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Senator Max Baucus, chairman of the Senate Finance Committee, is soon to introduce a bill that would create permanent tax cuts for the middle-class and reduce estate taxes, New York Estate Lawyers has learned.

The tax cuts for families that earn more than $250,000 a year will be allowed to lapse, a source told New York Estate Lawyers. President Barack Obama set his own terms for the tax standards in a televised town hall meeting in which he would not consider extending the Bush tax cuts for the rich. “Obama drew a line in the sand,” a source told a New York Estate Lawyer. “He’s raised the stakes.”

The House is waiting for the Senate to introduce its own tax bill before showing off its own. “This would be the biggest tax policy change in 10 years,” the source told a New York Estate Lawyer. It is unknown as of yet whether there is enough support among Democrats in the Senate to pass it and if Republicans will attempt to block it.

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The Senate has yet to come to a real decision regarding the estate tax. Currently, there is no estate tax, but it is likely to return in 2011, according to New York Estate Lawyers. That may not be good news for heirs who decided to sell their inherited gains, however, thanks to higher capital gains taxes.

Before 2010, an heir could count on what’s called stepped-up basis on inherited property. This means capital gains taxes would be based on how much the asset was worth at the time the owner died, rather than the original purchasing price. Selling an item for what it’s worth currently would mean getting taxed on the difference between the current price and the selling price, rather than the difference between the purchasing price and the selling price.

This year, things are different, New York Estate Lawyers say. The new law of the land is the carry-over basis. Capital gains are now paid on the difference between sale price and the value of the asset when it was purchased, no matter how long ago that may have been. Not only does this mean higher taxes, but the heir would have to find out just how much the item was bought for whenever it was bought.

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Texas is one of the top tax havens for retirees, according to New York Estate Lawyers.

New York Estate Lawyers have discovered since Texas has no state personal income tax and a low 6.25 percent sales tax (which local taxes can raise up to 8.25 percent), it is a popular place for people looking to avoid taxes. Homeowners 65 or older can exempt $10,000 of the property’s value from school taxes and $3,000 is exempt from other local taxes. This doesn’t even count the standard $15,000 homestead exemption that all homeowners get in that state.

There is also no inheritance tax in the state, and the estate tax is limited to federal estate-tax collections. There are number of other states that qualify as retiree havens when it comes to taxes, including Washington, Florida, Nevada, Colorado, South Dakota, Tennessee, and New Hampshire.

It looks like the federal estate tax will be restored on January 1, 2011, and a lot of families are going to feel it, says a New York Estate Lawyer.

No one knows for sure, however, which is creating plenty of uncertainty when it comes to financial planning, especially for the retired, who may have to decide how much they can live on and how much they will have to give away as gifts to avoid being taxed.

The estate tax in 2009 allowed $3.5 million to be exempt, according to New York Estate Lawyers. The tax, should it return in 2011, will only allow a $1 million exemption, and rise from the old rate of 45 percent to a new rate of 55 percent.

That old saying about death and taxes being the only sure things may not be as sure as they it used to be, thanks to impending changes in U.S. tax law, a New York Estate Lawyer reports. It is still unknown whether Congress will do anything to extend or change the Bush-era tax cuts. Experts tell New York Estate Lawyers this makes planning details for business or finance quite a bit more difficult.

Since businesses do not know how much money will be available, they are afraid to hire. Investors in mom-and-pop organizations don’t know whether or not to sell their stocks before their taxes rise or to hold on to what they have. Estate planning has also become a thorny problem, since the estate tax may or may not return and even the level of taxation should it come back is unsure, New York Estate Lawyers say.

“’Uncertainty is the word of the month,” the CEO of a financial advisory firm which counsels small businesses told a New York Estate Lawyer. “How can you possibly make a decision when the future outside of your control is so cloudy.” The in-and-outs of financial law is tricky enough even without all the changes that new legislation can bring. It can take a great deal of time, effort, and skill just to keep abreast of the changes, let alone how to make them work so businesses can prosper and investors can make informed decisions.

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The last twenty years has seen a great increase in bankruptcy, not only in number, but in the age of those affected by bankruptcy, a New York Estate Lawyer reports. In 2007, about 7% of those who filed for bankruptcy were over the age of 64. The number was only 2.1% in 1991. The median age for bankruptcy was 43 in 2007, and only 36.5 in 1991.

There are more elderly people than before, but not enough to account for the shift in bankruptcy. A new study suggests credit card debt is the problem. New York Estate Lawyers learned from data gathered by the Consumer Bankruptcy Project that two-thirds of the elderly directly attributed their bankruptcy to credit card interest and fees. Only 53% of the younger group blamed credit cards. The median credit card debt for the elderly was $27,213, while the median debt for the younger set was $15,499. 44.8% of the elder debtors carried at least five cards, while only 32.4% of the younger debtors had as many.

The study did not show that the elderly were more likely to spend without regard for the consequences. It showed that the elderly were less likely to have “problems controlling spending” than their younger counterparts.

An American Business Family Foundation study shows that more jobs could be lost – as many as 1.5 million – if the United States Congress allows the federal estate tax to return.

The Economic Growth and Tax Relief Reconciliation Act caused the estate tax to expire at the end of 2009, according to New York Estate Lawyers. That same act will allow the return of the tax – at a rate of 55% for all assets over $1 million. The study says that if the estate tax returned at a 65% rate, more than 1.6 million jobs would be lost. If Congress merely allows the estate tax to return at the pre-Economic Growth and Tax Relief Reconciliation Act rate of 55%, between 1.4 million and 1.5 million jobs would be lost.

New York Estate Lawyers have found a number of national agricultural organizations, including the National Cattlemen’s Beef Association and the American Sheep Industry Association have tried to get U.S. Senate support to pass permanent estate tax relief legislation that will help preserve jobs.

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Life insurance has generally had fairly good treatment from tax laws over years, thanks to a reputation for protecting widows and orphans, a New York Estate Lawyer reports. It was the contention of the life insurance companies that their policies kept people from becoming poor when the family breadwinner died unexpectedly.

Gradually, however, the clientele of life insurance policies have become wealthier. Now the companies are selling their policies to wealthier Americans, often as a part of complex estate-tax plans. The clientele is changing, and so is the traditional role of life insurance. Congress is always looking for more revenue and it may turn to life insurance companies, citing their traditional offense of helping orphans and widows is no longer valid.

New York Estate Lawyers have found no current legislation or proposals before Congress to change tax law for life insurers. It is very likely that any such attempt would be opposed by insurance companies – and any increase in taxes in a bad economy will always face a stiff battle.

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The wife of one of the nation’s most prominent hedge fund owners, has taken over the hedge fund’s offices to give space to her own company – built for entertainment, not money management, sources tell a New York Estate Lawyer.

She’s known for her flamboyant ways, and the analysts at the hedge fund don’t even seem to notice anymore, even when she wears a low-cut leather dress in her husband’s (and her own) New York office.

“Eighteen years and no prenup means family office,” she told a New York Estate Lawyer.

New York Estate Lawyers have learned of a licensing deal between a Los Angeles company and the estate of Michael Jackson to create an online virtual world that will be known as “Planet Michael”.

The digital world will be part of the Entropia Universe, a massively multiplayer online game that currently has about 100,000 active users, run by a Swedish company.

The estate will work with the game publisher to get the game prepared for a late 2011 release, according to New York Estate Lawyers. It will allow fans to collect and trade virtual Jackson paraphernalia and earn credits by successfully passing challenges based on his music and dance moves.