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Estate Tax Update
FEDERAL ESTATE TAX:
In 2009, the federal estate tax cutoff point was $3.5 million, with rates of 45% on the excess. In 2010, there is NO Federal estate tax, but on 1/1/2011 (unless the law is changed before then) the federal estate tax returns with only a $1 million credit, and a 55% tax on the excess.
I will be sending out a Newsletter in early 2011 (or earlier if there are any changes) with an update on this issue.
MA ESTATE TAX:
Regardless of what happens with the federal estate tax credit, MA still has its own separate estate tax, with a threshold of $1 million (not set to increase). The $1 million is just a "threshold", meaning that if your estate exceeds $1 million, the entire estate is taxed in MA - at 6-16%.
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Federal and MA estate taxes apply to all assets at death, including real estate, bank accounts, stocks & bonds, IRA's, life insurance (full face value), and business interests.
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PLANNING IMPLICATIONS:
There are techniques to reduce Federal and MA estate taxes, passing more to your intended beneficiaries.
If your total assets are more than $1 million (including life insurance), your estate will incur up to a 16% MA estate tax (on the entire amount) - for example, a $2 million estate would owe over $300,000 before passing the rest to your family. This is REGARLDESS of the federal estate tax.
Here are a few scenarios:
1. Married couples with existing 2 Revocable ("A/B") Trusts for estate tax savings. These types of Trusts allow a married couple to reduce federal and MA estate taxes. Some existing Trusts will no longer maximize estate tax savings, and may actually cause an increase in the MA estate tax. If you're in this situation, you should have your documents reviewed, with possible amendments to the Trusts in order to maximize the MA estate tax savings.
2. Married couples with more than $1 million who do NOT have 2 Trusts in place. You should consider setting up 2 Trusts to reduce the MA estate tax that would be due upon your deaths, passing more on to your heirs.
3. Individuals with more than $1 million of assets. You may want to consider techniques such as Irrevocable Insurance Trusts (to pass your life insurance free of estate tax), or annual gifting to reduce your estate taxes.
4. Individuals or married couples with less than $1 million of assets). You should still have the essential basic estate planning documents in place to ensure that your intentions are carried out: Will, Power of Attorney, Health Care Proxy and HIPAA Authorization. In addition, you might consider a single Trust to avoid the 1+ year probate process upon death, ensuring that your assets pass smoothly and quickly to your intended beneficiaries.
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Powers of Attorney &
Health Care Proxies
Everyone should have a Power of Attorney* and a Health Care Proxy regardless of your other estate planning documents.
The Power of Attorney allows you to name someone to make your general and financial decisions for you during your lifetime. Although intended to be used if you are incapacitated, the common "durable" type is effective upon signing, and your named agent can act for you even if you are not incapacitated. Or you could choose the "springing" type, which would not be effective unless you became incapacitated.
The Health Care Proxy allows you to name someone to make your medical decisions for you during your lifetime, if you are unable to make or communicate them. You could also include "living will" provisons (stating your intentions re. artificial life support), and/or organ donation provisions.
There have been recent changes to the "HIPAA" regulations (laws that regulate who your medical information can be provided to). As a result, most Powers of Attorney* and Health Care Proxies should be re-done to incorporate these changes. In addition, everyone should have a simple "HIPAA Authorization form".
*Powers of Attorney should be re-done every 4-5 years (even if you have no changes), because many banks and other financial institutions will not accept older ones. |
| About My Law Practice
I have over 20 years experience in estate planning, probate and estate tax preparation. I handle all types of estate planning, from basic to complex, including strategies to minimize estate taxes and avoid probate. I walk clients through the entire process, including the necessary follow-up work after signing documents.
I also help clients navigate the legal process after a loved one dies - including Probate (or administration if there is no Will), Trust administration, and Federal and/or MA estate tax calculation, preparation and filing.
My philosophy is to explain things so that you can understand your choices and feel comfortable with the process and the ultimate documents.
I work with clients on all levels of estate planning, ranging from the young parents who need simple Wills, to wealthy clients who need estate tax planning.
I have offices in Brookline, Needham, and Wellesley.
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Message from Attorney
Robin Gorenberg
Thanksgiving is upon us - time spent with family and friends - time to be grateful and to reflect on what is important. Getting your estate plan in order is a gift - to yourself, to your family and your loved ones, giving you and your family peace of mind.
I wish all of you a happy and healthy Thanksgiving, and safe travels to those of you who are celebrating away from home.
Feel free to forward this to friends and colleagues who may find it informative. Just click the "forward" button at the bottom of this email.
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Should I wait until January to update my estate plan?
Not necessarily. If your estate is worth more than $1 million, no matter what happens with the federal estate tax, the MA estate tax still has a $1 million thresshold. Therefore, regardless of the federal estate tax, you should have documents that allow you to reduce the MA estate tax. There are also techniques that can save estate taxes if put in place before 2011.
If your estate is less than $1 million, the federal estate tax law won't impact you, and you should have the basic estate planning documents in place.
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Uniform Probate Code
In January, 2009, MA adopted the "Uniform Probate Code", which changes MA probate procedure . The new law makes MA more uniform with other states, adds protection for those under guardianship and beneficiaries of Trusts, and eases the probate and administration process.
Most of the changes that effect the probate of estates do not take effect until July, 2011 and I will be sending out a Newsletter to update you on the new laws. |
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I can provide you with referrals to outstanding attorneys for real estate matters, family/divorce, personal injury, medical malpractice, health care, and business law.
I also offer a realtor referral service, where I match you with the best realtor for you situation, based on the realtor's specific knowledge, location and experience, at no charge to you. For more information, go to www.real-estateconnections.com.
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Testimonials
"Ms. Gorenberg completed our estate with discretion, empathy and thorough understanding of the ins and outs of estate law. We highly recommend her."
"Robin is an outstanding estate attorney. She has been practicing for many years and is an "A" player."
"Robin is an exceptional professional. She is knowledgeable, thorough, experienced, an excellent communicator and a pleasure to work with. She works quickly, and makes herself available when you need her. Highly recommended."
"Top Notch Service" - I would highly recommend Robin for any legal work. Robin has proven to be very knowledgable and provided outstanding legal advice. We challenged her with some unique provisions and she was able to provide clear and concise responses which helped make it easier for us to understand. I found her to be pleasant and cooperative. Robin consistently responded to inquiries in a timely and effective manner."
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Read more at www.robingorenberg.com
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