currently, the $500,000 limit is available only if spouses file a joint return for the year of sale. WanderPolo Law, LLC can help you understand the tax laws that effect you and your loved ones. Contact us for advice prior to the sale or transfer of your home. (Please be aware that your contacting us does not establish an attorney-client relationship, and information that you send to us through this website may not be protected by the attorney-client privilege. Please DO NOT send any confidential information to us through this website.)
