There are three taxes your family may have to face in the State of Maryland.  There is a federal estate tax, a Maryland estate tax, and a state inheritance tax.  Maryland does have a state inheritance tax, but it does not apply to everyone.  It does not apply if you leave your assets to your spouse, your children, your grand-children, parents or grandparents, or your brothers or sisters.  Anyone else, nieces, nephews, cousins, friends, or domestic partners, the State of Maryland does tax with an inheritance tax of 10%.  And that is 10% on the first dollar.  So, if you leave a niece $60,000, she will have to pay $6,000 in inheritance tax.

Then, we have the federal estate tax and the Maryland estate tax.  The way they work is you add up all of your assets: your real estate (fair market value), your retirement accounts (IRAs, 401Ks, TSPs), your savings accounts, your stock, the death value of your life insurance and you come up with your gross estate.  Then, you subtract the debt: your mortgages, credit card bills, loans, and your come up with your net estate.  Right now, if your net estate is less than one million dollars, there is no tax.  Assets over one million dollars are taxed by the State of Maryland at approximately 16%.  The State of Maryland used to follow the federal exclusion.  Because the federal government has increased their exclusion, the State of Maryland capped their tax on assets over one million dollars ($1,000,000).

Finally we have the federal exclusion and right now it is at five million dollars ($5,000,000).  So anything under $5 million will not be taxed by the federal government, but anything over that amount will be taxed at 35%.  The federal exclusion of $5 million ends December 31, 2012 and reverts back to an exclusion of $1 million with a 55% rate as of January 1, 2013 unless Congress changes the law in the meantime.

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

“Three Taxes at Death” by Attorney Nicole Livingston

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

Don’t forget to tune in today to WNAV Radio on 1430 AM or 99.9 FM @ 3:50pm to listen to Your Estate Matters with Attorney Nicole Livingston.  The topic is Three Taxes at Death.

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

As a member of the American Academy of Estate Planning Attorneys, I must complete 36 hours of continuing legal education per year.  This is important because in Maryland there is no requirement that attorneys obtain continuing education credits.  Once an attorney passes the Bar, they never have to open a book again.

With the changes in the laws that affect so many facets of our estate planning and elder law practice, I must keep on top of these things.  It is vital to the quality service we provide our clients that our attorneys are on the cutting edge of current legal trends and news.

Also as a member of the AAEPA, I have access to over 100 attorneys across the country.  I can find out what is happening in a jurisdiction a client may be moving to or perhaps one that is politically in line with our state.  I can request information or service on behalf of our clients here in Maryland, such as preparation of deeds or other documents.  We are all connected and you can feel confident that no matter where you may go, you’ll have an attorney waiting for you with the same set of ideals with regard to how a successful estate planning practice is run.

It is also important to have a team approach to your estate plan.  You want to feel that you will have the support you need, when you need it.  You want to feel confident that if you call the office, that the person you talk to is eager to answer your question or at the very least find out the answer through other means.  You also want to feel reassured that you will receive prompt attention regardless of the urgency or lack thereof.  Often clients will tell me that they left a message for their attorney and they hadn’t heard back a week later.

Finally, a qualified professional not only knows the law and any changes on the horizon, but also takes the time to understand your individual story.  Your family is unique and deserves the special attention a firm like ours can provide.

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

How do you know if you’re working with qualified professionals? Attorney Paula M. Mattson-Sarli

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

Don’t forget to tune in today to WNAV Radio on 1430 AM or 99.9 FM @ 3:50pm to listen to Your Estate Matters with Attorney Paula M. Mattson-Sarli.  The topic is How do you know if you’re working with qualified professionals?

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

May is National Elder Law Month!  The Patient Protection and Affordable Care Act, the health care reform law, includes provisions to protect some of the most vulnerable older adults — those who live in nursing homes and those who are victims of elder abuse.

Nursing Home Transparency and Improvement

The health care reform law:

• Requires nursing homes to disclose the identity of their owners, operators, and financers, so they can be held accountable for the care their residents receive.

• Requires nursing homes to take steps internally to reduce criminal and civil violations.

• Establishes a Quality Assurance and Performance Improvement Program to improve quality assurance standards.

• Requires the federal government to implement a system to collect and report information about how well nursing homes are staffed, including accurate information about the hours of nursing care residents receive; staff turnover rates; and how much facilities spend on wages and benefits.

• Requires cost reports that nursing homes will file with the government to show expenditures by category — nursing, therapy, capital assets, and administrative services.

• Implements a pilot program to improve federal government oversight of nursing home chains that have quality of care problems.

• Requires direct-care workers in nursing homes to receive training on dementia and abuse prevention.

• Extends to all states the opportunity to receive federal matching funds to conduct national criminal background checks, including fingerprint checks, on individuals who apply for direct patient access jobs in long-term care facilities and with home care agencies that receive funding from Medicare or Medicaid, thus eliminating the ability of persons with criminal histories to move from state to state to work with vulnerable seniors and persons with disabilities.

Prevention of Elder Abuse

The health care reform law also:

• Establishes an Elder Justice Coordinating Council to make recommendations to the

U.S. Secretary of Health and Human Services on the coordination among federal, state,

local, and private agencies and entities to prevent elder abuse, neglect, and exploitation.

Recommendations are due in 2012.

• Provides $400 million in first-time, dedicated funding for state Adult Protective Services (APS) programs.

• Provides $100 million for state demonstration grants to test a variety of methods to detect and prevent elder abuse.

• Provides $26 million for the establishment and support of Elder Abuse, Neglect, and Exploitation Forensic Centers to develop forensic expertise and provide services relating to elder abuse, neglect, and exploitation.

• Provides $32.5 million in grants to support the Long-Term Care Ombudsman Program and an additional $40 million in training programs for national organizations and state long-term care ombudsman programs.

• Provides $67.5 million for grants to improve long-term care staffing through training and recruitment and incentives for individuals seeking or maintaining employment either in a long-term care facility or a community-based long-term care entity.

• Requires the immediate reporting of crimes in federally-funded long term care facilities and subjects facilities who fail to do so to significant fines.

• Creates an Advisory Board to develop approaches to improve the quality of long-term

care, including preventing abuse, neglect, and exploitation.

The funds for these provisions were authorized by the health care reform law, but still must be appropriated by Congress.

About the National Academy of Elder Law Attorneys (NAELA)

NAELA, founded in 1987, is a national association of Elder and Special Needs Law attorneys devoted to the education and training of attorneys who can meet the needs of seniors and people with disabilities, and who advocate for the needs of such individuals.

While NAELA Elder and Special Needs Law attorneys work one-on-one with clients in their local areas, NAELA also examines and advocates on national public policy issues facing seniors and people with disabilities in America including long-term health care; planning for retirement; estate planning and probate; guardianship and conservatorship; health care decision making; and elder abuse and neglect.

This information is provided as a public service and is not intended as legal advice. Such advice should be obtained from a qualifiedElder and Special Needs Law attorney.

© Copyright 2010

National Academy of Elder Law Attorneys, Inc.™

www.NAELA.org • 703-942-5711

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

A question that comes up frequently with my clients is: “Why did my attorney tell me to get my real estate appraised when my spouse passed away?”  Let me explain why I regularly make this recommendation:

You and your spouse own your assets together.  When one of you dies all the assets pass to the surviving spouse either by right of survivorship or a living trust.  If your estate is under $1,000,000.00 there may be very little for you to do.  However it is important to keep a record of the value of capital assets such as real estate, stocks, and businesses as of the date of the first spouse’s death.  The reason to get the appraisal is to establish the basis of the asset as of the date of death, so when you sell the asset your accountant or CPA will be able to determine the capital gains tax on the asset.

At a person’s death certain assets such as real estate, stock and businesses get a stepped up basis as of the date of death or 6 months after the date of death if alternative valuations are used.  Knowing the basis of the property is important when you sell the asset or if you depreciate the asset.

Let me give you an example of what I am recommending:

Jane and Tom purchased a home in 1970 for $36,000.00.  Assuming no adjustments have been made, $36,000 is the basis of the property while they both are living.  Jane and Tom have lived in the home since they bought it.  Jane recently passed away.  The home is now worth $500,000.00.  Tom’s new basis in the property is $268,000.00.  The new basis is comprised of $18,000.00, which is ½ of the original purchase price, $36,000.00 and the stepped up basis of Jane’s ½ interest in the property as of the date of her death which is $250,000.00.  Tom continues to live in the home for many years.  When he sells the home he will need the basis amount.  Tom will have to prove to the IRS and the State of Maryland the value of the home when he and Jane first purchased it and the value of the home as of Jane’s date of death.  It is easier and less expensive to establish the value of the property at the time of Jane’s death rather then waiting years when Tom sells the home.  A historical appraisal can be expensive.

So what do you do with the appraisal once you receive it?  You give a copy to your tax preparer and keep the original with your important papers to be retrieved when you sell the property.

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

The Importance of Knowing the Basis of an Asset by Attorney Colleen Sinclair Prosser

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.

Don’t forget to tune in today to WNAV Radio on 1430 AM or 99.9 FM @ 3:50pm to listen to Your Estate Matters with Attorney Colleen Sinclair Prosser.  The topic is The Importance of Knowing the Basis of an Asset.

SinclairProsser Law, LLC is a member of the American Academy of Estate Planning Attorneys.