A Matter of Law
Winter
March 2010
Roe Taroff Taitz & Portman, LLP
31 Oak Street
Patchogue, New York 11772
 
Tel: 631.475.4400 Fax: 631.475.9882 
Greetings!

We hope that this snowy winter finds you safe and warm.  Our third issue is packed with information that can save you money when it comes to Estate Planning and tell you how your motor home just might not be your castle.  In addition, we have a contribution from Simon Mercado,  a student at Wake Forest University.  Simon is the son of one of our staff members.
 
Sincerely,
Steve Taitz, Esq.
Roe Taroff Taitz & Portman, LLP
 
FEDERAL ESTATE TAX REPEALED FOR 2010 
 
WOW! No Federal estate tax for 2010. Those who are reading this are glad we survived 2009. At that time, the Federal estate tax exemption was $3,500,000.00 per person.
 
So is the repeal good news? The answer is: not necessarily. With repeal came the concept of carry-over basis. This means that if someone dies in 2010, there is no automatic step-up in basis for assets owned by a person at the time of death.
 
For example, assume a person has stocks valued at $100,000.00 at the time of purchase, but $500,000.00 at the time of death. Last year, there would be no Federal estate tax because the stocks would get a step-up in basis to the date of death value of $500,000.00. When the stocks are sold, there will be no capital gain tax. And since the stocks are less than $3,500,000, there would be no Federal estate tax.
 
Now, however, the basis is $100,000.00 and when the heirs later sell the stock, there will be a capital gain tax to pay on the $400,000.00 of gain. Thus, there is a capital gain tax even though there is no estate tax. This is not a nice "surprise".
 
Most of us will not die in 2010. But that doesn't mean we shouldn't check our Wills. Please do so as soon as you finish reading this.
 
If your Will contains a fractional division of your assets upon your death, that is into a by-pass amount and a marital deduction amount, then you should probably seek advice to see whether or not your Wills should be changed.
 
On January 1, 2011, the Federal estate tax will return. However, the exemption will be only $1,000,000.00 and with inflation, it should be $1,340,000.00 per person. In addition, if there is a surviving spouse, an additional $3,000,000.00 of assets could be sheltered from estate tax.
 
Why is this important? The Federal estate tax rate will jump to 55% for Federal estate tax purposes on assets in access of the allowable exemptions. Please remember that the New York State estate tax maximum rates are 16% for assets in excess of $1,000,000.00 per person.
 
If you are feeling "overtaxed" with all of this, please feel free to contact John J. Roe, III for a review of your planning documents.
 
Even if you don't have any formula clauses in your Wills, you should probably contact us because the New York State form of Power of Attorney has been drastically altered. Powers of Attorney are important. Only in a rare instance will someone use the Power of Attorney to inappropriately take assets from the donor of the power.
 
Please look at your Powers of Attorney and call John J. Roe, III to make an appointment for any changes you think are required.
 
Upcoming Community Events
                 Nine the Musical
                 Feb. 22 - Apr. 20
________________________________ 
                Mozart and More  
                 March 27 8pm
                The Amazing Kreskin
                 May 8 8pm
LATER WILL BE TOO LATE
 As Reviewed by Simon Mercado
 
 "Later will be too late." Thomas Friedman's words echoed throughout Wait Chapel of Wake Forest University as over 2,000 people listened intently to the wisdom of the three time Pulitzer Prize winner. Friedman had come to Wake Forest University in Winston-Salem, North Carolina on February 10th to begin a two-day Voices of Our Time lecture series on energy.
 
His one-hour long speech was centered around his newest book, Hot, Flat, and Crowded- Why We Need a Green Revolution-And How It Can Renew America. Friedman's well-known reputation and oratorical prowess provided the audience with a compelling argument in favor of a Green Revolution. He asserted that the time is now for the United States to initiate a globalized ideology pertaining to the environment. Friedman claimed that we are currently in the midst of the beginning stages of a new revolution known as the Energy Technology Revolution. In this new era, our tireless efforts at continual technological advancement must be geared towards energy efficiency.
 
Friedman briefly addressed the problem of American complacency and how it could potentially hinder the ET Revolution. He admitted that ever since the end of the Cold War, Americans had developed a habit of perpetual laziness and overall indifference to hard-work. However, Friedman asserted that the American complacency has no place within the realms of energy efficiency. The recently adopted American ideology of "I'll do it later" must cease to exist because when it comes to preserving the environment, later will ultimately be too late.  
In This Issue
FEDERAL ESTATE TAX REPEALED
COMMUNITY EVENTS
LATER WILL BE TOO LATE

A MAN'S HOME RULED NOT TO BE HIS CASTLE
 
Lester P. Taroff, a Partner in the firm's Creditors' Rights Department, received a decision from the Supreme Court of the State of New York, County of Suffolk, which denied a judgment-debtor the right to claim a homestead exemption for his "motor home".  Under New York law, CPLR ยง5206, there exists a $50,000.00 Homestead Exemption to enforcement of a money judgment against the judgment-debtor's principal residence.   Included in the exemption statute as property covered by the exemption are "mobile homes".
 
The firm's client had obtained a judgment against the owner of the recreational vehicle "RV" and sought to have it sold by the Suffolk County Sheriff to satisfy the judgment.  The judgment-debtor objected to this action, claiming it to be a "motor home" and his primary residence, continuously occupying it as such for over a year, and therefore entitled to the Homestead Exemption under New York law.
 
In a decision of first impression, Justice Paul J. Baisley, Jr. concluded that a "motor home" or "RV", as opposed to a "mobile home", did not qualify for the Homestead Exemption.  The Judge concluded that, after applying common definitions of each, the "mobile home" was designed to be a semi-permanent structure and that a "motor home" was "...a large motor vehicle equipped as living quarters." 
 
It is obvious that a "motor home" is essentially an automobile.  An automobile owned by a judgment-debtor can be seized and sold to satisfy a judgment.   A proper result was inevitable under that rationale.
 
The vehicle was sold at Sheriff's auction in 2009.  The client was very pleased with the result and, as the successful bidder, left on vacation to see America via the Interstate Highway System.
 
For more information on this topic please contact Lester Taroff or Elliott Portman. 
 
 
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