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September 2010 Archives

PA court: Opponent can obtain correspondence between attorney and expert witness

A new opinion from the Pennsylvania Superior Court says that an opposing party can subpoena from an expert who will be testifying in a case the correspondence that the witness had with the attorney who retained him or her.  Generally, when a request for discovery asks for correspondence coming from an attorney, an objection will be raised that this is privileged attorney work product.  There is a rule of civil procedure that protects the mental impressions and work product of an attorney representing a party in a case from having to be disclosed.  However, there is also a rule which allows discovery of material regarding the opinions of an expert and the facts underlying those opinions.  In the case of Barrick v. Holy Spirit Hospital of Sisters of Christian Charity, the defense sought the correspondence between the plaintiff's attorney and the expert to examine whether and how the attorney was affecting the opinion of the expert.  The Superior Court ruled that the interest in obtaining the information about the expert's opinion on which he or she will testify takes priority over protecting attorney work product. This opinion was issued on September 16.  It remains to be seen whether the plaintiffs in the case will attempt to appeal to the Pennsylvania Supreme Court. The lesson for attorneys using expert witnesses is to avoid written correspondence with expert witnesses about the substance of their opinions and testimony.  Any such communications should only be oral and should not be recorded. Readers should not solely rely on this note but should consult with a competent attorney licensed in their state. You can also find more information in my firm's websites on Family Law and Wills and Estate Planning and Administration.

Attention Washington: Give us a compromise and certainty on 2011 estate tax

Here we are with little more than 100 days left in 2010 and we have no idea what the estate tax will be in 2011 (not to mention what will happen with income taxes which will impact a lot more people). As readers will recall, if nothing is done in Washington, the temporary tax cuts and changes passed in 2001 will expire and the tax code will revert to what it was in 2001.  For estates, that means an exemption of just $1 million with tax rates at 55 percent for amounts beyond the exemption.  While most Americans were not subject to paying the estate tax before, it can impact many people who would be considered middle class.  Many people are not aware that life insurance purchased and paid for by the decedent is subject to possible estate taxation if the decedent had the ability to determine who receives the insurance proceeds.  That is probably the case for most people who buy life insurance.A person who owns a modest suburban home, has put away money into a 401(k) for years and has several hundred thousand dollars worth of life insurance could end up leaving an estate subject to estate tax.  Such persons are hardly in the category of wealth of someone like Bill Gates, Warren Buffett or other multi-billionaires.There are techniques that we can use in estate planning to enhance the value of estate tax exemptions and to mitigate the impact of estate taxes but a major difficulty and frustration for professionals and clients in this field is the uncertainty.  Will the estate tax exemption really drop down to $1 million?  Will some new reform be passed that will set it at some higher level?  The one thing that is pretty certain now is that there is a distinct tax advantage for heirs and beneficiaries of people who die in 2010 as the beneficiaries of some very wealthy folks like the late New York Yankees owner, George Steinbrenner are finding out.  As a recent USA Today article noted, some people who were suffering from terminal illnesses in 2009 had a tax incentive to maintain life support until 2010 began and now with 2010 in its later months, there are terminally ill individuals and their families who may well be considering whether to withdraw life support measures to bring about death before 2010 ends.  I will make a prediction that we will see at least one episode on one of the television crime drama shows which involve a homicide intended to bring about a death in 2010 to avoid estate taxation.So what is happening now? As reported in that same USA Today article, in 2009, the Obama Administration proposed freezing the estate tax at the 2009 levels with a $3.5 million exemption and 45 percent rate on assets exceeding the exemption amount.  The House of Representatives approved this proposal but Republicans blocked action in the Senate.  Meanwhile, in July of this year, Sen. John Kyl (R-Arizona) and Sen. Blanche Lincoln (D-Arkansas) reintroduced a proposal that would set the estate tax to have a $5 million exemption and a 35 percent tax rate on assets exceeding that exemption amount.To try to get some historical perspective on this, I found an IRS publication on the history of the estate tax. The estate tax as we know it today goes back to 1916.  Back then, there was an exemption amount of $50,000.00  I ran that amount through a CPI calculator and found that adjusted for inflation, $50,000.00 in 1916 would have the purchasing power of $1,001,431.19 in 2010.  So initially, it might seem that a $1 million exemption at least would be in line with the original 1916 exemption amount.  However, other factors indicate that the reach of the estate tax has expanded significantly.  First, in 1916 the top tax rate was only 10 percent whereas in 2011, it will be 55 percent. (It was actually as high as 77 percent from 1941 through 1976.)  Perhaps more significantly, the types of assets that are subject to taxation has expanded since 1916 - most notably taxation of life insurance proceeds which many families depend upon to replace the income of a family breadwinner.The estate tax was originally intended to limit concentration of major concentrations of wealth in the hands of a few powerful families (as well as to provide revenue).  Indeed Bill Gates and Warren Buffett, two of the richest men on the planet are outspoken that there should be estate taxation to limit over-concentration of wealth.  However, to limit the impact of estate taxation to those on whom it is really intended - the very wealthy, it seems reasonable to have an exemption that is significantly higher than the $1 million that will result from the 2011 automatic reversion.  Whether that level should be $3.5 million or $5 million can be debated but it is time for the politicians in Washington to figure out a compromise and get it done. 

Same-sex couple married in MA cannot get divorce in Texas says state appeals court

In Texas, an appeals court has overturned a trial court ruling and held that a same-sex couple who were married in Massachusetts cannot obtain a divorce in Texas.  Click the link to read the court opinion in In re Marriage of J.B. and H.BTexas amended its constitution in 2005 to add a provision that states:
(a) Marriage in this state shall consist only of the union of one man and one woman.
(b) This state or a political subdivision of this state may not create or recognize any legal status identical or similar to marriage.
Tex. Const. art. I, ยง 32.
The Texas appeals court held that given this provision, Texas courts cannot grant a divorce to a same-sex couple because Texas law does not recognize the existence of a marriage to dissolve by divorce in the first place.  The court did not that in the statute regarding divorces that a person can bring an action to declare a marriage void but that the plaintiff in this matter did not seek a declaration that the marriage was void but a divorce to dissolve the marriage.  The court would not permit this because Texas law does not recognize the marriage to exist in the first place.The plaintiff in the case attempted to argue that the marriage should be recognized under principles of comity.  Essentially, comity is a practice in which one sovereign, as a matter of mutual respect, will honor the laws of another sovereign.  The Texas court held that while comity is a common practice, it will not be applied if the result would be contrary to Texas public policy.  The plaintiff argued that there was case law in New York which has not legalized same-sex marriage but that such marriages in other states could be recognized on comity grounds.  The Texas court distinguished those cases by noting that New York has not passed a law explicitly outlawing same-sex marriage as Texas has so while recognition might not be against New York public policy, it would be against Texas public policy.The Texas appeals court also held that same-sex couples are not part of a protected class such that there was violation of the 14th Amendment provisions of the U.S. Constitution concerning equal protection and due process.  This puts the Texas ruling at odds with the federal court ruling in Perry v. Schwarzenegger,  the case challenging California's Proposition 8.  The current federal court ruling striking down Proposition 8 on 14th Amendment grounds has no impact on Texas yet and would not unless and until the U.S. Supreme Court were to uphold it the U.S. Supreme Court  a lower federal court which has jurisdiction over Texas were to so rule.Going forward, I would expect that this ruling will stand in Texas courts. A more likely avenue for overturning that would seem to be the Perry case or another federal case going to the U.S. Supreme Court and ruling that denial of same-sex marriage would violate the 14th Amendment.  Or, another possibility could come out of a future challenge to the federal Defense of Marriage Act (DOMA) provision that allows states to not recognize same-sex marriages from other states.
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