The issue of what to do about the estate tax when the current tax law expires in 2010 has been a subject of intense debate in Congress for the past several years, with Republicans maneuvering for complete repeal of what they deride as the Death Tax and Democrats trying to block what they view as a tax break for the rich that could cost the federal treasury hundreds of billions of dollars.
In the last Congress, Senate Republicans fell four votes short of a measure that would have increased the tax exemption to the first five million of an individual’s estate and set the top estate tax rate at 35 percent. Now it appears there is bipartisan support in the new Democratic Senate for continuing the estate tax rate at 2009 levels starting in 2010. The top estate tax rate will be 45 percent in 2009 and the exemption will be $3.5 million per person. This means we will not have a year where there is not an estate tax.
The Senate voted 97-1 in favor of an amendment that Sen. Max Baucus (D-MT) proposed adding to the Senate’s five-year budget blueprint. The Baucus amendment would make permanent a number of tax cuts set to expire at the end of the decade. Although the amendment doesn’t specifically mention the estate tax, Baucus talked about making the 2009 estate tax rules permanent during a discussion of the amendment on the Senate floor. The Senate voted against a move to increase the exemption to five million per person. With the move to stabilize estate taxes, it appears the Senate will now be looking at rejecting cuts in Medicare and Medicaid (here in California, Medi-Cal) spending that President Bush and some Republican lawmakers have proposed.
In California news, the 2007 statewide average private pay rate for nursing facility services is now $5,101. This is used in calculating the period of ineligibility for transfers of nonexempt property for less than fair market value when individuals seek to apply for Medi-Cal and are denied. Counties must use this figure whenever the date of application, or the date of institutionalization (the more recent of the two) occurs in 2007, and a disqualifying transfer has occurred. Existing periods of ineligibility are not updated annually so counties must not use this figure to recalculate the period of ineligibility where the date of application and institutionalization occurred prior to January 1.
Ms. MacDonald’s practice is limited to Estate Planning, Probate and Elder Law. Ms. MacDonald maintains her practice in the Santa Clarita Valley at 27013 Langside Avenue, Suite A, Santa Clarita. She can be reached at 661-251-1300.