NY Budget Proposal - Eliminate Estate Tax; State Takeover Medicaid Costs

Category: Elder Law, Estate and Inheritance Tax

From Newsday.com - Pataki proposes $110.7 billion budget: "Gov. George Pataki proposed a $110.7 billion state budget plan Tuesday that would reduce property, income and business taxes by $3.2 billion even while pumping up spending on education and energy independence." This article outlines the basic budget package proposal.

Key agenda items are (1) elimination of the New York Estate Tax, and (2) a state takeover the Medicaid program, which is currently administered on the county level, and funded through through the joint efforts of the county, the state and the federal government.

One response to the proposed elimination of the New York Estate Tax from Newsday.com - Elimination of estate tax will cost state millions:

"In the budget unveiled Tuesday, Pataki proposed doubling the amount free from the state's estate tax to $2 million starting in 2007, bringing the exemption in line with federal rules. The exemption would rise to $3.5 million in 2009, and the tax would be eliminated in 2010. While federal law calls for the federal estate tax to be restored in 2011 with a $1 million exemption, New York's tax would disappear permanently.

It could be difficult, however, to get the plan through the state Legislature, where Democrats are looking at it with a critical eye. The state estate tax is expected to bring in $868 million during the fiscal year ending March 31."

One response to the Medicaid issue from ABC affiliate weny.com : 'At the county level, Pataki proposed a $1.1 billion state takeover of Medicaid costs.
"Counties will no longer have spiraling Medicaid costs that push county property tax higher," said Pataki.
"It's good news," said Chemung County Executive Tom Santulli. "But we've got a lot of work to do."
Santulli says the county will still have to foot a $120 million Medicaid bill despite Pataki's proposal.
"That's in growth, not in existing program," Santulli explained. "The program is no smaller than it was before."'

US Supreme Court - Oregon's Assisted Suicide Law Legal

Category: Elder Law, Estate Planning, Miscellaneous Musings

From Wills, Trusts & Estates Prof Blog - the United States Supreme Court Upholds Oregon's Assisted Suicide Law:

"The United States Supreme Court has upheld Oregon's assisted suicide law in a 6-3 opinion released today (January 17, 2006).

In 2001, United States Attorney General John Ashcroft determined that assisted suicide was not a legitimate medical practice and thus doctors who prescribe the deadly drugs would be in violation of the Controlled Substances Act (CSA)...

In today's opinion, authored by Justice Anthony Kennedy, the court recognized that the federal government has the authority to punish drug dealers and pass rules for health and safety but that in the case of Oregon's"

See also: Supreme Court Upholds Oregon Suicide Law, AP, Jan. 17, 2006.

"The Supreme Court upheld Oregon's law on physician-assisted suicide yesterday, ruling that the Justice Department may not punish doctors who help terminally ill patients end their lives.

By a vote of 6 to 3, the court ruled that Attorney General John D. Ashcroft exceeded his legal authority in 2001 when he threatened to prohibit doctors from prescribing federally controlled drugs if they authorized lethal doses of the medications under the Oregon Death With Dignity Act....

A Pew Research Center for the People and the Press poll released Jan. 5 found that 46 percent of Americans support a right to assisted suicide while 45 percent oppose it. Assisting suicide is a crime in 44 states, including Maryland, as well as the District. It is a civil offense in Virginia. In three states -- North Carolina, Utah and Wyoming -- the law neither prohibits nor permits assisted suicide. Ohio's Supreme Court has decriminalized assisted suicide, but state regulations do not condone it.

State referendums supporting assisted suicide have failed in California, Maine, Michigan and Washington. A bill failed in Maryland in 1995 and 1996."

One Trust, Two Trusts, Can you Merge Trusts?

Category: Estate Planning, Tax Law and Planning, Probate and Estate Administration

From the blog Rubin on Tax, a summary of PLR 200552009, issued December 30, 2005, discussing the tax consequences of two trusts with similar trust merging for administrative reasons (who wants to administer and pay administration expenses on 3 trusts when you can do it for just one?):

"In a recent Private Letter Ruling, the IRS provided that where several identical trusts combined into one trust with similar terms, and all the trusts held similar assets, the merger would not generate gain or loss to the trusts or their beneficiaries. The IRS further went on to provide that the tax attributes of the trusts merged into the new trust, such as net operating loss carryforwards and tax basis, would carry over to the new trust."

Note that a private letter ruling or PLR is only authority for that taxpayer, and cannot be relied upon by any other taxpayer. However, it is an example of the IRS's analysis of certain issues.

In doing estate planning, consider how well the distributive terms of any irrevocable trust you create, such as a life insurance trust or ILIT, match the distributive terms of your Will, or other testamentary document. To the extent that the trust terms for your children match, for example, then the Trustee may be able to combine the insurance trust with the trust created under your Will and only administer one trust per child. The key to being able to match these terms over time is to give someone a power over your irrevocable trusts to modify the distribution terms to the beneficiaries, so that as you modify your will over time, the trust terms can follow.