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NEWS UPDATES

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HOUSE BILL 6300: The purpose of House Bill 6300 is to authorize a study by the Secretary of HHS of among other things, the impact of long term care costs and to explore the Medicaid eligibility rules and determine how they might be changed to reduce the costs of Medicaid.  The Bill will be looking at (1) the look back period for determining eligibility for long term care services.  The study will look at the impact of changing the now five (5) year look back period to a Ten (10) year look back period (2) the disqualification of Medicaid eligibility for those people who have equity in their home.  The study will look at the impact of changing the current rule (which allows for a person to qualify for Medicaid as long as they have $750,000 or less of equity in their house) to either $50,000 or $200,000 of equity instead and (3) expanding estate recovery and how Medicaid can place liens on real estate.  The study allows for the Secretary to report back to Congress no later than January 1, 2014.  At this time, Massachusetts IS NOT changing their current laws.

NEW HOMESTEAD LAW: The Senate Bill 2406, An Act Relative To The Estate of Homestead, was signed by Governor Patrick on December 16, 2010.  The new law which replaces the existing homestead law will take effect on March 16, 2011.  The major point of the new law is that it affords an "automatic" homestead or protection against creditors of up to $125,000 in a homeowner's equity in their primary residence.  It also safeguards homeowner's of two to four family homes as well as mobile homes.  The mechanism of Declaring a Homestead is still available under the new law and still recommended as it protects a homeowner's equity up to $500,000.

NEW ESTATE TAX EXEMPTIONS:

On December 17, 2010, President Obama signed the "Tax Relief Unemployment Insurance Reauthorization and Jobs Creation Act of 2010," which extended the "Bush Tax Cuts."  As of 2011, the following will occur:

(1) the Estate and Gift Tax exemptions are reunified at $5 million per person;
(2) Estate and Gift tax rates are reunified at 35%;

There is now an opportunity for married couple to transfer up to $10 million worth of assets free of estate, gift and generation skipping taxes.  This opportunity will only last until 2012, at which time the gift tax exemption goes back to $1 million per person.

The Rodriques Homestead Exemption - A homestead can now be placed against property being held in a revocable trust.  On February 23, 2010, the United States Bankruptcy Court ruled that a Massachusetts Homestead Exemption can now legally be declared in favor of an owner whose property is being held by a revocable trust.  Therefore, if your property was deeded to a revocable trust previously and you have not filed a homestead you need to do so immediately.

Estate Tax Exemption Update  - it does not appear that Congress will make any changes to the estate tax exemption before the end of the year.  This means that there will be no federal estate taxes due for deaths occurring on or after January 1, 2010, but before January 1, 2011.  However, it is possible that a new estate tax law will be enacted and become retroactive.

$8,000 Homebuyer Tax Credit Extended - the $8,000 credit was scheduled to lapse on December 1 but will now be in effect through the end of June 2010. Homebuyers must sign a contract before April 30, 2010 and close by June 30, 2010. The income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.  The bill also made more homeowners eligible to claim the credit on their taxes.  First-time buyers -- those who have not owned a home in the past three years -- still qualify for an $8,000 rebate. However, now people who want to trade up can also qualify. Those who have owned and occupied a residence for at least five years out of the past eight can claim a $6,500 tax credit if they close on a purchase by the end of June.

Supreme Court Says Deceased Employee's Ex-Wife Can Get His Pension Benefits - A new Supreme Court decision illustrates the importance of making sure your beneficiary designations are up-to-date. The Court has unanimously ruled that an employer must distribute a deceased employee's retirement benefits to his ex-wife even though she had renounced the benefits in their divorce. Click here to read case Kennedy v. Plan Administrator for DuPont Sav. and Investment Plan (U.S., No. 07-636, Jan. 26, 2009).

Massachusetts Homestead Exemption Increased to $500,000 - As of October 26, 2004, the Massachusetts Homestead Exemption protects up to $500,000 worth of equity in one's primary residence.  To learn more about the Homestead Exemption click here.

Required Minimum Distributions Waived For 2009 - A new law enacted in late 2008 provides that retirement plan account participants, IRA owners, and their beneficiaries do not have to take RMDs for 2009.

Taxpayers who can take advantage of this change won't be forced to sell stock or mutual fund shares held in retirement accounts when their value is exceptionally depressed. This change helps retired taxpayers who do not need to rely on their RMDs for living expenses. By not making the RMD for 2009 (or withdrawing less than the RMD) from their qualified plan accounts and/or IRAs, they will wind up with less taxable income for 2009, and, possibly, avoid (or mitigate the effect of) AGI-based phase-outs of tax breaks. They will also have more tax-sheltered amounts to leave to their beneficiaries.

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