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ESTATE PLANNING ALERT: Bush Tax Cuts Extended

Congress has passed legislation extending the Bush tax cuts through 2012. The new law reinstates the Federal estate tax for persons dying in 2010; however, an election can be made to either come under the law being enacted today (i.e., make the estate subject to the Federal estate tax and thus receive a step up in basis in the estate assets) OR be subject to the law as it was before the new law was enacted today (i.e., the estate is not subject to the Federal estate tax and receives the decedents carryover basis).

The new law increases the Federal estate tax and generation skipping tax exemptions to $5 million with a maximum tax rate of 35 percent. (Absent extension of the Bush tax cuts, these exemptions were scheduled to drop to $1 million with a tax rate of 55 percent.) The new law also reunifies the gift and estate tax exemptions. For example, in 2009 the lifetime gifting exemption was $1 million, while the estate tax exemption at death was $3.5 million. Beginning in 2011, the gifting and estate tax exemptions will be $5 million. Also, any unused estate tax exemption can now be used upon the death of the surviving spouse.

These changes in the tax laws open the door to significant planning opportunities. We will be providing you with more details on this new law in the near future. If you have questions in the meantime, please contact your attorney at Moss & Barnett.

(December, 2010)


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[05/16] Marriage of Green
In a dispute between ex-spouses over the husband's CalPERS pension, which included four years of credit for past military service purchased with community funds, the trial court's characterization of the credit as the husband's separate property is reversed, where prior to the marriage, the husband's right to the credit amounted to no more than an expectancy, which is not a property right divisible upon dissolution of marriage, since he held no unconditional, contractual right to the payment of benefits, or even a nonvested right to such credit, before he actually purchased the credit during the marriage, using community funds.

[05/15] In re A.S.
In juvenile court proceedings involving a brother and sister whose permanent plan called for them to be placed in foster care: 1) an order permitting the siblings to be placed separately is affirmed, and 2) an order approving an application to administer psychotropic medication to the boy is affirmed, as California Rules of Court, rule 5.640(c)(8) comports with due process.

[05/14] In re B.C.
In a case in which a man filed a JV-505 statement, requested genetic testing to determine whether he was a biological father, and filed a declaration stating that he wished to meet his paternal obligations, the Court of Appeal holds that under California Rules of Court 5.635 it was error for the juvenile court to have authorized testing but to have required the man to pay for it, and to have failed to make a determination of biological paternity.

[05/14] Southerland v. City of New York
In a suit by a father and his children under 42 USC section 1983 asserting that a children's services caseworker employed by the City of New York entered their home unlawfully and effected an unconstitutional removal of the children into state custody, a grant of summary judgment to the caseworker is: 1) affirmed with respect to the father's substantive due process claim, under the "brief removal" doctrine, but 2) vacated with respect to the father's and children's Fourth Amendment unlawful-search and Fourteenth Amendment procedural due process claims, and the children's Fourth Amendment unlawful-seizure claim.

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