Estate Planning Post Fiscal Cliff

As part of the “fiscal cliff” legislation passed earlier this month, Congress fixed the federal estate tax credit at $5.12 million.  This generally means that estates of individuals having less than $5.12 million at death will not be liable for any federal tax.

Congress also extended the so-called “portability” of the credit that allows surviving spouses to use the portion of the credit not used by a deceased spouse.  Such portability allows a married couple to pass $10.24 million to their children or other beneficiaries free of federal estate tax.

The new legislation also fixes the federal gift tax at $5.12 million.   Individuals may generally make lifetime gifts totaling $5.12 million without incurring any federal gift tax.  The gift tax credit remains unified with the estate tax credit.  In other words, an individual has a $5.12 million credit to be used during lifetime or at death.  If an individual makes a $500,000 lifetime gift, then the individual’s estate tax credit to be used at death will be reduced accordingly.

Finally, the federal gift tax annual exclusion is $14,000 for 2013.  Individuals may gift up to $14,000 to each of as many people as the individual chooses during the calendar year.

Clearly we are not in Kansas anymore.  Gone are the days when many middle class individuals and married couples required credit shelter or bypass trusts to reduce or eliminate federal estate tax exposure.  The new law, including the flexibility afforded by the portability provisions, renders estate tax planning a non-issue for all but the very wealthy in New Hampshire.

That said, a comprehensive estate plan remains as important as ever.  Most individuals and families will continue to face estate planning issues unrelated to taxes:  management of assets for minor children, proper beneficiary designations for 401(k)s and IRAs, health care directives, and planning in second marriage situations.  Tax planning was always just a portion of the estate planning process.

In my practice, I have always found that the majority of adverse consequences stemming from a failure to properly plan have absolutely nothing to do with the federal estate tax.  More often than not, I find that a lack of planning results in losses or depletions in estates due to outdated or incorrect beneficiary designations on life insurance or retirement plans, plans that pass wealth onto children in an inefficient manner, and dissention among beneficiaries.  These dangers will always be present regardless of changes in the federal estate tax system.

By:  Brian C. Kelly


Confessions of a Personal Injury Lawyer: Your Doctor

Frequently, one of the most frustrating challenges in an injury case involves your doctor.  Only someone with a medical background can offer the required evidence about an injury, so your case requires the cooperation of your doctor.  Unfortunately, it is not uncommon for physicians to have lawsuit phobia.  He or she is happy to treat you, but it is a different story when requested to express a formal opinion for a claim.  There are doctors and medical facilities which actually have a blanket policy that they will not get involved, leaving the patient without the medical evidence necessary to make the case.

When a physician is willing to express an opinion, the opinion has to be based on sufficient probability to be usable.  Medical opinions do not have to be based on certainty, but to be admissible as evidence, a medical opinion has to be based on a more probable than not basis.  If the physician is willing to express the opinion that more probably than not your injury or continuing problems are from the accident, the opinion can be used in your claim.  However, if the medical opinion is that your problems “could” be or “might” be related, then the opinion fails as a legal matter.  Such a medical opinion cannot be used in your claim because it is deemed too speculative an opinion.

Physicians are remarkable people who deserve our respect and gratitude.  However, more of them should be willing, despite an inevitable degree of uncertainty, to express and defend their opinion, even though the patient was injured in an incident which results in a claim.

By:  Peter G. Webb