The Higher Cost of Dying in other states

The Federal government is trying to decide what size of estate tax exemption citizens are going to have next year from the Federal Estate Tax. Under current law the exemption amount is currently $3,500,000.00 in 2009. If Congress does nothing the Federal Estate Tax exempt amount will be unlimited beginning January 1, 2010. I am betting we are going to see last minute legislation at the end of December to prevent the repeal of the repeal of the Estate tax for 2010.

However, state governments are also feeling the economic pinch and looking for ways to increase tax revenues. Dead people are an easy constituency to squeeze because they do not vote. For example, the State of Illinois "decoupled" its estate tax from the federal exemption amount beginning January 1, 2009. In Illinois anyone who dies this year pays an additional estate tax over anything one owns in excess of a $2,000,000 exemption from Illinois estate tax. What does the mean? If a Missouri resident dies with a $3,500,000 taxable gross estate in 2009, the taxpayer pays $0 Federal estate tax and $0 Missouri estate tax. The same taxpayer who dies in Illinois this year pays $0 Federal estate tax and $209,124 in Illinois estate tax. Picking the right state to die in for tax purposes can save some real dollars! Living on the correct side of the Mississippi can benefit one's loved ones significantly!

I think the Missouri tourism commission ought to adopt a new campaign to attract older citizens to move to Missouri before they die.

The House passes Tax Relief (Sort of)

On December 3, the U.S. House of Representatives passed the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009 (H.R. 4154) by a vote of 225 to 200. Not exactly a land side; but, a beginning.

H.R. 4154 would:

· make permanent the $3.5 million estate tax exemption

· make permanent the 45 percent top rate.

· Prevent the untenable and unworkable switch (scheduled to take effect in 2010) from step-up to carryover basis.


One of the shortest tax bills ever to be passed, it is notable for what it does not say. Many of the changes requested by the Treasury department are absent. It is now up to the Senate. A lot has to occur before this becomes law. Stay tuned for further updates.

Lawmakers Scramble to Extend the Estate Tax

The bonanza of passing one's estate free of federal estate tax might actually happen on January 1, 2010. Due to a quirk in the tax code, the estate tax and generation skipping tax ("GST") are repealed for one year starting next year. Currently, anyone with a taxable estate of less than $3,500,000 is exempt from Federal Estate tax (and in Missouri from state estate tax as well). The Senate is considering legislation that would extend the $3,500.000 exemption another year in essence repealing the repeal of the estate tax. But, with time running out and the agenda focused on health care reform, there may not be time to do anything this term.

Starting in 2011 the Federal Estate Tax and GST tax would return and tax everything that one owns in excess of $1,000,000 at a 55% rate. This means that those who are very rich could take advantage of the one year repeal by dying in 2010. While this is a tough advice for any client, think of the social mayhem that could result by leaving such tax policy in place? Congress needs to act responsibly and deal with this legislation before it adjourns. Stay tuned for further updates.

Social Security

Anyone who has visited your local security office recently will have a story to tell. There may be a better way to find out information about one's benefits by using the internet. Below are some links that might be of help to anyone who is looking for answers to their social security questions:

TO SEE IF YOU QUALIFY FOR BENEFITS:

What Benefits Can I Qualify for?
www.socialsecurity.gov/best
Can I get Help with Medicare Prescription Drug Costs?
www.socialsecurity.gov/i1020

TO ESTIMATE YOUR FUTURE BENEFITS:

To Obtain Retirement Benefit Estimate
www.socialsecurity.gov/estimator
To Calculate Retirement, Disability, Survivor's Benefits
www.socialsecurity.gov/planners
To Request Social Security Statement
www.socialsecurity.gov/statement

TO APPLY FOR BENEFITS:

To Apply for Social Security retirement/spouse's benefits
www.socialsecurity.gov/applyforbenefits
To Apply for disability benefits
www.socialsecurity.gov/applyfordisability
To Apply for help with Medicare Prescription Drug Costs
www.socialsecurity.gov/i1020
To Check Status of
Online Application
www.socialsecurity.gov/applyforbenefits

COMMON TRANSACTIONS ONCE YOU ARE RECEIVING BENEFITS:

To Change Address or Phone #
www.socialsecurity.gov/coa
To Obtain Replacement Medicare Card
www.socialsecurity.gov/medicarecard
To Request Proof of Income Letter
www.socialsecurity.gov/beve
To Obtain Form 1099/1042S (Social Security Benefit Statement)
www.socialsecurity.gov/1099
To Obtain Password
www.socialsecurity.gov/password


TRANSACTIONS ONCE YOU HAVE A PASSWORD

To Check Information or Benefits
www.socialsecurity.gov/pcyb
To Change Address or Telephone #
www.socialsecurity.gov/coa
To Start or Change Direct Deposit
www.socialsecurity.gov/pdd


I hope that these links might be of help to anyone in answering your social security questions.

Good artilce in U.S.A. Today about Wills

See: 5 Myths about Wills and what you should do.

To Tax Estates or Not? That is the Question!

Under the current tax code in effect right now, the Federal Estate Tax is scheduled to be repealed beginning on January 1, 2010. Under the current law in effect in 2009, a citizen can own up to $3,500,000 in total assets, and pay no Federal Estate tax. And, in Missouri we have no state estate tax either. Anything in excess of that amount is taxed at a current rate of 45%.

We have been thinking that Congress was going to "fix" this and pass a law extending the current Federal Estate Tax for next year. Senate Bill 722 would make the 2009 exempt amount and rate permanent. A House Bill 2032 would make the exemption amount only $2,000,000 and fix the rates for estates between $2M and $5M at 45%; 50% for estates between $5M to $10M and tax estates over $10M at 55%. Another House Bill, No. 436 would use the $3.5M exemption and a top rate of 45%. Meanwhile the Congressional Budget Office has thrown out 4 models for Congress to consider.

The truth is nobody knows what is going to happen? What is apparent is that we are fast approaching deadlock; and, if Congress fails to act before the end of the year, we may begin to see in January the tax equivalent of hell freezing over. Stay tuned. We will bring you the latest as soon as we know what is going to happen!

FDIC Protection for Bank Accounts

We get a lot of calls about the status of the Federal Deposit Insurance Corporation's guarantee of deposits in FDIC insured bank accounts. The current $250,000 limit has been extended by the FDIC until the year 2014. It was originally scheduled to have reverted to the old $100,000 limit at the end of 2009. The additional $250,000 amounts for IRA's and certain retirement accounts has been made permanent.

If you want to know how these limits apply check out the ESTIMATOR that is put out by the FDIC.