Stepped Up Basis In 2010 (August 2010)

In the Estate Planning Insights column for October 2009, I explained the “stepped up basis.”  When a person dies owning property such as real estate or stocks, the fair market value of that property on the date of death will become the new tax basis of that property.  You may review the October 2009 article on this subject by going to

However, if anyone dies in the year 2010, those inheriting property should understand the special rules which apply only to deaths in read more

Why You Should Convert to a Roth IRA (July 2010)


Forget all the articles you have read about whether you should convert to a Roth IRA.  Forget about “Roth IRA Conversion Calculators.”  If you have a substantial amount in a retirement plan that can be converted to a Roth IRA, you should convert this year.  I am confident about this because my son, Ethan Okura, and I have developed a technique for converting to a Roth IRA in a special way which greatly reduces income taxes in the conversion.

Before I explain read more

The New Hawaii Estate Tax (June 2010)

There is now a new Hawaii estate tax.  The bill proposing the tax (House Bill 2866) was vetoed by Governor Lingle on April 25, 2010.  The Hawaii legislature overrode the veto on April 29, 2010, and the bill became Act 74 on April 30, 2010.  It imposes a tax on the estates of persons dying after April 30, 2010.

Let me first explain the history of the Hawaii inheritance tax and the Hawaii estate tax.  An estate tax is a tax on the property of someone who has died.  The federal death tax is an read more

Protect Your Home From Medicaid Liens – Part 3 (May 2010)


Last month and the month before, I explained how to protect your home from Medicaid liens.  In my April column, I described how a parent can transfer the family residence to the children, and keep a “life estate.”

The life estate allows the parent to continue to live in the home for life.  If the parent goes into a nursing home and receives Medicaid help, the government can still put a Medicaid lien on the property.  The lien is like read more

Protect Your Home From Medicaid Liens – Part 2 (April 2010)


Last month we discussed the dangers of having the government put a Medicaid lien on your home and property if you end up in a nursing home.  Remember, a “revocable living trust” cannot protect your home from nursing home costs.

Some senior citizens who are worried about Medicaid liens just give the house to the children.  I do not think this is wise.  There are many cases in which the parents gave the home to the children, then the children read more

Protect Your Home From Medicaid Liens (March 2010)


More and more senior citizens are becoming concerned about nursing home costs.  No one really wants to go to a nursing home.  Nearly every elderly person would prefer to stay at home.  However, no matter how much children love their parents, caring for an elderly parent at home can be so stressful that a stay in a nursing home often becomes necessary.  A Kaiser Family Foundation Survey in 2003 found that if you are 65 years of age or older, there is a 45% read more

An Unusual Year for Tax Law (February 2010)


There is no federal estate tax this year.  Since the State of Hawaii has no inheritance tax, Hawaii residents can die this year with any amount of assets and pay no death taxes at all.  This is only for the year 2010.  For someone dying in 2011 or later years, any assets not inherited by a spouse or a charitable organization will be taxed, starting at a tax rate of 41% from the first dollar over 1 million, and going up as high as 55% for amounts over 3 million read more

Tenants by the Entirety (December 2009)


Most married couples in Hawaii buy their home as “tenants by the entirety.”Many have transferred their home to their trusts.  Which is better?  To own your home as tenants by the entirety, or to put your home into your trusts?  Let’s look at the advantages and disadvantages.

First, I apologize to those of you who are unmarried, divorced or a widow or widower.  “Tenancy by the entirety” can only be used by a married couple.  Read the most recent deed for your read more

New Medicaid Rules Are Now Effective (November 2009)

The February 2006 Estate Planning Insights column was entitled “Big Change in Medicaid Laws.”  On February 1, 2006, Congress passed the Deficit Reduction Act of 2005.  President Bush signed the bill into law on February 8, 2006.  This new federal law makes important changes to the rules about qualifying for Medicaid for nursing home costs.  These are the biggest changes in this area of law since 1993.

According to the Deficit Reduction Act, some important parts of the new law were to be read more

The Stepped Up Basis (October 2009)

In estate planning, it is important to understand “stepped up basis.”  When you buy property (for example, real estate or stocks) your “tax basis” in the property is the amount you pay for the property.  When you sell the property, you have profit or “gain” equal to the difference between the sale price and tax basis.  You have to pay “capital gains taxes” on your gain.

For example, suppose you bought a vacant lot many years ago for $10,000.  Now, that same land is worth $110,000.  read more