Change of Estate Tax Law

Wednesday, August 19th, 2009

Wealthy residents from Connecticut usually flee to Florida in avoiding the estate tax in the state.  But now, they don’t need to do that because there’s a new law (House Bill 6802) enacted on Sept. 8.  The law states that deaths occurring from January 1, 2010 onwards, as much as $3.5 million worth of estates and gifts will be exempt from tax.  This raised the threshold for taxable gifts and estates from the existing $2 million level.

In Connecticut today, when the estate is exactly $2 million, there will be no estate taxes paid.  However, an estate of $2,000,001 pays Connecticut $101,700 in taxes.  Fortunately, this will change beginning 2010.  The new legislation will not only increase the threshold exemption, it will also reduce the rates by 25%.  For instance, a $5.1 million estate which currently pays Connecticut $402,800 will only pay the state $130,200 if the death occurred after year-end. 

This means that you can now stop avoiding Connecticut in planning and establishing your residence.  State Rep. (R-149^th Dist.) Livvy Floren said, “These changes may be considered good step toward the right direction.”  So if you’re a resident of Connecticut or you have real property there, you might want to revisit and make current your estate plan with an attorney soon.  

Tags: attorney, Connecticut, estate plan, estate tax, Florida, gifts, law, Livvy Floren, state, wealthy
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What Do You Need?

Friday, August 7th, 2009

A Harris Interactive poll (2008) found that 55% of adults don’t have wills.  Maybe some don’t want to think about dying, but the truth is: majority doesn’t know how to start one or who to talk to.

An estate plan may be as simple as creating a will or it could also be as complex as building up a living will or trust.  You can talk with a qualified attorney to be enlightened on this but remember that it’s important to create one because you want to ensure the destiny of your assets as well as your children.  When you don’t have any of these, the state will have a free hand on where to take your money and your children along with it when you pass away.

Choose what you need.  A will is an instruction document that states your assets and the individuals or institutions where you want to give it to.  Most wills go to probate after your death.  A probate court will oversee inheritance distribution and debt payment.  A living trust sets up conditions on when and how to distribute your assets.  This will help reduce the taxes paid and avoid probate.  Finally, a living will provides an assignment of medical power of attorney given to a person you trust.

Tags: assets, attorney, death, estate plan, Harris Interactive poll, living will, probate, state, trust, Wills
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Never Procrastinate

Monday, August 3rd, 2009

When faced with a difficult decision, people naturally procrastinate.  For example, planning on your own demise is the most common thing that you delay until it’s too late.  Remember that wills are important even if they’re not mandatory.  Your affairs will be decided by the state if you don’t have a will when you die.  And worse, someone else will make your healthcare and financial decisions when you’re no longer able to make it on your own.

Here are some of the negative consequences when you don’t make a will:

• *Your preferences for burial instructions and life-support procedures may not be exactly followed.
• *The state may decide over your minor children’s guardianship.
• *A court-supervised probate may hold your estate which can result in costly fees.

To prevent these scenarios, you need to prepare any or all of the following: Will, Revocable Living Trust, Durable Power of Attorney (both financial and healthcare), and a Living Will.  Remember to date, sign, and notarize them for safekeeping as well as review them periodically most specially if there are changes in your family situation (death of a beneficiary, new child, divorce, or marriage).  To further eliminate conflicts, compare the trust or will beneficiaries to the ones named in your retirement plans or insurance.

Tags: decision, durable power of attorney, fees, financial, guardianship, healthcare, living will, planning, probate, revocable living trust, state, trust, will
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