Q: Asked at a recent party: so why hasn't President Clinton (not the identifying term actually used) been disbarred yet?
A: Now this is a legal column, not a political one. Thus, let's focus in on the "nuts and bolts." Apparently, President Clinton is licensed to practice in only one state – Arkansas.
In a recent column I wrote how "equity" (fairness) is part of the civil process. It is also a factor in any disciplinary action against an attorney by a state Supreme Court.
only begins proceedings after the matters giving rise to the concern are finished, as occurred in the O.J. Simpson situation and will probably be the case after the ongoing independent council probe actual ends (I am told it is not officially over) and all the grand jury proceedings have formally concluded.
But the stage has been set in Arkansas. U.S. District Judge Susan Webber Wright has referred to that State's Supreme Court her decision which states a finding of actions which obstructed the judicial process. Also at least one complaint by an Arkansas bar member has been filed.
Now whether these alleged occurrences, as seen by the Arkansas Supreme Court, would justify a suspension or a disbarment is another matter that either may or may not be played out. All we can do is watch what happens. But do not expect anything soon.
Q: Both a lawyer and a financial planner suggested that my parents transfer all of their assets, including their house, to me so that after three years they could, if necessary, apply for Medicad. I was given the impression that there is no other way to save the house.
A: Your parents do not have to fear estate taxes because they have tax wills that this year can pass on $1,350,000 tax free and in a few years can pass on $2,000,000. They have "Medigap" insurance and enough income to cover nursing home expenses of one and yet still permit the other to live comfortably. But assuming this proposed course of action is pursued, consider what happens with the house.
Your Mom and Dad paid $65,000 for the house which is now estimated to be worth $285,000. The house is free and clear.
The house can be transferred to you without gift taxes by using each one's $10,000 per year per person deduction and then deducting the remaining $265,000 from one or both $675,000 lifetime exemptions.
If they sold the house, there would be no capital gain tax because a couple can shelter up to $500,000 of gain. If you inherited the house and sold it for $285,000 there would be no gain because you received a "stepped up basis" from their $65,000 to $285,000. If the house was gifted to you and then sold, you will receive the $285,000 asset but will "step into their shoes" with the $65,000 basis. If you sold thereafter, your taxable gain would be $220,000 with a tax of approximately $50,000 that must be paid.
Thus, transferring appreciated assets to "save" them has built in booby traps. Also remember if they live in the house that you own, the IRS may require you to report as income the reasonable rent that they should be paying, even if they do not. If you transfer the house and they retain a life estate, then the life estate can be taken by the nursing home or could be enough to disqualify one or both from Medicad benefits. You really need to go back to the financial planner and the attorney and discuss all of the ramifications carefully and in depth.