As a follow up to our notice of last week, it would appear that no deal has been reached for the extension of the current Federal Estate Tax. Instead, the Federal Estate Tax expired 12/31/09 and we will move into 2010 with the Federal Estate Tax repeal in place.
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.
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%.
A Power of Attorney is an important document that allows you (“the principal”) to appoint an agent to make decisions concerning your legal and financial matters in the event you are unable to do so for yourself. If you have not executed a Power of Attorney document and you become incapacitated, a guardianship court proceeding will be required to authorize someone to make legal decisions on your behalf. A guardianship proceeding can take several months and cost several thousand dollars to complete. The good news is that creation of a valid Power of Attorney can avoid the necessity of a guardianship proceeding. As such, the execution of a Power of Attorney document is a very important estate planning tool.
Uncertainty in life is a certainty. Our lives are in a constant state of flux, which requires planning in order to be in a position to address the unforeseen. Estate Planning and Asset Protection applies to almost everyone, regardless of age. As a person ages, they may be concerned about planning for the cost of their care while continuing to maintain their lifestyle, and about transferring their wealth to their children with minimal tax consequences.
Over 100 Million American adults have not designated an agent to make medical decisions or documented the type of care they desire. Although it can be a difficult issue to tackle, it is important for all adults to think about who would make certain medical decisions for them in the event they were too sick to convey their wishes personally. In some cases, the individuals assume that their spouses or children can step in and take over the medical decision-making. However, New York is one of a few states that do not automatically authorize families to make critical medical decisions for loved ones who lack the capacity to decide for themselves. Unfortunately, this fact is often not discovered until it is too late. As a result of the failure to specifically designate an agent to carry out your wishes, your family members and doctors could face bitter, lengthy legal battles in an effort to determine what treatments you would want.
Given the current state of the world economy and recent local events, many of our clients have expressed a desire get their financial and household business matters in order. There are three basic estate planning documents that all individuals should consider when planning and organizing a life plan strategy, although the specific content of those documents will differ by personal circumstances.