Denise P. Cambs' Estate Planning, Elder Law and Estate Administration practice concentrates in both the personal and tax aspects of family asset transmission, the management and administration of trusts, tax and charitable planning considerations, and the post-death administration of Decedent's estates. In addition, Mrs. Cambs' practice includes such traditional "elder law" concerns as the family management of finances in the face of long-term care costs, asset preservation issues and "disability planning" (involving the use of Supplemental Needs Trusts) for families with minor or adult disabled dependents.

Mrs. Cambs is a Fellow in the American College of Trust & Estate Counsel (ACTEC). She has more than 24 years of experience in matters related to tax and estate planning, probate and estate administration. Mrs. Cambs' primary objective is to provide high quality, personalized legal representation to the clients she serves.

See Denise P. Cambs, Esq. for more information concerning her trust and estate planning, administration and probate expertise.

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Estate Planning Articles by Denise P. Cambs, Esq.

2010 Tax Planning Updates

Happy New Year to our Estate Planning Clients and Professional Colleagues:

As some of you may already know, it appears that the Federal Estate Tax has been temporarily repealed, effective as of January 1st, 2010. Few expected this to happen, and many believe that when Congress does assess the impact of this major change later this year, an attempt will be made to retroactively re-instate the Federal Estate Tax.

I’m therefore writing to summarize those recent changes to the Federal Estate Tax laws which became effective on January 1st, 2010, and to share thoughts on how these changes might impact your personal planning going forward:

• On January 1st 2010, the Federal Estate Tax and Generation Skipping Transfer Tax were temporarily repealed for one (1) year, pursuant to ‘sunset provisions’ which were originally included as part of the Federal Economic Tax Recovery Act of 2001.
• This temporary repeal applies only to the Federal Estate Tax and Generation Skipping Transfer Tax (GSTT). It does not apply to the New York State Estate Tax which impacts Estates of New York residents valued at more than $1 Million Dollars. Additionally, the Federal Gift Tax remains in-effect at a rate of thirty-five (35%) percent for individual gifts in excess of $1 Million Dollars.
• The temporary repeal of the Federal Estate Tax and GSTT may endure for all of 2010, or it may be halted by Congress at any time during the calendar year. The general consensus is that Congress will likely attempt to re-instate the 2009 Federal Estate Tax rates and exemptions at some point during 2010, but constitutional issues may prevent Congress from making any such re-instatement of 2009 estate tax rates or other action retroactive to January 1st, 2010.
• Still, the odds are fairly high that some legislators will fight hard to make any new Federal Estate Tax rates and structure retroactive to January 1st, 2010; and if such retroactive application is attempted, Federal Court proceedings may have to be exhausted before the effective date of ‘new’ Federal Estate Tax legislation is conclusively resolved.
• As such, where Federal Estate Tax liability can be anticipated (generally in those Estates which exceed $1 Million Dollars in value), the Estates of Decedents dying on or after January 1st, 2010 may have to reserve sufficient funds to cover anticipated future Federal Estate Tax liability until issues related to retroactive application and constitutionality are conclusively resolved - whether by Congressional action or in response to Federal Court challenges (again, based on the constitutional issues presented).
• If Congress fails to take any action related to the Federal Estate Tax/GSTT repeal in 2010, then effective as of January 1st, 2011, the top Federal Estate and Gift Tax rates will increase to fifty-five (55%) percent; and the Federal Estate Tax exemption will fall from $3.5 Million Dollars (in 2009), to a level $1 Million Dollars per individual Decedent. This could mean that barring additional Congressional action later this year, effective as of January 1st, 2011 those Estates valued in excess of $1 Million Dollars may once again be subject to both Federal and New York State Estate Tax liability.
• The temporary repeal of the Federal Estate Tax does not come without a cost. While there is no Federal Estate Tax in-effect, Estates of Decedents dying after January 1st, 2010 are subject to a complicated carry-over basis regime, and State death tax rates continue to apply.
• In other words, while there is no Federal Estate Tax in-effect, there will only be a limited corresponding ‘step-up’ or increase to the tax cost-basis of the Decedent’s assets based on ‘date of death’ values. The ‘step-up’ is limited to $1.3 Million Dollars, and it is unclear at this point how the Executor may allocate the stepped-up basis in larger Estates. For those Estates valued in excess of $1 Million Dollars which must still file New York State Estate Tax Returns and pay New York State Estate Tax liability where applicable, it is similarly unclear whether the step-up in tax cost basis will be limited to $1.3 Million Dollars even where New York State Estate Tax is actually paid. These issues will presumably be addressed by the Federal and State legislature on a case-by-case basis later this year.
• Notably, the limited application of ‘stepped-up’ tax cost basis to date-of-death values will apply to ALL Estates of Decedents dying on or after January 1st, 2010, regardless of the size of the Estate.
• As such, under the Federal Estate Tax laws as currently written, comparably small Estates which would not otherwise have been subject to Federal Estate Tax liability may no longer receive the benefit of a full ‘stepped-up cost basis’ while the temporary repeal of the Federal Estate Tax remains in-effect.
• To complicate matters further, for Decedents dying on or after January 1st, 2010, any asset which has a ‘date of death’ value that is less than the Decedent’s original cost basis will have the cost-basis of that diminished asset ‘stepped-down’ to the lower ‘date of death’ value - - an unlikely, but not impossible result! (i.e., consider GE shareholders whose GE stock may currently be valued at something less than the shareholder’s original cost basis).
• Complicated new carry-over basis rules which are beyond the scope of this letter also now apply to the computation of capital gains tax on Estate assets.
• Suffice it to say, however, that if these new carry-over basis rules are not retroactively repealed by Congress later this year, those rules will not only keep accountants very busy in 2010, but they may cause undue hardship to those Estates which are caught in the resulting ‘tax trap’ of this temporary repeal of the Federal Estate Tax.
• Since the new Federal Estate Tax laws which became effective on January 1st, 2010 do not impact the Federal Gift Tax rate structure, the Gift Tax Annual Exclusion of $13,000-per-recipient remains unchanged for 2010. As such, families may wish to continue their pattern of annual gifting to individual family members and/or to IRC §2503(c) Education Trusts for minors based on the $13,000-per-recipient Federal Gift Tax Annual Exclusion which remains in-effect, particularly if individual assets are valued at more than $3.5 Million (or $7 Million Dollars for married couples).
• If Congress fails to enact new Federal Estate Tax legislation in 2010, the Federal Estate Tax (and Generation Skipping Transfer Tax) will emerge on January 1st, 2011 in much the same shape and form as they existed in 2001:
  • the Federal Estate Tax exemption will fall-back to $1 Million Dollars per individual Decedent;
  • the Generation Skipping Transfer Tax will be re-instated at a flat rate of fifty-five (55%) percent for all gifts and bequests to grandchildren or other ‘younger generation beneficiaries’, subject to a $1 Million Dollar GST Exemption; and
  • the highest Federal Estate and Gift Tax Rate will return to fifty-five (55%) percent.

Required Disclaimer: This summary letter is intended to provide a general overview of 2010 changes to the Federal Estate Tax rate structure. It is not intended to apply to any one client or family.

Moreover, to ensure full compliance with IRS disclosure requirements, this paragraph confirms that the Federal tax commentary contained in this letter and any attachments to this letter is provided for general information only. The commentary contained in this letter or any attachments to this letter is not intended or written to be used - - nor can this commentary or attachments be used - - for purposes of: (1) avoiding taxes or penalties under the Internal Revenue Code; or (2) promoting, marketing, recommending, or advising any 3rd party regarding specific transactions or matters which are referenced or alluded to in this communication.

Why is Denise P. Cambs different from other estate planning attorneys?

Common experience shows that Revocable Living Trusts and asset protection planning are aggressively marketed to senior citizens and others as a one-size-fits-all solution to an overall planning dilemma. Promoters of Living Trusts often lure individuals to free seminars where they predict incredible expenses, delays and frustrations for everyone in the room.

The trust promoter then promises that all of the problems of probate and estate administration will be solved if the participants purchase their package of forms and services.

Typically, these form Trust Agreements are mass-produced from software generated forms and, for this reason, documents are often not tailored to meet individual client needs.

The generic trust documents which are marketed and sold to senior citizens and others are often overpriced. The trust promoter is charging what amounts to be a flat fee for a preprinted form agreement. This flat fee is often higher than what would have been charged by a qualified attorney for a customized document or series of documents accompanied by highly specialized tax or estate planning advice. In many cases, the flat fee charged by trust promoters is often higher than the filing fee which would be imposed at the time of any probate proceeding, and it has no bearing to the amount of time which the trust promoter expended on the particularly planning project.

At The Cambs Law Firm, we are aware that quite often the lawyer who works with a family to develop updated Wills, Living Trust Agreements (when appropriate) and lifetime self-determination documents (e.g., Durable Powers of Attorney, Health Care Proxies and Living Wills) is often the attorney the family will call in the event of a crisis, such as when a family member is diagnosed with a major illness or requires hospitalization and/or nursing home care.

Unlike promoters of mass produced Living Trusts and other planning devices, Denise P. Cambs doesn't offer products for sale. Instead, she strives to develop a relationship of trust and confidence with all of her clients in order to provide clients and their families with advice and counsel which is tailored to the family's needs and circumstances.

Perhaps most importantly, in order to ensure the highest level of personal attention to clients, Mrs. Cambs does not undertake representation on behalf of every individual or family who contacts the Firm. By reviewing summary information requested on a completed Estate Planning Questionnaire in advance, Mrs. Cambs is able to preliminarily assess the issues presented, generally, as well as the client or family's planning needs in order to arrive at a sound and appropriate customized estate plan in a cost-effective and efficient manner.

Fees are carefully discussed in an introductory cover letter and more fully explored in the context of a first meeting so that the clients and families may make informed decisions regarding the manner in which they will be charged before determining how to proceed with a particular estate plan.