Upstate Estate Law, P.C. Blog

A recent development on the federal estate tax.  Senators Kyl and Lincoln are still working together to enact legislation fixing the current estate tax regime.  Under their proposal, the estate tax will return in 2011 with an exemption of up to five million dollars per person, ten million dollars per couple, to be indexed for inflation.  There would be a return to stepped up basis for inherited assets.  The rate of tax would gradually be reduced to 35%.

A novel idea is also to give estates of persons passing away in the year 2010 the choice to either pay estate tax under the new system and receive stepped up basis, or not pay estate tax and deal with the carry over basis rules and the resultant capital gains taxes. Such a decision calls for an evaluation of the economics of paying the estate tax versus paying the capital gains taxes (generally, smaller estates will be better off paying the estate tax and getting the stepped up basis for estate assets, while larger estates far in excess of the exemption would likely be better off paying the capital gains tax).  Such an evaluation would be similar to the evaluation currently undertaken to determine whether it is more beneficial to report estate asset values as of the date of death versus the alternate valuation date.  

Back to my all too familiar refrain on this issue: stay tuned.

First off, this Yankees fan would like to say thank you to George Steinbrenner for his successful stewardship of the New York Yankees over the past several decades.  RIP The Boss.  As a friend of mine said, somewhere in heaven Thurman Munson, Billy Martin, and George Steinbrenner must be having their long-awaited sitdown.

Now to blog business.  From a purely estate tax point of view, George Steinbrenner picked a pretty good year to pass on. There is no federal estate tax this year. The estate tax savings can be measured in the hundred’s of millions of dollars, considering a net worth north of one billion dollars.  I believe The Boss was domiciled in Florida, a state with no state estate tax, which results in additional estate tax savings.   On the other hand, The Boss may have owned some real property in New York, a state that can take a fairly good bite out of an estate with its estate tax.  But with no really good information as to his holdings and estate plan, it would be mere speculation to estimate what the New York estate tax might be.

It is more interesting to think about the possibility that Click here to finish this post.

The death of another celebrity has apparently led to more estate litigation and bickering about who is entitled to the assets left behind. Gary Coleman died on May 28, 2010.  The reporting is raising some interesting issues for probate lawyers.  The bare bone facts, as reported by various news outlets, appear to be as follows:

1. Gary Coleman executes a Last Will and Testament in 1999 and a new Last Will in 2005.

2. Gary Coleman marries Shannon Price on August 22, 2007. Neither the 1999 nor 2005 Last Wills mentions Ms. Price, naturally.

3. In the end of 2007, Gary Coleman executes a Codicil (Amendment) to his 2005 Last Will, giving his entire estate to Ms. Price.

4. Gary Coleman and Ms. Price divorce on August 12, 2008, but apparently continue living together until his death on May 28, 2010.

While the Gary Coleman estate will in reality be subject to the laws of the state of Utah, there are several scenarios that could play out under South Carolina law with this set of facts. Click here to finish this post.

Happy Independence Day everyone! Be safe.

Well, we are almost through one half of the year 2010, and there is not much news to report on what will happen to the federal estate tax. As you may know, pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), there is no federal estate tax in 2010. There is also no estate tax in South Carolina this year, as has been the case since January 1, 2005.

In December 2009, the U.S. House of Representatives passed a tax bill that would make the 2009 federal estate tax law permanent, thus locking in the 3.5 million dollar per person estate tax exemption and 45 % top tax rate. The Senate never took up this bill. There has been some political rangling in the Senate lately, but Democrats are unwilling to take up a bill unless they are fully confident they can get a floor vote.  The reasons for this are beyond the scope of this post, but suffice to say that political rangling is preventing new federal estate tax legislation.

With the possibility of a double dip recession looming, the oil spill that will not end, and mid-term elections coming up that may dramatically alter the make up of Congress, one wonders whether anything will happen on this issue. 

What is interesting is what will happen to South Carolinians Click here to finish this post.