Preview of the Proposed New Tax Relief Act of 2010–Conclusion

 

 

Changes to Regulated Investment company (RIC). 
Do you have investments in an offshore owed Regulated Investment company (RIC).  Here’s what changes you might be able to expect if the current bill is extended.

 

Estate tax look-through of certain Regulated Investment Company (RIC) stock held by nonresidents. Although stock issued by a domestic corporation generally is treated as property within the United States, stock of a RIC that was owned by a nonresident non-citizen is not deemed property within the United States in the proportion that, at the end of the quarter of the RIC’s taxable year immediately before a decedent’s date of death, the assets held by the RIC are debt obligations, deposits, or other property that would be treated as situated outside the United States if held directly by the estate (the “estate tax look-through rule for RIC stock”). The proposal permits the look-through rule for RIC stock to apply to estates of decedents dying before January 1, 2012.

 

By the time you read this, much may have been changed.  What we know for sure is that there will be change and it will impact our elder and special needs clients.  Please consult with us, or with an appropriate elder law attorney as you make decisions that will impact your taxable situation for the coming years.

 

Your friends at…

 

Cohen & Oalican

Boston Elder Law Attorneys
Raynham Elder Law Attorneys
Andover Elder Law Attorneys

Preview of the Proposed New Tax Relief Act of 2010 - Part 4

 

Once again.. this is a preview of what is currently under discussion.  It is NOT law, and should not be looked at as political, legal, or financial advice.  This is only  a brief look at some of the currently debated act, as it impacts our senior clientele.

 

Tax Free Distributions to Charity from IRA Account
Continuing on the theme of philanthropy, if approved, there will continue to be opportunity to make charitable contributions from your retirement account without attracting a tax penalty.

The bill if approved in its current form extends through 2011 the provision that permits tax-free distributions to charity from an Individual Retirement Account (IRA) of up to $100,000 per taxpayer, per taxable year. The bill allows individuals to make charitable transfers during January of 2011 and treat them as if made during 2010.

 

To Be Continued…

 

Your friends at…

 

Cohen & Oalican, LLP

Boston Elder Law Attorneys
Raynham Elder Law Attorneys
Andover Elder Law Attorneys

Preview of the Proposed New Tax Relief Act of 2010 - Part 3

 

 

Once again.. this is a preview of what is currently under discussion.  It is NOT law, and should not be looked at as political, legal, or financial advice.  This is only  a brief look at some of the currently debated act, as it impacts our senior clientele.

 

Estate Tax
Top on the list for most of our elder law clients, is preserving their estate.  Below are the changes, verbatim, on what we may expect to see in tax relief in Estate Taxes.

Temporary Estate Tax Relief
Temporary estate, gift and generation skipping transfer tax relief. The EGTRRA phased-out the estate and generation-skipping transfer taxes so that they were fully repealed in 2010, and lowered the gift tax rate to 35 percent and increased the gift tax exemption to $1 million for 2010. The proposal sets the exemption at $5 million per person and $10 million per couple and a top tax rate of 35 percent for the estate, gift, and generation skipping transfer taxes for two years, through 2012. The exemption amount is indexed beginning in 2012. The proposal is effective January 1, 2010, but allows an election to choose no estate tax and modified carryover basis for estates arising on or after January 1, 2010 and before January 1, 2011. The proposal sets a $5 million generation-skipping transfer tax exemption and zero percent rate for the 2010 year. 5 of 12

Conservation Gifts & Capital Gains
For those clients considering the philanthropic disposition of property for purposes  of conservation, the following is being contemplated.

Extension of provision encouraging contributions of capital gain real property for conservation purposes. The bill extends for two years (through 2011) the increased contribution limits and carry forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes.

 

To be continued…

 

Your friends at…

Cohen & Oalican, LLP

Boston Elder Law Attorneys
Raynham Elder Law Attorneys
Andover Elder Law Attorneys

Superior Court Upholds MassHealth Applicant's Sale of Property to Daughter:

Part 2
A Summary of Clark v. Dehner

Superior Court Decision

The Superior Court overturned MassHealth's decision, finding that the transaction between Susan and Michelle was valid and should not be considered a disqualifying transfer. The Court determined that the transaction was for fair market value, and that the promissory note satisfied all of the regulations requirements, in that it was actuarially sound, provided for equal payments, and prohibited cancellation at Susan's death. The Court disagreed with MassHealth's determination that the note was not reasonably enforceable because the transaction had occurred between family members. The Court acknowledged that there was no guarantee that Susan would sue Michelle in the event that she defaulted on the note. However, the Court noted that it was inappropriate of MassHealth to assume that Susan would not seek to enforce the note by all available means.

Conclusion

Practitioners and clients should be encouraged by the Court's decision in Clark. The decision validates transactions between family members using promissory notes, which can be a valuable last-minute planning option for clients needing immediate long-term care in a nursing home. Clark also offers practitioners with a creative planning opportunity to cure disqualifying transfers into irrevocable trusts, while preserving the value of the transferred asset for the family. The decision is also an important step in reversing MassHealth's trend of dissallowing long-term care planning techniques between family members set into motion by the implementation of the DRA. However, even in light of this favorable decision, practitioners are urged to be cautious and draft promissory notes and related agreements between family members in strict accordance with MassHealth's regulations.

United States Treasury Regulations require us to disclose the following in connection with this message: Any tax advice included in this message and its attachments was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.

Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.

Review the Deed to Your Home - You Might be Surprised What it Says!

Did you know that how you own your home during your life determines who receives it upon your death? There are several ways a person can own a home. Therefore, there are different possible outcomes concerning who receives that house upon your death.

For most of our clients, the home is their most valuable asset. So, its often a big surprise when folks realize the deed will override a conflicting bequest in their will regarding the disposition of real estate. If you’re the only owner on the deed (meaning there are no other person identified as owners with you), then the real estate is a probate asset. This means that your will determines who receives that house when die. In that case, make certain your will represents your current wishes. Otherwise, that house could pass to that nephew you liked twenty years ago, but can’t stand any longer. By the way, if you don’t have a will, the state in which you live has one for you. That’s called “intestate” law and it’s a set of default rules about the who gets your property.

If you own a home with another person, the deed gets much more complicated. This is because deeds are chock full of old legal terms that can confound a homeowner. A good elder law attorney can explain the implications of the deed. However, to get a head start, look for certain terms in that deed.

Here’s a few critical terms to look for:

“Joint Tenants” - that means if you die, your share of the house automatically passes to the surviving other owners. In that case, it doesn’t matter what your will says, a joint deed determines where the house goes, not your will. One benefit of joint ownership is that it avoids probate. It’s a convenient way to pass on real estate as long as the joint owners are the persons you wish to receive your share of the property.

“Tenants-in-Common” is a deed which defers to your will. If you own your home as “tenants-in-common” with two other people and you die, your one-third of the house passes according to the terms of your will and not automatically to the other two owners of the house. The benefit of this type of ownership is that you can change who receives your share simply by signing a new will. The downside is that will must be probated with court to pass your interest in the real estate interest to your heirs.


Cohen & Oalican, LLP provide a full spectrum of services for the elderly, for disabled adults, and for the families.