Matthew Curtiss, Esq

Fishing Friday- 5.29.09

TheDay.com - Weather failing to cooperate.

Yeah it is.  I type this while looking out the window at a grey foggy river.  Water temps in New London Harbor are up to 56 degrees, so things are starting to heat up (figuratively, of course).  According to the posted article, it looks like bunker have left the Mystic River and the shad haven't moved in yet. 

This weekend will be filled with coats of varnish, dinghy repairs and the last steps to getting the boat ready for launching.

Senate OKs Probate Court reform bill - The Connecticut Post Online

Senate OKs Probate Court reform bill - The Connecticut Post Online.

It's all over but the signing by Governor Rell.

Life Insurance and its affect on Estate Plans

Life insurance is a useful tool to cover estate taxes when an estate tax is likely and a client may not have the liquid assets to cover it.  Many clients own real estate, interests in a family business, or other illiquid assets which the client may wish to preserve for future generations rather than sell to pay taxes.

Enter life insurance. 

But a problem is arising.  Clients have been able to depend on the the interest earned on life insurance plans to pay the annual premiums.  According to a blog post by Professor Paul L. Caron over at TaxProf Blog, the recent downturn in interest rates have decreased the amounts earned which may cause the policy owner to be liable for the premium.  As the Wall Street Journal article (which Professor Carton cites) states, the prospect of lapsed policies due to unpaid premiums is very real and such lapses are expected to increase.

One of the many reasons I appreciate belonging to the   Estate and Tax Planning Council of Eastern Connecticut and having talented and knowledgable insurance people available for help on issues such as this.

Fishing Friday- 5.22.09

Ahhh, Memorial Day Weekend.   A nice long weekend that is never as warm as you think it'll be. Either way, its supposed to be a nice one, and with the nice weather comes the bass.

Reports have striped bass arriving in The Race as well as in local rivers and estuaries.  According to that report, a 46" bass was recently caught in the Mystic River right near Mystic River Park!!!

I'm hoping to get out for at least a little bit to try out some cinder worm patterns.  Of course, there will be lawn mowing and general labor as well.

Have a great weekend.

Spring Clean your Estate Plan

I typically recommend a self-review of an estate plan every five years.  Changes in tax laws, adoption by states of powers of attorneys and health care power of appointments mean a plan put into place even in the early 90s might be ineffective or worse.

The New York Times published a little reminder that its a good idea to check on your plan before the estate tax laws change.

Even better, check on it now.  Documents drafted more than 5-10 years ago may not comply or deal with new laws: living wills that don't address the Health Insurance Portability and Accountability Act (HIPAA) , powers of attorney which don't comply with state statutes, and even worse, trusts which don't take into account the decoupling of the Connecticut Estate tax exemption from the federal exemption.  More on that to come in future posts.

Connecticut Probate Court reform imminent

Last night, as expected, the Connecticut house voted to reform the Connecticut Probate Court system.  Among other things, the number of courts would be reduced from the current level of 117 to "50 or less", according to the Hartford Courant.  The law would also require full-time hours, lawyers as judges, and other changes to standardize the court system.

The Senate is expected to act on the measure in the coming days.

Proposed Estate Tax changes for Wealthy Estates

The Obama Administration, faced with health care budget shortfalls , will be looking to boost tax revenues collectible on wealthy estates. 

One proposal, as cited by the Wall Street Journal article, is to allow only one valuation for a particular asset whether being gifted or whether inherited.  Its unclear how this rule will be applied in reality.  As the article states:

[t]hat is because the incentive is to undervalue items when paying the estate tax. But the incentive is to overvalue them when reporting gifts, so that the basis will be higher when calculating capital gains if the item is sold. Under the proposal, taxpayers would have to use the same value for both purposes.

Makes sense to me, but the actual impact of such a change on the average American estate will be minimal.  Also, the question arises on how such a valuation rule change would actually impact a single piece of property or a single taxpayer.  Yes, it closes a loophole, but maybe this loop isn't so big to make a difference in the amount of tax collected.

Either way, while the Treasury estimates that this change will collect more than $24B of the $60B it seeks to raise, it still will only impact "less than three-tenths of 1 percent of estates in any year". 

This is not a Test

I've been reminded by more than a few people that they miss this blog.  I will heed their call. Much to write about in the coming weeks, estate tax changes, a possible future for Connecticut pet trusts, fishing, and general randomness.  Enjoy.