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Taxed to death no more

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Indiana Lawyer Focus

The fate of the inheritance tax in Indiana went from a slow, lingering demise over the next decade to sudden death in the biennial budget lawmakers approved this session.

“My clients are very happy about it,” said Valparaiso estate and transactional attorney Michael B. Miller. “They hate the death tax.”

kraft Kraft

But Miller feels at least a twinge of loss. No more filling out Indiana Inheritance Tax Return IH-6, no more figuring taxes due from heirs based on their relationship to the deceased or exemptions for heirs also based on relationship, and other variables.

“I’m a Sudoku person, a person who likes to do puzzles, so for me it was kind of fun,” said Miller, who also holds an accounting degree. “That part of my practice is going to disappear.” After a moment of reflection, he said, “I guess I won’t miss it.”

There’s been no notable mourning for Indiana’s inheritance tax, which had been scheduled to gradually phase out by 2022. Lawmakers made the repeal of the tax retroactive to the start of the year, so inheritances are not subject to the tax if the grantor died after Dec. 31, 2012.

But attorneys say clients shouldn’t treat the end of the inheritance tax as a reason to forgo estate planning. Paul Kraft, co-founder and senior principal of Frank & Kraft P.C. in Indianapolis, is concerned that some people may wonder what’s left to do now that the tax is gone.

“Clients still really need to have the assets valued as of the date of death,” Kraft said. “That’s still going to be very important.”

Kraft said failing to do so could unwittingly subject beneficiaries to federal tax liabilities. He provided an example: Suppose someone’s parent purchased stock for $10 many years ago but the stock is now worth $100 per share. If the stock isn’t properly valued at the time of the parent’s death, a beneficiary who inherits the stock could face federal capital gains taxes on $90 per share.

“Hopefully clients won’t be lulled into a false sense of security now that the Indiana inheritance tax is gone,” Kraft said. “Death-tax reduction was one of many reasons to do estate planning. There are many, many other reasons people need to realize it’s important to do estate planning.”

Anne Hamilton chairs the Estate Planning and Administration Section of the Indianapolis Bar Association and is of counsel at Kroger Gardis & Regas LLP. She said one of the biggest changes she sees from the elimination of the tax is a greater ability to leave inheritances for people regardless of their relationship.

Indiana’s inheritance tax divided beneficiaries into three classes, and the tax burden was lowest and exemptions highest for immediate family such as children, parents, grandparents and grandchildren. Extended family – nieces, nephews, aunts and uncles, for instance – were taxed at a moderately higher rate, and those who paid the highest inheritance tax were more distant relatives and unrelated beneficiaries.

The highest tax rate on inheritances from immediate family (Class A) was 10 percent for inheritances in excess of $1.5 million, and the first $250,000 was exempt, according to Indiana Department of Revenue spokesman Robert Dittmer. Heirs with distant or no relationship (Class C) faced a minimum rate of 10 percent and a top rate

of 20 percent on sums greater than $1 million, yet only $100 was exempt from taxation for heirs in that class.

Hamilton said the end of the tax probably will change some clients’ decisions about their estates. Some may opt to include a neighbor who provided care, for example.

“It allows the clients to focus without being so concerned about the estate being reduced by taxes,” Hamilton said. “As planners, it allows us to really focus on what they want to do rather than what they ought to do to save taxes.”

hamilton Hamilton

Kraft said elimination of the estate tax will help same-sex couples and unmarried couples, who in the past faced the highest tax rate and received the lowest exemptions. “It probably benefits that population more than anybody,” he said.

Hamilton said she had a client who paid estimated inheritance tax after receiving a benefit from a non-probate estate of a grantor who died in February. The client will be entitled to a refund because the tax was eliminated retroactively. Such occurrences are likely to be rare, attorneys said, because the deadline for estate valuation is nine months after a grantor’s death, so most filings would not yet have been made.

Miller said for most clients, the inheritance tax wasn’t likely to alter their wishes or planning. “I don’t think most decisions are tax-driven. Even most charitable decisions aren’t tax-driven, but certainly it just lifts a cloud over an additional expense that was looming in their minds.”

Indiana’s elimination of the inheritance tax puts it in the majority of states that don’t have tax on inheritances or estates. According to Forbes, Indiana was one of just eight states with an inheritance tax in 2013. Two others – Tennessee and Delaware – are repealing the tax later this year or in coming years. Twelve states had an estate tax or a combination of estate and inheritance taxes.

Elimination of the tax relieves potential burdens for a large group of Hoosiers whose estates were below the federal estate-tax exemption threshold of $5.25 million. Dittmer said that a record 26,000 Indiana inheritance tax returns were filed in 2009, a number that was projected to decline to 16,000 returns this year. The level of scrutiny on those returns is much higher than others.

“Practitioners and (Department of Revenue) staff not only have to have a good working knowledge of inheritance tax statutes, regulations and caselaw, but also probate, trust and property law,” Dittmer said. “The department audits every inheritance tax return regardless of the amount of an individual’s gross estate. Some audits are relatively straightforward while others are very complex.”

The inheritance tax on average raised $158 million annually between fiscal years 2006 and 2012, Dittmer said, but it was projected to bring in far less in the years ahead because of increasing credits and inclusion of more people in the class with the lowest rates. The tax had been projected to raise $126 million in FY2013, he said, and less annually beyond that.•

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  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

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