Monthly Archive for June, 2008

CNN: Obama Likes $3.5 Million For Estate Tax Exemption

The last section in this story by CNN today:

Obama favors maintaining the estate tax, which is scheduled to be repealed in 2010 for one year. But he would limit its reach.Obama would freeze the estate tax exemption amount at $3.5 million – up from its current $2 million level and the $1 million level it’s set to revert to in 2011. He would also keep the current top rate of 45%, which is below the 55% it is set to revert to in 2011.

Nothing revolutionary – we’ve been hearing $3.5 Million for a while now but interesting in the face of some his other tax policy ideas.

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Financing Your Life Insurance Premiums

This interesting idea comes to us today by Greg Herman-Giddens of The North Carolina Estate Planning Blog.  Greg writes:

Many of us could use more insurance for estate planning  purposes, such as financial security  for loved ones or payment of estate taxes. Most of us also have an unused asset, our insurance capacity. That is the amount of insurance for which we could qualify and is based on the projected value of our assets at life expectancy. For most people, the capacity is unused because of a reluctance to pay hefty insurance premiums.

How do we reach this capacity without bankrupting ourselves:  use the death benefit of the policy itself as the collateral for the loan you would use to pay the premiums.

Greg points out – rightfully so – that there would be no estate tax ramifications of the policy is held in an irrevocable life insurance trust and the life settlement market provides (potentially anyways) an exit strategy to accommodate an unforeseen change in circumstances.

Great post Greg, thanks!.

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Antipsychotics Increase Risk of Death in Dementia Patients, FDA Warns

FDA ALERT [6/16/2008]:  FDA is notifying healthcare professionals that both conventional and atypical antipsychotics are associated with an increased risk of mortality in elderly patients treated for dementia-related psychosis.

In April 2005, FDA notified healthcare professionals that patients with dementia-related psychosis treated with atypical antipsychotic drugs are at an increased risk of death.  Since issuing that notification, FDA has reviewed additional information that indicates the risk is also associated with conventional antipsychotics.

Antipsychotics are not indicated for the treatment of dementia-related psychosis.

The Food and Drug Administration warned doctors Monday that prescribing a certain group of psychiatric drugs (the atypical kind) to seniors suffering from dementia can increase their risk of death.

In April 2005, [the] FDA informed healthcare professionals and the public about the increased risk of death in elderly patients receiving atypical antipsychotic drugs to treat dementia-related psychosis.  “The analyses of 17 placebo-controlled trials that enrolled 5377 elderly patients with dementia-related behavioral disorders revealed a risk of death in the drug-treated patients of between 1.6 to 1.7 times that seen in placebo-treated patients.”  Most of the deaths appeared to be either cardiovascular (e.g., heart failure, sudden death) or infectious (e.g. pneumonia) in nature.

[...]

Though the FDA opine that “the methodological limitations in these two studies preclude any conclusion  that conventional antipsychotics have a greater risk of death with use than atypical antipsychotics”, they nonetheless have determined “that the overall weight of evidence, including these studies, indicates that the conventional antipsychotics share the increased risk of death in elderly patients with dementia-related psychosis that has been observed for the atypical antipsychotics.”

Conventional Antipsychotic Drugs Atypical Antipsychotic Drugs
Compazine (prochlorperazine) Abilify (aripiprazole)
Haldol (haloperidol) Clozaril (clozapine)
Loxitane (loxapine) FazaClo (clozapine)
Mellaril (thioridazine) Geodon (ziprasidone)
Moban (molindone) Invega (paliperidone)
Navane (thiothixene) Risperdal (risperidone)
Orap (pimozide) Seroquel (quetiapine)
Prolixin (fluphenazine) Zyprexa (olanzapine)
Stelazine (trifluoperazine) Symbyax (olanzapine and fluoxetine)
Thorazine (chlorpromazine)
Trilafon (perphenazine)
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Northwestern to Offer 2-Year J.D. Program

This one was just everywhere.

According to NU’s press release, “Northwestern University School of Law will offer an accelerated JD program starting in 2009[.]“

NU will be the first top tier law school to offer such an accelerated program.

While the two-year option will have the same curriculum as the traditional program, Van Zandt said that to be admitted to it, applicants will be required to have two or three years of “substantive work experience” after college. While this is typical of Northwestern law admissions, it is not a requirement for the three-year program. People with work experience are likely to have “the good time management” necessary, he said. Northwestern hopes to admit 25-40 students into a two-year program next year.

Northwestern will also require all students to take two new course, one in “analytic skills” (finance, statistics, accounting, etc.), and one in “legal services behavior.

According to the TaxProf Blog, Southwestern Law School and the University of Dayton also offer two-year degrees.

I kind of remember my third year, I think…  ‘Nuff said I guess.

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Child of Couple in Civil Union Can Receive Social Security Benefits – ‘Family Values’ Proponants Say ‘let the kid starve!’

The Bush administration’s Office of Legal Counsel in an opinion letter interpreting the effect of the Defense of Marriage Act on the benefits eligibility of the child of a non-biological “second parent” in a civil union wrote:

Although DOMA limits the definition of “marriage” and “spouse” for purposes of federal law, the Social Security Act does not condition eligibility for CIB [child's insurance benefits] on the existence of a marriage or on the federal rights of a spouse in the circumstances of this case; rather, eligibility turns upon the State’s recognition of a parent-child relationship, and specifically, the right to inherit as a child under state law. A child’s inheritance rights under state law may be independent of the existence of a marriage or spousal relationship, and that is indeed the case in Vermont. Accordingly, we conclude that nothing in DOMA would prevent the non-biological child of a partner in a Vermont civil union from receiving CIB under the Social Security Act.

The above is from Dale Carpenter at The Volokh Conspiracy.

What is almost more interesting about Mr. Carpenter’s post are the comments by Peter Sprigg – a rather poor and misguided ideologue. (He would probbaly say he’s “enlightened.”)  Mr. Sprigg is quoted as being “disappointed” that the administration did not take a “pro-family” position by denying benefits to the child.  When you, my valiant reader, figures out how that works let me know would you?  Because I just can’t see how denying benefits to a child promotes “marriage and family and the sanctity of human life.” That’s the mission of the group Mr. Sprigg currently schlepping for – or is it stumping, I always get those two mixed up – so I would think that would be his goal…  Promoting family values or kicking people when they’re down?  You choose.

Mr. Carpenter goes on to say:

I’m no expert on Social Security benefits, but the result seems right as a textual matter under both DOMA, which forbids federal recognition of same-sex marriages, and the Social Security Act, which defines an eligible child as one who has the state-law right to inherit from a parent regardless of the marital status of the parent. A contrary result would have put the federal government in the position of saying that not only is the parents’ civil union created by state law unrecognized, but that the legal parent-child relationship created by state law is unrecognized. While it appears the legal parent-child relationship in the case arose from the parents’ civil union, rather than from an adoption, the continued recognition of that parent-child relationship under Vermont law, including the inheritance right, is not dependent on the continued existence of the civil union.

As someone who is on the road to becoming an expert in social security benefits, I agree completely.

Thanks Mr. Carpenter!

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New AMT Patch Passes Committee

According to this story from the AP on Wednesday of last week, the Ways and Means Committee voted 22-16 on a new AMT patch.

The new law (if it makes it that far) would shield “more than 20 million largely upper-middle-class families from shelling out thousands of dollars for the AMT in 2008, a concept that nearly all lawmakers support.” Its the way to pay for it that pits the Ds vs the Rs.  The Ds want to offset the $61.5 billion cost of the relief by bringing in more revenue by taxing corporations…  The Rs are (shockingly) opposed to this.

But in a repeat of last year, Democrats insisted that the $61.5 billion cost of the relief must be made up by bringing in new revenue, mainly from corporations. Republicans were equally insistent that that will never happen, saying that tax relief for some people should not result in what they regard as tax increases for others.

Last year, after months of wrangling, Senate resistance and a presidential veto threat, House Democrats gave in, and on the last day of the session in December Congress approved an unpaid-for AMT bill. The late vote delayed refund checks for millions of taxpayers while the Internal Revenue Service reprogrammed its computers to comply with the new law.

[...]

The Ways and Means bill would raise about $31 billion over 10 years by increasing the tax rate on the share of investment profits received by private equity and hedge fund managers, also known as carried interest. It would disallow certain deductions some oil and natural gas companies receive for domestic production, bringing in $13.6 billion.

[...]

The measure, said committee chairman Charles Rangel, D-N.Y., “would deliver this tax relief to middle-class families without adding to the deficit and without forcing future generations to pay for the decisions we make today.”

But the top Republican on the panel, Jim McCrery of Louisiana, said he “took comfort in this bill’s dim future and hope that we can work together soon to enact an AMT patch without offsets.”

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Bumper Sticker: “I’m spending my children’s inheritance.”

The NYT today published an articled called “8 Reasons You Should Not Expect an Inheritance.”

We’ve been hearing this for years but this list is compelling and, frankly, kind of a downer.  But it is a good read…  The list has some items on it I’d not considered before and not necessarily intuitive… For instance:

Fewer people have pensions, so they’re more wedded to the markets. In 2005, according to the Employee Benefits Research Institute, 63 percent of workers in the private sector worked for employers who offered only 401(k) or similar plans, not traditional pensions.

As pensions continue to disappear, retirees and those close to the final quitting time will depend more heavily on how their investments perform. And as large numbers bet heavily on stocks to finance 20-plus years of retirement cruises and Cadillacs, some will inevitably lose big.

  1. People who make it to 65 will live a lot longer
  2. Social Security and Medicare will probably change
  3. Fewer people have pensions, so they’re more wedded to the markets
  4. Out-of-pocket health care costs for retirees may soon hit seven figures a couple
  5. Divorced individuals may pass on less money
  6. It’s getting easier to drain a home’s equity
  7. Life insurance may not offer much help
  8. The transfer of wealth will increasingly happen while the older generations are still alive
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I’m Switching Firms – And the Ohio T&E Blog is Coming With Me

If you’re one of my C-Bus readers you likley already know, but for those who are not, Effective July 1 I will no longer be under the employ of Buckingham, Doolittle & Burroughs and will instead be working for Dinsmore & Shohl.  Many things are uncertain as the powers-that-be have yet to decide some critical issues but I can tell you that its happening.  Columbus’ Business first has an article on the move here (PDF) or you can check out Dinsmore’s press release here.

This is the reason for the relative dearth of postings recently and won’t do much to encourage more in the near future…  But bear with me; I’ll return in time.

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Cremains of Pringles Can Inventor to Be Burried In, That’s Right, A Pringles Can

According to this story in the Huffington Post,

Fredric J. Baur, of Cincinnati, who died May 14 and who designed the Pringles potato crisp packaging system was so proud of his accomplishment that a portion of his ashes has been buried in one of the iconic cans.

Too bad he and Bill Bramanti didn’t get together while Mr. Baur was still alive. They could have had a good time. Pringles ‘n PBR!

Thanks also to Professor Beyer for his post.

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No Changes To The Estate Tax This Year

So says the WSJ in this article and Sen. Jon Kyl, an Arizona Republican. The exclusion is $2 million this year and jumps to $3.5 next year… Tune in, same bat-time, same bat-channel for updates.

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