What Is An Ethical Will?
By: Daniel P. Kapsak
Life Testaments/Ethical Wills
Life Testaments, or ethical wills, are a way to share your values, blessings, life’s lessons, hopes and dreams for the future, love, and forgiveness with your family, friends, and community. Although these names frequently cause confusion, Life Testaments/Ethical Wills are simply writings intended to provide loved ones with more formal and tangible expressions of those values, guiding principles, and wishes than conversations that may be planned but never held.
Life Testaments are not new. Their use may be found, for example, in Hebrew Scriptures dating back 3000 years ago (Genesis 49). References to this tradition are also found in the Christian Scriptures (John 15-18) and in other cultures.
Initially, Ethical Wills or Life Testaments were transmitted orally. Over time, they evolved into written documents. “Life Testaments/Ethical wills” are not considered legal documents: they do not convey your wishes in the event of a terminal condition or irreversible come as may be found in a Living Will; nor do they express your wishes as to your materials possessions as may be found in your will.
Today, Life Testaments are being written by people at turning points in their lives: facing challenging life situations and at transitional life stages. They are usually shared with family and community while the writer is still alive, but may also present a person’s legacy of values and beliefs after death.
Life Testaments may be one of the most cherished and meaningful gifts you can leave to your family and community. These personal documents reflects the “voice of the heart.” Think of it as a love letter to your family. Every Life Testament is as unique as the person writing it.
After reading a number of these documents, there are common themes that run through many of them. While many older ethical wills contained burial instructions, blessings, and personal and spiritual values, more modern Life Testaments seem to share the same common themes:
- Important personal values and beliefs;
- Important spiritual values;
- Hopes and blessings for future generations;
- Life’s lessons;
- Love;
- Forgiving others and asking for forgiveness.
There are many personal reasons for writing a Life Testament:
- We all want to be remembered, and we all will leave something behind;
- If we don’t tell our stories and the stories from whom we come, no one else will and they will be lost forever;
- It helps you identify what you value most and what you stand for;
- By articulating what we value now, we can take steps to insure the continuation of those values for future generations;
- You learn a lot about yourself in the process of writing an ethical will;
- It helps us come to terms with our mortality by creating something of meaning that will live on after we are gone;
- It provides a sense of completion in our lives.
Here are some occasions when you might consider writing an Life Testament.
Betrothed Couples:
Today, the overall divorce rate in our society has “declined” to about 50%. However, 70% of divorces occur within the first 5 years of marriage. A Life Testament can help a couple to clearly understand each other’s values, and it can contribute to building a foundation of common values for the marriage.
Expectant and new parents:
It’s been said that children don’t come with a “user’s manual.” A Life Testament at this stage will provide a foundation of common values upon which to approach childrearing. In addition, it can help in conflict resolution by increasing the understanding of each other’s important values.
Divorcing Couples:
Even in divorce, a Life Testament can provide some security and reassurance for the children involved, by providing tangible evidence what’s important to their parents. It’s even possible that in a divorce situation, the “blame factor” might be minimized.
Growing families:
For growing families a Life Testament can be used to teach values to the children. By writing these values on a document, it has the potential to improve communication with the children.
Empty-Nesters
Provides the opportunity to launch adult children and enter into a new relationship phase.
Middle age and beyond:
This is one life stage that writing a Life Testament is most fitting. It is an opportunity to harvest our life experiences, convert these experiences into wisdom, and allow for the fulfillment of the responsibility of passing this wisdom on to future generations
End of Life:
If energy and time permits, writing a Life Testament at the end of life adds a transcendent dimension to our lives by providing a link to future generations. In essence, you are providing your legacy of values and beliefs for a time when you are gone.
Writing a Life Testament may seem difficult. However, it can be viewed as the writing of a love letter to your family. Life Testaments can include personal and spiritual values, hopes, experiences, love, and forgiveness. It may well be one of the most cherished gifts you can give to your family.
Here are three basic approaches for creating your Life Testament.
Approach #1
Using an outline structure and a list of items to choose from. This is by far the easiest way to get started and it can build your confidence quickly. You can create a rough draft to work from in less than an hour. The Ethical Will Writing Guide Workbook and The Ethical Will Writing Guide software were developed for this approach. This approach is also covered in Ethical Wills: Putting your values on paper.
Approach #2
Using guided writing exercises to help you create content for your Life Testament. The Ethical Will Resource Kit contains several guided exercises to help you. Ethical Wills: Putting your values on paper contains even more exercises.
Here are some ideas to help you get started.
- Over time, write down ideas --a few words or a sentence or two about things like:
o My beliefs and opinions
o Things I did to act on my values
o Something I learned from grandparents / parents / siblings / spouse / children
o Something I learned from experience
o Something I am grateful for
o My hopes for the future
- Write about important events in your life
- Imagine that you only had a limited time left to live. What would you regret not having done?
- Save items that articulate your feelings, e.g., quotes, cartoons, etc
- Review what you’ve collected after a few weeks or months
- Clump related items together -- patterns will emerge
- Revise and expand the related categories into paragraphs
- Arrange the paragraphs in an order that makes sense to you
- Add an introduction and conclusion
- Put this aside for a few weeks and then review and revise
Approach #3
Starting with a blank sheet of paper. This is the most open-ended approach. Keeping a journal or diary is an excellent way to write about your thoughts, feelings, and experiences. Over time, review what you’ve written. Themes will emerge from which you can create a comfortable structure for your Life Testament.
The Terri Schiavo Tragedy
By: Bruce Alan Danford, Esq.
This article is not meant to advance the position taken by either the parents of Terri Schiavo nor her husband in this most tragic event. I certainly do not claim any theological or spiritual insight in the arguments advanced by either side. I do strongly advocate the premise that a recurrence of a situation similar to this need not occur in anyone else’s life, especially your life.
Over the past several decades there has been a growing body of both statutory law (laws enacted by either a state legislature or the U.S. Congress) and case law (interpretation of the law or the Constitution by the Courts) as to whether or not and to what extent the refusal to accept medical treatment is effectively assisted suicide or not. The governing law is that the refusal to accept medical treatment is not assisted suicide and is entirely within the rights of an individual. Both statutory and case law have also continually upheld the right of an individual to decide his or her own medical treatment or right to refuse medical treatment. I cannot expound upon this any more eloquently and concisely than Supreme Court Chief Justice Rehnquist did in Cruzan v. Director, Missouri Dep't of Health, 497 U.S. 261, 269-270 (U.S. 1990).
At common law, even the touching of one person by another without consent and without legal justification was a battery. Before the turn of the century, this Court observed that "no right is held more sacred, or is more carefully guarded, by the common law, than the right of every individual to the possession and control of his own person, free from all restraint or interference of others, unless by clear and unquestionable authority of law." This notion of bodily integrity has been embodied in the requirement that informed consent is generally required for medical treatment. Justice Cardozo, while on the Court of Appeals of New York, aptly described this doctrine: "Every human being of adult years and sound mind has a right to determine what shall be done with his own body; and a surgeon who performs an operation without his patient's consent commits an assault, for which he is liable in damages." The informed consent doctrine has become firmly entrenched in American tort law.
The logical corollary of the doctrine of informed consent is that the patient generally possesses the right not to consent, that is, to refuse treatment. Until about 15 years ago and the seminal decision in In re Quinlan the number of right-to-refuse-treatment decisions was relatively few. Most of the earlier cases involved patients who refused medical treatment forbidden by their religious beliefs, thus implicating First Amendment rights as well as common-law rights of self-determination. More recently, however, with the advance of medical technology capable of sustaining life well past the point where natural forces would have brought certain death in earlier times, cases involving the right to refuse life-sustaining treatment have burgeoned. Cruzan v. Director, Missouri Dep't of Health, 497 U.S. 261, 269-270 (U.S. 1990) (Internal citations omitted.)
An individual’s personal ethical, religious, or spiritual beliefs regarding these deeply personal matters are exactly that: theirs and theirs alone as it pertains to themselves. In short, the United States Supreme Court has upheld in several cases the right of an individual to decide for themselves whether or not they wish to accept medical treatment.
The tragedy in the circumstances wasn’t that Terri Schiavo had made the decision to accept or decline medical treatment. The tragedy was she had not written her decisions down. Ms. Schiavo had not prepared a living will or a medical power of attorney expressing her wishes and desires. This left her parents, her husband, her friends, and her loved ones uncertain as to her wishes and desires. I have no great insight as to the motivations behind the acts of either party, the parents or the husband, in this matter. I do know some small modicum of dignity and privacy was denied her during the one period of Ms. Schiavo’s life when all of us should have some. It was denied both her and her family when different groups wishing to advance their own beliefs intruded into Ms. Schiavo’s life and ultimate death.
Please read the following timeline and answer for yourself the following questions:
Ø Do I want my family and friends to undergo such a horrific sequence of events spanning the better part of two decades?
Ø What do I want to happen if I were in similar circumstances?
Ø Who would I trust to enforce my decisions?
Ø And most important of all, have I prepared the necessary documents, a living will and a medical power of attorney, to ensure neither I nor my family ever have to undergo such a protracted, exhausting chain of events?
A living will and a medical power of attorney can be the greatest gift you ever give your loved ones.
___________________________________________________________________________
Timeline of the Terri Schiavo case (excerpted in part, from the AP story: Herald Tribune, Sarasota, FL, 10.15.03 and the timeline, Key Events in the Case of Theresa Marie Schiavo, Steven Haidar (Dartmouth College/University of Miami) and Kathy Cerminara (Nova Southeastern University, Shepard Broad Law Center).
- Feb. 25, 1990: Terri Schiavo collapses in her home. Doctors believe a potassium imbalance caused her heart to stop, temporarily cutting off oxygen to her brain.
- Nov. 1992: Terri's husband, Michael, wins malpractice suit that accused doctors of misdiagnosing his wife; jury awards more than more than $700,000 for her care, Michael receives an additional $300,000.
- Feb. 14, 1993: Terri Schiavo's parents, Bob and Mary Schindler, have a falling out with Michael over the malpractice suit money and Terri's care.
- July 29, 1993: Bob and Mary Schindler file petition to have Michael Schiavo removed as Terri's guardian. The case is later dismissed.
- May 1998: Michael Schiavo files petition to remove Terri's feeding tube.
- Feb. 11, 2000: Circuit Judge George W. Greer rules feeding tube can be removed.
- Jan. 24, 2001: 2nd District Court of Appeal upholds Greer's decision.
- March 29, 2001: Greer rules feeding tube to be removed April 20.
- April 18, 2001: Florida Supreme Court refuses to intervene in the case.
- April 20, 2001: U.S. District Judge Richard Lazzara grants the Schindlers a stay until April 23 to exhaust appeals.
- April 23, 2001: U.S. Supreme Court refuses to intervene.
- April 24, 2001: Feeding tube is removed from Terri Schiavo.
- April 26, 2001: Circuit Judge Frank Quesada orders doctors to reinsert Terri's feeding tube; the Schindlers pursue lawsuit against Michael Schiavo, accusing him of committing perjury by saying his wife did not want to be kept on life support.
- April 30, 2001: Lawyers for Michael Schiavo file emergency motion with appellate court asking it to order removal of Terri's feeding tube.
- July 11, 2001: 2nd District Court of Appeal sends case back to Judge Greer.
- July 18, 2001: Schindlers ask Greer to let their doctors evaluate Terri before making a final decision on removing the feeding tube.
- Aug. 10, 2001: Greer denies the Schindlers' evaluation request, as well as their request to remove Michael Schiavo as guardian.
- Sept. 26, 2001: Schindlers' attorneys argue before 2nd District Court of Appeal, citing testimony from seven doctors who say Terri can recover with the right treatment.
- Oct. 3, 2001: 2nd District Court of Appeal delays removal of feeding tube indefinitely.
- Oct. 17, 2001: 2nd District Court of Appeal rules that five doctors can examine Terri to determine whether she has any hope of recovery. Two doctors are picked by the Schindlers, two are picked by Michael Schiavo and one is picked by the court.
- Feb. 13, 2002: Mediation attempts fail; Michael Schiavo again seeks to be allowed to remove Terri's feeding tube.
- Oct. 12, 2002: Weeklong hearing begins in the case. Three doctors, including the one appointed by the court, testify that Terri is in a persistent, vegetative state with no hope of recovery. The two doctors selected by the Schindlers say she can recover.
- Nov. 12, 2002: The Schindlers' attorney says medical records suggest Terri's condition may have been brought on by physical abuse, and asks for more time to get more evidence.
- Nov. 22, 2002: Judge Greer rules that there is no evidence that Terri has any hope of recovery and orders feeding tube to be removed Jan. 3, 2003.
- Dec. 13, 2002: Judge Greer stays order to remove feeding tube on Jan. 3 until the 2nd District Court of Appeal reviews the case.
- April 4, 2003: Schindlers' attorneys ask Second District Court of Appeal panel to "err on the side of life" and overturn Greer's ruling.
- June 6, 2003: 2nd District Court of Appeal upholds Greer's ruling.
- July 15, 2003: The 2nd District Court of Appeal refuses to rehear the case.
- Aug. 22, 2003: The Florida Supreme Court declines to hear case.
- Sept. 2, 2003: Schindlers take case to federal court seeking judicial intervention.
- Sept. 17, 2003: Judge Greer sets Oct. 15 date for removal of tube.
- Oct. 3, 2003: Attorney General Charlie Crist says he won't get involved in case.
- Oct. 7, 2003: Gov. Jeb Bush files a federal court brief urging Terri Schiavo be kept alive.
- Oct. 10, 2003: U.S. District Judge Lazzara rules he does not have jurisdiction to intervene in case.
- Oct. 13, 2003: Protesters and Schindler family begin 24-hour vigil at Pinellas Park hospice where Terri Schiavo lives.
- Oct. 14, 2003: 2nd District Court of Appeal again refuses to block tube removal; Schindler attorneys declare legal options exhausted.
- Oct. 15, 2003: Doctors remove feeding tube; Bush pledges to search for possible legal options to resume feedings.
- Oct. 20, 2003: The State of Florida's House of Representatives, vote 68-23 to give Governor Jeb Bush the authority to intervene and reinstate the feedings.
- Oct. 21, 2003: The Florida Senate passes the same measure by a 23-15 vote. Governor Jeb Bush orders the feeding tube reinserted.
- Oct. 23, 2003: The New York Times reports that legal scholars indicate that the Florida Legislature may have initiated a constitutional crisis.
- Oct. 24, 2003: The ACLU announces that they will join the legal wrangling on the side of Michael Schiavo. The AARP says that they are also looking into the case.
- Oct. 29, 2003: Michael Schiavo's attorneys file briefs stating that the law granting Governor Bush the power to reinstate Terri's feeding tube is unconstitutional - violating Terri's right to privacy as well as the separation of judicial and executive powers as set forth in the Florida State Constitution.
Bush's lawyers immediately file a counter motion to have the suit thrown out on technical grounds. This motion is rejected.
- Nov. 7, 2003: Though the Florida legislation provided for a new guardian (Dr. Jay Wolfson) for Terri, a judge rules that the Schindlers can seek to have either Terri's brother or sister appointed to this position.
- Nov. 10, 2003: Bush files his appeal with the Second District Court in Lakeland, FL, resulting in a stay for the removal of the feeding tube.
- Nov. 14, 2003: Circuit Judge W. Douglas Baird lifts the stay, arguing that delaying the removal of Terri's feeding tube violates her right to privacy.
In response, the Second District Court of Appeals issues an indefinite stay on the removal of the feeding tube.
- Nov. 19, 2003: Governor Bush's legal team file briefs stating that a jury trial is necessary to determine whether Terri wishes to be kept alive via medical interventions. Bush also seeks to remove Judge Baird from the case.
- Nov. 21, 2003: Florida Senators Stephen Wise and Jim Sebesta introduce legislation (S692) that would require persons in persistent vegetative states to be administered medically supplied nutrition and hydration in the absence of a living will, regardless of family beliefs about what those patients would have wanted. (The measure is withdrawn from consideration on April 16, 2004.)
- Dec. 1, 2003: Jay Wolfson, guardian ad litem, concludes in his report that Terri Schiavo is in a persistent vegetative state with no chance of improvement.
- Dec. 7, 2003: A St. Petersburg Times-Miami Herald sponsored poll reveals that 65% of Florida voters oppose "Terri's Law." Opponents of the law cut across party lines, religious affiliation, age, income and ethnicity.
- Dec. 10, 2003: The 2nd District Court of Appeals refuses to remove Judge Baird, who is the presiding judge in the state-court lawsuit filed October 21, 2003.
- Jan. 5, 2004: The Schindler family petitions the Pinellas County Circuit Court to reappoint Jay Wolfson, the guardian ad litem.
- Jan. 8, 2004: Judge Demers rejects the request to reappoint the guardian ad litem, citing the pending court decisions over the constitutionality of “Terri’s Law” as reason to wait on any action.
- Feb. 13, 2004: The 2nd District Court of Appeals reverses Judge Baird’s ruling (in the case filed October 21, 2003) that denied the Schindlers permission to intervene in Michael Schiavo’s Constitutional challenge to “Terri’s Law.” The Court explains that Judge Baird did not follow proper procedure. The court also gives permission to Governor Bush to question several witnesses who Judge Baird previously had ruled could not offer any relevant testimony.
- March 12, 2004: Judge Baird again rejects the Schindlers’ request to intervene in Michael Schiavo’s suit that questions the constitutionality of “Terri’s Law.”
- March 20, 2004: Pope John Paul II addresses the World Federation of Catholic Medical Associations and Pontifical Academy for Life Congress on Life-Sustaining Treatments and Vegetative State: Scientific Advances and Ethical Dilemmas. His remarks spark widespread interest and controversy.
- March 29, 2004: Nursing home workers discover four “fresh puncture wounds” on one arm and a fifth wound on the other arm; the workers state that a hypodermic needle appears to have caused the wounds. Attendants discovered the wounds shortly after the Schindlers visited Terri Schiavo for 45 minutes. Toxicology reports indicate that no substance was injected into Terri Schiavo. Clearwater police later conclude that the marks might have been made by a device used to move Ms. Schiavo and, in any case, that no evidence of abuse or other wrongdoing could be found.
- March 29, 2004: Judge Greer denies a motion filed by the Schindlers seeking to have Michael Schiavo defend himself in a hearing; they allege that he is violating a 1996 court order that requires him to share a sufficient amount of Terri Schiavo’s medical information. Michael Schiavo claims that he has shared an adequate amount of information through attorneys.
- April 16, 2004: S692 is withdrawn from consideration in the Florida Legislature.
- April 23, 2004: The 2nd District Court of Appeals rules that the Pinellas County trial court has jurisdiction to hear and is the proper venue for the case Michael Schiavo has filed against Governor Bush asserting that "Terri's Law" is unconstitutional.
- May 6, 2004: Pinellas Circuit Judge W. Douglas Baird rules that "Terri's Law," sought and signed by Gov. Bush and approved by the Legislature on October 21, 2003, is unconstitutional. The governor appeals the ruling.
- June 1, 2004: The 2nd District Court of Appeals grants a motion from attorneys for Michael Schiavo to send the case directly to the Florida Supreme Court and bypass a lower-court review. Meanwhile, attorneys for Gov. Bush file a motion asking that all appeals be halted until the issue of whether Michael Schiavo has the authority to fight the governor on his wife's behalf is resolved.
- June 16, 2004: Florida's Supreme Court, pointing to "a question of great public importance requiring immediate resolution by this Court," accepts jurisdiction and sets oral arguments for August 31, 2004.
- June 30, 2004: 2nd District Court of Appeals affirms Judge Baird's March 12th ruling denying the Schindlers the ability to intervene in the lawsuit over the constitutionality of "Terri's Law."
- July 19, 2004: The Schindlers file a motion in the Circuit Court for Pinellas County seeking relief from judgment in Schindler v. Schiavo. Based in part upon the recent statement by Pope John Paul II, they argue that the orders mandating withdrawal of Terri's feeding tube and authorizing Michael to challenge the constitutionality of "Terri's Law" violate her "free exercise of her religious beliefs [and] her right to enjoy and defend her own life and, in fact, imperil her immortal soul."
- Aug. 31, 2004: The Florida Supreme Court hears oral arguments in the case.
- Aug. 31, 2004: Circuit Judge George Greer, opposed for re-election by an attorney who was known to oppose Greer's rulings in the Schiavo case, is re-elected by a large margin.
- Sept. 23, 2004: Florida's Supreme Court, unanimously affirming the trial court order, declares "Terri's Law" unconstitutional.
- Oct. 4, 2004: Governor Bush files a motion and then an amended motion for rehearing and clarification of the Florida Supreme Court opinion issued on September 23, 2004.
- Oct. 21, 2004: Florida Supreme Court denies Governor Bush's amended motion for rehearing and clarification, as well as a motion seeking permission to file a second amended motion for rehearing and clarification. The Court issues a mandate.
- Oct. 22, 2004: In Pinellas County, at the trial-court level, Judge Greer denies the motion filed by the Schindlers on July 19, 2004. He also stays the removal of Terri's feeding tube until December 6, 2004.
- Oct. 25, 2004: Governor Bush files a motion with the Florida Supreme Court asking that it recall the mandate it issued on October 22nd because he will be filing a petition for certiorari regarding this case with the United States Supreme Court.
- Oct. 27, 2004: The Florida Supreme Court grants Governor Bush’s motion asking that it recall the mandate issued on October 22nd. Proceedings in the trial and all appellate courts in the case of Bush v. Schiavo are stayed until November 29, 2004.
- Dec. 1, 2004: Governor Bush petitions the U.S. Supreme Court to overturn the Florida Court's September 23rd ruling which struck down "Terri's Law."
- Jan. 24, 2005: The U.S. Supreme Court refused to hear Governor Bush's appeal. However, other legal motions filed by Terri's parents, Bob and Mary Schindler, are still pending. Former court appointed guardian for Schiavo, Jay Wolfson, urged an independent medical evaluation.
- Jan. 28, 2005: An attorney for the family of Terri Schiavo asked Greer to allow him to proceed with a motion arguing that her due-process rights were violated because she has never had her own attorney.
- Feb. 22, 2005: The 2nd District Court of Appeal cleared the way for Michael Schiavo to remove Terri's feeding tube, then Pinellas Circuit Court Judge George Greer issued an emergency stay blocking removal of Terri Schiavo's feeding tube until 5 p.m. EST the next day.
- Feb. 23, 2005: Greer extended the stay by two days, saying he needed time to decide whether her parents should be allowed to pursue other legal and medical options.
- Feb. 24, 2005: An attorney for the Schindlers claimed that the Department of Children & Families is seeking a 60-day stay on the removal the feeding tube while it investigates new allegations of abuse and neglect.
- Feb. 25, 2005: Greer ruled that Michael Schiavo may order the removal of the feeding tube at 1 p.m. March 18th.
- March 16, 2005: U.S. House passed a bill aimed at keeping Terri alive.
- March 17, 2005: Florida House passed a bill intended to keep Terri alive; U.S. Senate passed a bill different from the U.S. House version.
- March 18, 2005: The feeding tube is removed. Judge Greer ruled against Congressional Republicans who had tried to put off tube removal by seeking Schiavo's appearance at hearings.
- March 19, 2005: Congressional leaders from both parties agreed on a bill that would allow the tube to be reconnected while a federal court reviewed the case. The White House said President George Bush would sign the bill when it is passed.
- March 20, 2005: U.S. Senate passed the bill during an emergency hearing.
- March 21, 2005: U.S. House of Representatives passed the same bill. President Bush signed it into law.
- March 22, 2005: U.S. District Judge James Whittemore refused to order the reinsertion of the tube. The judge said the Schindlers failed to establish a "substantial likelihood of success" on the merits of their arguments. The parents appealed to the U.S. 11th Circuit Court of Appeals in Atlanta.
- March 23, 2005: On the fifth day of the tube removal, the 11th Circuit declined to order the reinsertion of the tube. The Schindlers vowed to appeal to the Supreme Court.
- March 24, 2005: The U.S. Supreme Court refused the appeal; Judge Greer rejected a request from Florida's Dept. of Children & Families for custody of Schiavo.
- March 25, 2005: Judge Whittemore refused for a second time, to order the reinsertion of Ms. Schiavo's feeding tube; the Schindlers appeal Judge Whittemore’s order to the U.S. Court of Appeals for the 11th Circuit. The 11th Circuit affirms. The Schindlers announce that they will pursue no more federal appeals; the Schindlers file an emergency motion attempting to convince Judge Greer to reinsert the tube, at least until the 11th Circuit decides their appeal.
- March 26, 2005: Judge Greer denies the Schindlers' motion; the Schindlers appeal to the Florida Supreme Court to reverse Judge Greer's refusal to reinsert the tube, but the Florida Supreme Court refuses to do so, citing a lack of jurisdiction.
- March 27, 2005: In an interview on CNN, Governor Bush says: "I cannot violate a court order. I don't have power from the U.S. Constitution, or the Florida Constitution for that matter, that would allow me to intervene after a decision has been made."
- March 29, 2005: The Rev. Jesse Jackson leads a prayer service outside the hospice and speaks out against removal of Schiavo's feeding tube.
- March 30, 2005: The 11th Circuit, acting both through a panel and as a whole, denies the motion for rehearing it permitted the Schindlers to file; the U.S. Supreme Court refuses to review the 11th Circuit ruling.
- March 31, 2005: Terri Schiavo dies.
Jobs and Growth Tax Relief Reconciliation Act of 2003
Dear Client,
As you probably know, Congress recently passed the "Jobs and Growth Tax Relief Reconciliation Act of 2003," which contains significant tax cuts for stockholders, individual taxpayers, couples, and businesses. Here's what you need to know right now about this important new legislation:
Reductions in taxes on dividends and capital gains.
An important component of the 2003 Jobs and Growth Act, particularly if you are an investor, is a reduction in the taxes on dividends and capital gains. These lower rates can mean considerable tax savings for taxpayers, although they are not permanent, since they will cease to apply after 2008, barring additional Congressional action to extend them. Here are more details regarding dividends and capital gains under the Act.
Under the 2003 Jobs and Growth Act, effective for sales and exchanges (and installment payments received) after May 5, 2003, and before Jan. 1, 2009, the 10% and 20% rates on adjusted net capital gain are reduced to 5% (zero, in 2008) and 15% respectively, for both regular tax and the alternative minimum tax (AMT). The lower rates apply to sales of capital assets held more than one year. Because this 5% drop in the capital gains rate is more than the 3.6% drop in the top individual rate under the 2003 Jobs and Growth Act and the 2% drop in other individual rates, the advantage of long-term capital gains over other types of taxable income is even greater for high earners than it was before. Note, however, that there is no cut in the 28% capital gains rate affecting collectibles and certain small business stock and the 25% rate affecting gains representing depreciation claimed on MACRS realty.
For dividends received in tax years beginning after 2002 and before 2009, dividends received by an individual shareholder from domestic corporations are treated as adjusted net capital gain for purposes of applying the capital gain tax rates. In other words, the dividends are taxed at rates of 5% (zero, in 2008) and 15% for both regular tax and AMT purposes. This results in substantial tax savings for dividend recipients given the fact that, under pre-2003 Jobs and Growth Act law, the dividends were taxed as ordinary income at rates up to 38.6%.
Acceleration of certain previously enacted tax benefits and reductions for individuals.
An important component of the 2003 Jobs and Growth Act speeds up previously enacted tax benefits and reductions that were scheduled to be phased in over the next several years. These acceleration provisions include:
... Acceleration of 10% individual income tax rate bracket expansion. The expansion in the width of the 10% rate bracket for single and joint filers is accelerated from 2008 to 2003. thus, under the 2003 Jobs and Growth Act, the 10% tax bracket for 2003 ends at $14,000 (up from $12,000) of taxable income for joint filers and $7,000 (up from $6,000) for single filers and marrieds filing separately, and for 2004, both these figures will be indexed for inflation. The endpoint of the 10% bracket for heads of household remains unchanged at $12,000. From 2005 through 2007, the end point of the 10% bracket will revert to the $12,000/$6,000 levels (and under 2001 EGTRRA, will go up to $14,000/$7,000 for 2008 through 2010).
... Acceleration of reduction in individual income tax rates. The 2003 Jobs and Growth Act change that will affect the widest number of taxpayers is an immediate reduction of the marginal tax brackets paid by all but the lowest earners. Under the change, the tax rates above 15% for 2003 and later years are 25%, 28%, 33%, and 35% (previously rates for 2003 above 15% were 27%, 30%, 35%, and 38.6%). These rate reductions were scheduled for 2006 under 2001 EGTRRA. After 2010, rates above 15% will revert to the pre-2001 EGTRRA levels (i.e., to 28%, 31%, 36%, and 39.6%).
... Acceleration of marriage-penalty relief. The 2003 Jobs and Growth Act reduces so-called marriage penalties (i.e., tax-law provisions that force two-income couples to pay more in taxes each year merely because they are married). The basic standard deduction amount for joint returns will be double ($9,500 for 2003) the basic standard deduction amount for single returns (under the Economic Growth and Tax Relief Reconciliation Act of 2001 (2001 EGTRRA), this wasn't scheduled to be fully phased in until 2009). However, for tax years beginning after 2004, a joint return filer's basic standard deduction will revert to pre-2003 Jobs and Growth Act levels (e.g., for 2005, to 174% of a single return filer's basic standard deduction). Furthermore, in 2003 and 2004, the end point of the 15% tax bracket for joint returns will be twice the end point of the 15% tax bracket for single returns (under 2001 EGTRRA, this wasn't scheduled to happen until 2008). In other words, for 2003, the 15% tax bracket for joint filers applies to taxable income over $14,000 (up from $12,000) but not over $56,800 (up from $47,450). However, for tax years beginning after 2004, the end point will, like the basic standard deduction amount, revert to pre-2003 Jobs and Growth Act (e.g., for 2005, 180% of the end point of the 15% tax bracket for single returns).
... Acceleration of increase in child tax credit. For 2003, 2004 and 2005, the child tax credit will increase to $1,000 per qualifying dependent child under 17 (up from the $600 per qualifying child for 2003-2004 and $700 for 2005 that was provided for under pre-2003 Jobs and Growth Act law), but after 2005 the child tax credit will fall back to $700 for 2006-2008. What's more, for 2003, the increased amount of the child tax credit will be paid in advance beginning in mid-July over a period of three weeks. Thus, a typical qualifying family will receive an advance payment check for up to $400 per qualifying child who is under age 17 as of the end of 2003. Note that the income limits related to the child tax credit are unchanged by the 2003 Jobs and Growth Act, which means that the amount of the credit allowable is reduced or eliminated for taxpayers with adjusted gross income (AGI) over certain levels: $75,000 for singles and $110,000 for married couples. However, taxpayers who didn't qualify in the past for the child tax credit because of AGI limitations may now qualify for a portion because of the increased credit (even though they won't get an advance payment).
... Minimum tax relief to individuals. The 2003 Jobs and Growth Act also includes some relief from the alternative minimum tax, or AMT. For 2003 and 2004, the maximum AMT exemption for joint filers and surviving spouse is increased to $58,000 (up from $49,000 under pre-2003 Jobs and Growth Act law) and for unmarried taxpayers is increased to $40, 250 (up from $35,750) for joint filers and surviving spouses and $40,250 for unmarried taxpayers, reverting to $45,000 and $33,750 after 2004. Under pre-Jobs and Growth Act law, the AMT exemption amount for 2003-2004 was $49,000 for joint filers and surviving spouses and $35,750 for unmarried taxpayers, reverting to $45,000 and $33,750 for 2005 and later tax years.
Tax changes for businesses and corporations.
The 2003 Jobs and Growth Act includes two temporary tax breaks designed to encourage immediate investments. Under the first of these breaks, small companies can expense up to $100,000 in new equipment investments through 2005. Under a second provision, businesses can depreciate more of their assets sooner through 2004. Another change for corporations affects the estimated tax payment rules for 2003.
The 2003 Jobs and Growth Act vastly liberalizes the expensing election, which permits small businesses to expense (i.e., deduct immediately rather than depreciate over several years) a certain amount of the cost of tangible depreciable personal property purchased and placed in service during the tax year in an active trade or business. All of the following expensing changes are effective for tax years beginning after 2002 and before 2006:
... The maximum annual expensing amount is $100,000 (it was $25,000 before).
... The maximum annual expensing amount is reduced (but not below zero) by the amount by which the cost of qualifying property placed in service during the tax year exceeds a specified dollar level. This dollar level is increased to $400,000 (from $200,000).
... The above increased dollar amounts will be inflation-indexed for tax years beginning after 2003.
... Off-the-shelf computer software is made eligible for expensing.
... Taxpayer revocation of expensing elections will no longer require IRS consent.
A second major change affecting businesses is an increase and extension of bonus first-year depreciation. In general, before the 2003 Jobs and Growth Act, a 30% additional first-year depreciation allowance applied to the non-expensed portion of qualified property (which included most new MACRS property) if: (1) its original use commenced with the taxpayer after Sept. 10, 2001; (2) the asset was acquired by the taxpayer after Sept. 10, 2001 and before Sept. 11, 2004; and (3) it was placed in service by the taxpayer before 2005 (before 2006 for certain property with longer production periods).
The 2003 Jobs and Growth Act makes the following changes:
... For 30% bonus first-year depreciation purposes, property can be acquired before 2005.
... 50% bonus first-year depreciation applies to qualified property if (1) its original use commences with the taxpayer after May 5, 2003; (2) the asset is acquired by the taxpayer after May 5, 2003 and before 2005 (there can't be a written binding contract for acquisition in effect before May 6, 2003); and (3) it is placed in service by the taxpayer before 2005 (before 2006 for certain property with longer production periods).
... Taxpayers can elect on a class-by-class basis to claim 30% instead of 50% bonus first-year depreciation for qualifying property, or elect not to claim bonus first-year depreciation at all. Two situations in which a taxpayer would likely consider making an election to claim smaller bonus first-year depreciation (or to elect out of it entirely) are where the taxpayer (1) has about-to-expire net operating losses, or (2) anticipates being in a higher tax bracket in future years.
Note that there still is no AMT depreciation adjustment for the entire recovery period of qualified property recovered under the bonus first-year depreciation rules (50% or 30%).
Another change for corporations affects only the estimated tax payment rules for 2003. Despite the general rule that estimated tax payment installments must be made no later than Apr. 15, June 15, Sept. 15 and Dec. 15, 25% of the amount of any required installment of corporate estimated tax which is otherwise due in Sept. 2003 will not be due until Oct. 1, 2003. This change affects corporations using (1) the calendar year (third installment of estimated tax would have been due on Sept. 15, 2003); (2) a fiscal year ending Mar. 31, 2004 (second installment would have been due on Sept. 15, 2003); (3) a fiscal year ending May 31, 2004 (first installment would have been due on Sept. 15, 2003); and (4) a fiscal year ending Sept. 30, 2003 (last installment would have been due Sept. 15, 2003). The due dates for all other corporate estimated tax payments aren't changed by the 2003 Jobs and Growth Act provision.
Please keep in mind that I've described only the highlights of the most important changes in the new law. Give me a call at your earliest convenience for more details on how you may be affected, and whether immediate action is needed to take advantage of the tax breaks in this important tax legislation.
Very truly yours,
Bruce Alan Danford