Federal Estate Taxes Still Being Discussed

Here is another story discussing the possible extension of the federal estate tax into 2010. According to the article, not the tax may be extended into 2010, but the exemption level may be increased to $5 million per person.

Remember, until the legislation is signed, it is just a proposal. There is no definitive change yet.

Wal-Mart Rolls Out Caskets....

Yes folks, the funeral industry has a new supplier to compete with....Wal-Mart has just begun selling caskets on-line. Prices range from $500 to $5,000. And, under federal law, funeral homes are required to accept 3-party caskets.

What is a Flower Bond?

The Power of Attorney for Finance forms I prepare for my clients includes the authority for the named agent to deal with issues related to "flower bonds". Every now and then I have a client who asks, what is a "flower bond". Here is a great definition:

Any of a limited series of U.S. government bonds that may be used at par to pay federal estate taxes. The bond is unique because there is no minimum time for which it must be held; further, its holder does not have to wait until maturity to use it at par for paying the tax. Flower bonds have not been issued since 1971.

Walter Cronkite Leaves Papers to University

The following NYTimes article provides a nice summary of the will of Walter Cronkite, in which he left his papers to the University of Texas.

The will bequeaths Mr. Cronkite’s personal papers to the university, a process that started before his death on July 17 but will now end with the release of materials he had held onto at his office and homes in Manhattan and on Martha’s Vineyard.

Much of the newsman’s other assets will be divided among his three children: Walter Leland III, known as Chip; Mary Kathleen, known as Kate; and Nancy Elizabeth. Chip Cronkite said the family was happy that so many of his father’s papers would be kept by the university.

I have often encouraged clients to consider leaving photos and other heirlooms to a museum or culture center where they can be enjoyed by many. My own family is considering doing this with some items my father had inherited from his Swedish ancestors.

Federal Estate Tax and Cost-Basis

The Wall Street Journal ran an interesting article on the estate tax. Here is something that struck me:

At issue is the "step-up in cost basis" that all assets receive when an owner dies. The way the law is currently written, if the estate tax goes away, so does the step-up in cost basis. That's where the problem lies.

Step-up means that the property heirs receive is valued as of the date of death. So if Grandma leaves a grandchild stock selling for $75 a share that was bought in 1970 for $2 per share, the heir's "cost basis" in the stock is $75. If the grandchild then sells the stock for $80, the taxable gain is $5 per share. The same holds true for both real estate and personal property, like an heirloom ring or art.

If Congress fails to extend the current system for 2010, then at the owner's death all assets would retain their original cost, called "carry-over basis." Under this system the heir's stock would have a cost basis of the original $2 per share rather than $75. If he then sells the stock at $80, the taxable gain would be $78 instead of $5—a huge difference.

Webcasting Funerals

Here is another story about the convergence of technology and death; webcasting funerals. Yes, at first this might seem a bit odd, but the story offers several reasons why this might attract customers. Recent customers included military personnel stationed overseas, a women 9 months pregnant and unable to fly, and a women in the hospital and unable to leave. The article states that younger generations are sharing more and more of their lives on-line, and that trend is entering the funeral business.

Remember, in Wisconsin a person can complete a Authorization for Final Disposition form, which allows you to appoint someone to be in charge of your funeral and to leave specific instructions. Webcasting might be something you'd want to mention on such a form.

I'd be curious to hear from those who have experienced this type of service. And thanks to my husband who spotted this article.

If you seen an article or have a topic you'd like to know more about, please leave a comment.

Movement on the federal estate tax

Monitoring a legal blog kept by a law professor, I came across a report that Rep. Schrader (D. Oregon) introduced H.R. 3841, a bill "[t]o amend the Internal Revenue Code of 1986 to repeal carryover basis for decedents dying in 2009, to increase the estate tax exemption to $5,000,000, and to reduce the maximum estate and gift tax rate to 45 percent." Only time will tell what will come out of DC, but it certainly looks like the current law will be changed soon.

Upcoming Estate Planning Seminar

On Saturday, November 7th, at 1pm, I will be giving a free seminar on estate planning and charitable giving for the John Muir Chapter of the Sierra Club. The presentation will be held at the First Unitarian Society, and will be followed by a tour of FUS' new, "green" addition. Learn more about this FREE event, that is open to the public, by clicking here.

Picking a Power of Attorney for Health Care

Every seminar that I conduct has a component devoted to discussing powers of attorney for health care. During the discussion, I encourage people to really think about who they name as their health care agent, and the back-up. Never go with someone out of a sense of obligation, rather, select the person who is right for the role. Who, in your circle of family and friends, is right? Here are a few points to consider:

• who is comfortable dealing with doctors and other medical staff;
• who will be able to handle seeing you in a very ill state;
• who will speak for you, based on wishes you communicated earlier, and not simply state what they want; and
• who has the time to be at the hospital or long-term care facility.

This last point is one that challenged me during my father's recent illness and death. When we first drafted his forms, I was married, but childless. However, I now have a young child, and being at the hospital was a challenge -- my father was there nearly a month before passing away. Having a young child, too young to be spending more than an hour at a hospital, did not prevent me from being a back-up agent, but it did present challenges. Thankfully, I was available via phone and carved out as much time as I could to be physically present.

What is palliative care?

"Palliative care", up until August I had a vague sense of what this phrase meant. Now, I have a much better understanding having been at my father's side during his last illness, decline, and recent death. It was a Friday when his physician said "he is not going to recover from this illness, we'd like to have you speak with the doctors from palliative care".

I knew it was like Hospice, but I was not able to give a good, concise definition. We met with palliative care team, and the decision was made to transfer my father to their unit. What did it mean? Palliative care does not mean "non-medical" or "non-treatment". Instead, the medical treatment is for comfort rather than curative measures. Comfort, not a cure -- that was the goal. Hospice, the term I was much more familiar with, is a brand of palliative care, a company name essentially.