updated June 2006
Important
Recent Changes
in Tax and Estate Planning Laws
Contents:
A.
New Medical Privacy Rights Law (HIPAA) Could Render Your Existing
Powers of Attorney
and Trustee Provisions Useless
The federal law known as the Health Information Portability
and Accountability Act of 1996, or "HIPAA", has all
but eliminated the right of your physician to give an opinion
as
to your competency, or lack
of competency, without a detailed authorization signed by
you and referring to the specific provisions required under
the
Act.
Without
this form,
your appointed decision maker, in many cases, would have
to get a court order to act on your behalf under your power
of
attorney
or
living
trust. This is a serious problem and could cost thousands
of dollars in unnecessary legal fees and court costs. It
is our
opinion that
everyone needs to execute a HIPAA form. If you would like
more information about the HIPAA form, please contact us
at 415-925-5200.
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B.
Continual Changes in the Federal Estate Tax Exemption through
2011
The per-person federal estate tax exemption was raised in several steps from $625,000 in 1998 to $2,000,000 in 2006, 2007 and 2008. In
2009 the exemption
will increase again to $3,500,000. In 2010, estate taxes are completely eliminated, and
in 2011
estate taxes are
reinstituted with a $1,000,000 exemption (yes, all the
way back to $1,000,000!).
Because
of the shifting nature of the exemption amount, your estate plan
provisions should
be reviewed to determine
if
they are still effective
or necessary. We strongly recommend that couples who
have Bypass, Residual or Exemption Trusts, in particular, review
their estate plans. An unnecessary
Exemption Trust could result in avoidable capital gains
taxes and become an unfortunate administrative burden
and/or
financial
hardship on the
survivor and future heirs
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C.
New IRA and Annuity Beneficiary Rules
The laws regarding transfer and income taxability of IRAs
and annuities at death have dramatically changed. If
your estate has substantial
tax-deferred assets we highly recommend review of your
beneficiary designations to be sure you are taking full
advantage of
the new rules.
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D.
The New California Domestic Partnership Law Has Revolutionized
the Law
California's new Domestic Partnership Law grants legal
status, benefits, and obligations to unmarried couples
who register.
It applies to couples
of the same sex and to some heterosexual couples over
age 62. This law creates, among other things, intestacy
rights
and property tax
exemptions for qualified couples. You should seek immediate
advice if you think this law might apply to you.
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E.
Greatly Increased Probate Court Fees
Due to the state’s budget crunch the legislature has
imposed dramatic fee increases for probate filings,
which were already
extraordinarily high in the state of California.
This is another reason to use a
revocable living trust to avoid probate, even if
your estate is not in a federal
estate tax bracket.
New Probate Court Filing Fees
| Estate Asset Value (no deductions for mortgages or other debt): |
Fee |
| • Under $250,000 |
$320 |
| • $250,000 to $500,000 |
$385 |
| • $500,000 to $1,000,000 |
$485 |
| • $1,000,000 to $1,500,000 |
$1,135 |
| • $1,500,000 to $2,000,000 |
$2,135 |
| • $2,000,000 to $2,500,000 |
$2,635 |
| • $2,500,000 to $3,500,000 |
$3,635 |
| • Greater than $3,500,000
|
$3,635
|
plus 0.2% of estate
value over $3.5M |
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F.
Proposed Changes in Medi-Cal Rules
California is considering a change to the exempt
status of assets for Medi-Cal eligibility. If you
are counting
on Medi-Cal
to cover the
cost of nursing home care, you should seek advice
on Medi-Cal planning to protect your home and/or
other
assets.
Please
contact us if you would like more information about these new
laws and regulations. You can download a printable PDF of these
law changes by clicking here.
Also,
see our questionnaire to
help you determine if you need to review your estate plan.
