ESTATE PLANNING, PROBATE & ELDER LAW NEWS
The holiday break gave me a chance to finish Audrey Niffenegger's Her Fearful Symmetry, which I mentioned in my last post. There are a few references to probate and estate planning in the novel, but this is my favorite -- it's a quote given by one of the main characters (Robert) while he gives a tour of London's Highgate Cemetery (which plays a major role in the book).
"Before modern medical technology, people had a difficult time determining when someone was really dead. You might think that death would be pretty blatant, but there were a number of famous cases in which a dead body sat up and went on living, and many Victorians got the jim-jams just thinking about the possibility of being buried alive.
Being a practical people, they attempted to find solutions to the problem. The Victorians invented a system of bells with strings attached that went through the ground and into the coffin, so if you woke up underground you could pull on your bell till someone came to dig you up. There's no record of anyone being saved by one of these devices. People made all sorts of odd stipulations in their wills, such as asking to be decapitated as insurance against an undesired revival."
A Will with a decapitation provision? Excellent!
Are you really ready to quit your day job this year?
Up through 2009 (and starting again in 2011, assuming the law isn't changed), there was a federal estate tax. That was and will be the bad part, at least for people who owed or will owe tax.
The good part was that, in exchange for potentially being subject to the estate tax, you got a "step-up" in basis. Essentially, when an individual died, his or her assets took as their basis for capital gains purposes their fair market value as of the date of death. So, to consider an example,...
Mom buys a bunch of stock in Company X, starting in 1950 and continuing to her death. The actual cost basis for her purchases was $15,000.
Mom dies, and her Company X stock is work $500,000.
Mom's three kids are left the Company X stock under Mom's Will.
What is the basis in the Company X stock? During a year in which there's an estate tax, that's easy: it's $500,000. So, if the kids sell the stock after Mom's death, they pay capital gains on the difference between the sale price and $500,000.
But how is this handled in 2010? There are three main rules:
1. Instead of a step-up in basis, we have a carryover basis regime. So the basis in Company X would be $15,000. But...
2. There is still a step-up in basis for $1.3 million of assets passing to beneficiaries who aren't the decedent's spouse. And...
3. There is a step-up in basis for $3 million of assets passing to the decedent's spouse.
The major problem with a carryover basis regime is that, in many cases, it is difficult or impossible to calculate the decedent's basis in his or her property. (From what I have read, this was the problem when carryover basis was briefly made the law, back in 1976.) And I worry that the biggest result of this change in the law will be full employment for America's forensic accountants.
I reviewed Meryl Gordon's book Mrs. Astor Regrets earlier this year (here) -- it was one of my favorite books I read in 2009.
The trial of Mrs. Astor's son, Anthony Marshall, is coming to a conclusion (barring appeals). Mr. Marshall was found guilty of "looting his mother's fortune" (another lawyer, Francis X. Morrissey Jr., was also found guilty) -- here is the story. I can't understand why the maximum sentence is only 3 years -- why is that? Because Mr. Marshall is rich? Ugh.
I'm also a little troubled by this line in the article:
The judge noted Marshall's World War II service and the possibility that the late Astor herself would have been aghast to see her son imprisoned, but he added that the law left him no choice but to impose a prison term.
1. Would Mrs. Astor REALLY have been aghast, in light of what her son did to her?
2. I realize that many people want to give members of The Greatest Generation a free pass (and unlimited free health care, free prescriptions, etc.) as a result of their actions in World War II, but I can't figure out why Mr. Marshall's heroics 60+ years ago have any bearing on this case.
