California's End of Life Act

            When Governor Brown signed the California End of Life Act in early October 2015, he said, “I don’t know what I would do if I were dying and in prolonged and excruciating pain. I am certain, however, that it would be a comfort to consider the options afforded by this bill and I wouldn’t deny that right to others.”  It is quite a statement considering the Governor’s Jesuit background, but a sentiment shared by many. 

            The new law goes into effect on June 9, 2016. Here are some facts with regard to it: 

·         The patient must be a resident of California;

·         The patient must be an adult;

·         The patient must be terminally ill and given a prognosis of six months or less to live;

·         The patient must be mentally competent of making their own healthcare decisions, but external factors, such as depression are not factors;

·         The patient must be acting voluntarily, and must make an informed decision which includes being given information about all other end-of-life options, and must be informed that he or she may be given the aid-in-dying drug, but need not take it.

·         Mechanically, the patient must make two verbal requests to his/her physician 15 days apart, followed by a written request witnessed by two people one of which cannot be a relative;

·         Then, 48 hours prior to the administration of the aid-in-dying drug, the patient must sign a form confirming that the choice to die was made of his or her own free will; and

·         Finally, the patient must self-administer the drug.  No one else can administer the drug. 

In addition to the requirements above, steps must be followed in order for a person to qualify for the aid-in-dying medication.  It is estimated that the average length in time between requesting and receiving the medication will be between 15 days and three months and will require the patient to see two doctors who must conclude that the patient has less than six months to live.  In seeing the doctors, at least one visit must be private, with only the patient and the doctor present with the goal being to ensure that the patient is acting of his or her own accord. Thus it would seem that a qualified patient who has reached the decision to transition should act  as soon as that decision is a sure one, before the patient becomes incompetent to carry out the dictates of the Act. 

In enacting the law, California becomes only the fifth state in the United States to have such a law, but with the population in California being what it is, the result will be that one in ten people in the United States will now have the legislative right to die. 

California’s law will expire in ten years subject to extension by the Legislature.

 

For more information and continued updates regarding the End of Life Option Act, go to www.endoflifeoption.org .

While we are urged by Dylan Thomas to “not go gentle into that good night”, for some the ability to go peacefully is an answer to their agonized dreams.

2016 Estate Planning & Tax Law Update - What You Need To Know In A Nutshell

WHAT'S NEW IN FEDERAL AND CALIFORNIA ESTATE LAW

 

It’s that time of the year to recap the current state of the law both federal and state, as it pertains to estate planning, probate, trusts, and wills. 

FEDERAL  

                On the federal level, it’s short and sweet.  The Federal Estate Tax (FET) Exemption amount has increased slightly to $5,450,000.  For married couples who take advantage of portability[1], this means that $10,900,000 can be passed on to their heirs estate tax free.  Under current law, the FET exemption fluctuates annually based on the rate of inflation.  Thus, decedents who died in 2015 are entitled to only $5,430,000 exemption but people passing in 2016 are entitled to $5,450,000.   

                The federal gift tax exclusion amount remains constant at $14,000. Because the gift tax exclusion amount is tied in to inflation rates and is allowed to only increase in thousand dollar increments, it does not change as often as the FET exemption rate.   

                A new law, the Federal Income Tax Consistent Basis Reporting requirement (IRC 1014(f) and 6035, directs that the tax basis of property received from a decedent may not exceed the value as of the property as reported on the federal estate tax return.  If no estate tax return was filed, then the value cannot exceed the value as reported.  In a nutshell, the IRS wants to make sure that trust or estate beneficiaries are confined to the tax basis of the assets that they receive as reflected on the decedent’s estate tax return. For Trustees of estates that exceed the FET exemption, this means another form must be filed with the IRS which identifies the values and the beneficiaries. The form must be filed within 30 days of the due date of the Federal Estate Tax Return. 

CALIFORNIA 

                As for California law, perhaps the biggest change is the passage of the California End of Life Option Act which became effective January 1, 2016.  As could be expected, the regulations are rigorous with regard to the application of the law.  The patient must have a terminal disease and be medically expected to die within six months.  The patient must make both oral and written requests to their attending physician in a timely fashion set by the statute. The patient must self-administer the drug (no one else may assist). Immunity has been granted to doctors who refuse to assist so one may wish to inquire of one’s own physician or preferred hospital if this is something important to the patient. Note that the law sunsets (expires) on January 1, 2026. Presumably the legislators want to see how this law works out for ten years before they make it a permanent law. 

                Surprisingly, another “temporary” law was passed with regard to the Revocable Transfer on Death (TOD) Deed.  As with the End of Life Act, this law is complex and the rules are rigorous.  The idea is that a property (there are specifics on the type of property) can be passed to heirs via the execution and recordation of a particular type of deed. It took the legislature over ten years to pass the law because of the many legal issues that this type of transfer raises (transferor capacity, Medi-Cal reimbursement, creditor  rights, title insurance, to name only a few).  The law automatically sunsets on January 1, 2021. Because there are other ways of accomplishing the transferor’s goals without the many restrictions and unknown issues, many lawyers will shy away from this device.  It is assumed within the legal community that the use of the deeds will create a lot of future litigation work, however. 

THE FUTURE 

                On the federal level, it’s fairly safe to assume that nothing earthshaking will take effect in 2016.  The presidential election being held late in the year will have no effect on existing law.  That said, the candidates are miles apart in their philosophies regarding the estate tax, but those philosophies follow fairly traditional party lines.  The Republicans would eliminate the estate tax altogether and both Ms. Clinton and Mr. Sanders would revert to a FET exemption of $3.5 million with an increase in the tax rate from the current 40% to 45% for Ms. Clinton. Mr. Sanders raises that rate to 55% for estates worth more than $50 million and a whopping 65% for billionaire estates.  He would also reduce the annual gift tax exclusion back to $10,000 per person per year.  

 Keep in mind that the estate tax laws are supposed to emanate from the House Ways and Means Committee and the oval office is theoretically not the originating source of tax law.  Of course the sitting administration can, and often does, put pressure on the Congress to create the law as it wishes it to be and there is always veto power.  The Obama administration has been highly active during his tenure in establishing both the current exemption along with the availability of portability.

 

               

 

 

---

[1] Portability allows a surviving spouse to file a claim with the IRS to allow them to “carry” their deceased spouse’s FET Exemption with them. The claim is made by filing an estate tax return (even if no tax is due) within nine months of the date of death. The result is that when survivor dies, he or she will have their personal Exemption, but also the exemption of their deceased spouse.