Matthew Curtiss, Esq

Estate Tax Dormant, Billionaire’s Bequest Is Tax-Free - NYTimes.com

Dan L. Duncan, a soft-spoken farm boy who started with $10,000 and two propane trucks, and built a network of natural gas processing plants and pipelines that made him the richest person in Houston, died in late March of a brain hemorrhage at 77.

Had his life ended three months earlier, Mr. Duncan’s riches — Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world — would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher — 55 percent.

Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan’s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.

via www.nytimes.com

Let the teeth gnashing begin.

The estate tax due, had he died in 2009, could have more than $2B.  In 2010, the estate owes nothing.  Remember this when politicians start complaining about budget deficits.

Not to be lost here is the fact that in 2010, the "step up in basis at death" is now limited to $1.3M in gains.  Presumably, all of that estate tax lost by the government could be made up my the excess of gains in Mr. Duncan's holdings above that number.

And to be analyzed further: what if Congress passed a new estate tax and made the law retroactive to January 1?  more gnashing.

Thanks to Attorney Matt Berger for the tip.

Scattering Your Loved One's Ashes - WSJ.com

Her husband, Donald Mitchem, had died of a heart attack at age 42, and on that day in 2005, Ms. Paris was just beginning what would become a worldwide journey to scatter his cremated remains. Since then, Donald's ashes have been placed in two dozen locations, including the Coliseum in Rome, outside Ernest Hemingway's house in Cuba and under the Christmas tree at New York's Rockefeller Center.

More Americans these days are scattering loved ones' ashes widely, with great purpose and often without permission—an act known in the funeral industry as a "wildcat scattering." It's a reflection of both the marked rise in cremation and the growing desire by people to find their own ways to ritualize grief.

via online.wsj.com

Funerals are expensive, sometimes the costliest item of probating an estate. The "wildcatting" of cremation ashes are both a means to control costs as well as to personalize the memorialization of a loved one.

Thanks again to Attorney Matthew Berger for the heads up on this article.

State Death Taxes Are the Latest Worry - WSJ.com

With the federal estate tax disappearing for most people, state death taxes have emerged as a surprise new worry.

This year, the federal exemption rose to $3.5 million per individual, or as much as $7 million per married couple. At the current level, only 5,500 estates a year are federally taxable.

That is down from the 17,500 estates that would have faced death taxes under the previous $2 million limit, the Urban-Brookings Tax Policy Center estimates.

The problem is that most states with estate or inheritance taxes haven't raised exemptions to match the federal limits. That means thousands of taxpayers who now escape the federal levy could still get hit with a state death tax.

via online.wsj.com

As the Wall Street Journal points out, the Feds don't talk with the States regarding estate tax exemptions and vice versa. States are usually left to play catch-up once the federal estate tax changes are made. The last few years have been relatively quiet; though many practitioners have been awaiting some resolution regarding the Connecticut "cliff tax" which will be going away on January 1, 2010. As of that date, if an estate is valued over the Connecticut exemption, the estate no longer get taxed all the way back to "$1 and above" but only on the amount over the exemption.

As of 2010, Connecticut should be in better shape in terms of the differences between its estate taxes and the Federal estate taxes.

It’s Now Legal to Catch a Raindrop in Colorado - NYTimes.com

It’s Now Legal to Catch a Raindrop in Colorado - NYTimes.com.

When I was studying for the bar exam, I remember spending probably 5 minutes on water rights.  Riparian v. prior appropriation, etc etc.  Just enough time to learn it, forget it a day after.

Living in eastern states all my life, I've never had a good reason to put "prior appropriation" rules to any use.  It seems totally counter-intuitive that I cannot collect rain that falls in my property.

Of course, if I lived in Colorado, could I then ask the water right owner to pump out my basement after yesterday's storms?

Our Pets are Property

Last week I blogged about the varying ways we can provide for our pets in our estate plans.  One of the reasons why you cannot bequest items or money to your pet is because, by tradition (legal anyways), pets are considered personal property.  Because property cannot own property, pets cannot legally be beneficiaries under a will or a trust.  The next time you're perusing the pet aisle at Stop and Shop and see a nice present for your cat, remember, perhaps you're only establishing a bailee/bailor relationship...but that's a subject for another time.

Uniform Trust Code section 408, which has been adopted by 14 states, provides

Trust For Care of An Animal:

Unif. Trust Code § 408 (amended 2003). 

(a) A trust may be created to provide for the care of an animal alive during the settlor’s lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor’s lifetime, upon the death of the last surviving animal.

(b) A trust authorized by this section may be enforced by a person appointed in the terms of the trust or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed.

(c) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust, property not required for the intended use must be distributed to the settlor, if then living, otherwise to the settlor’s successors in interest.

Similarly, some states have enacted Uniform Probate Code Section 2-907 which allows for honorary pet trusts.  11 states have adopted that provision.

Until Connecticut law changes, take this article to heart, pet lovers.  Since Connecticut has no animal custody statute, a civil action known as replevin (action to recover personal property) was required to get custody of a pet from a former paramour.

Fishing Friday- 7.11.08

Looks to be a glorious weekend.  Besides the cleaning of the home office, organizing the files of one of my conserved persons; I will be playing with the nautical charts feature on our new Lowrance XOG gps, installing a compass, and hopefully catching a few fish.    Saw some boats last weekend land a few on live eels drifted in the current while my flies (a whistler and a clouser) were altogether ignored.  It might be time, since the stripers seem to be going deeper with the warming of the LI Sound waters, for me to try out my spinning rig.

And just a reminder for the surfcasters and shore fishermen to brush up on your shoreline access law.  Connecticut has published a Public Trust Fact Sheet which outlines the recognized rules of who, when and where the public can access the shoreline. 

Quoting the fact sheet:

The public trust area comprises submerged lands and waters waterward of the mean high water line in tidal coastal, or navigable waters of the state of Connecticut.  On the ground, the public trust area extends from the water up to a prominent wrack line, debris line, or water mark. In general, if an area is regularly wet by the tides, you are probably safe to assume that it is in the public trust.  The public trust area is also sometimes referred to as tidelands, and is defined as "public beach" by the Connecticut Coastal Management Act, C.G.S. 22a-93(6). 

Under the Public Trust Doctrine, the public "owns" the land up to the high water mark.  Even in the more expensive private areas of the state, a beachfront homeowner cannot prevent shoreline use below that point. 

Of course, that's doesn't mean the public has a right of "access" to that shoreline.  People seeking to use the beach, shoreline, etc. still must use public access areas or risk trespass.

Next week:  I'll look at river and stream access.

Closing Documents on CD?

Ever heard of blegging?  From what I know, its a beg for information via someone's blog.   That's what I'm doing now.

We all know about the rising costs of everyday living.  As lawyers, we've been told that the paperless office is around the corner; though even with emails and e-filing of civil papers; somehow the files still get papered with printouts of emails and PDF'd complaints and motions.

Once place where I think we can gain some headway against the rising costs of paper is producing digitally-based closing document binders on CD for clients.  This is not a new idea as shown in this article from the 2004 ABA Techshow. 

Are you creating CDs for clients or are paper binders/folders still prevalent?  What about client copies of executed estate planning documents?