Dying 13 hrs. too soon cost $3 mil in taxes

By SUSAN EDELMAN

If Fritz Lohman had only known, he would have waited another 13 hours to kick the bucket.

Lohman, 87, a SoHo real-estate magnate who pioneered the exhibition of gay art, died at home at about 11 a.m. on New Year's Eve after a long illness.

If he had instead passed away after midnight Jan.1, his partner of 48 years could have avoided paying at least $3 million in estate taxes -- thanks to Congress letting that levy lapse for 2010.

"He would probably say, 'Why didn't they tell me? I could have waited another day,' " said Charles Leslie, 76, Lohman's business and life partner -- and the sole beneficiary to his $10 million estate. "It's so utterly ludicrous," Leslie said. "You think you've done everything right, taken every precaution, and then by some congressional fiat your life turns upside down."

"What a difference a day makes -- literally," added Leslie's estate lawyer, Erica Bell.

Bell and others are shocked that Congress failed by the end of 2009 to extend the "death tax" in 2010 for the richest Americans. The rate is 45 percent of assets beyond the first $3.5 million.

Under current law, the estate tax is gone for one year, but will be reinstated -- and raised -- in 2011 for beneficiaries of more than $1 million.

"That means, if you have a choice and someone is probably going to die soon, it would be better this year than next," Bell said. "The joke is, 'Throw momma from the train.' "

She added, "This is not good public policy. There's something really wrong with a tax law that suggests when it's good to die."

But that dilemma tormented another New York family whose wealthy mother was terminally ill in December.

"The family could have put her on aggressive, artificial life support, with tubes and medical devices, until January 1, thereby saving $3 million in federal estate taxes," a source said. "The family chose the kinder path -- letting her die naturally and peacefully." She didn't make it to New Year's Day.

Leslie said his tax bills may force him to sell some of the SoHo commercial properties he and Lohman bought years ago, investments that made them a fortune. The debonair Lohman also ran a high-end interior decorating business.

Leslie is stoic about the irony of the timing of Lohman's death.

"You can't second guess things like that. We do not happen to life -- life happens to us."

And the second issue to discuss is “ Medicaid for millionaires” -

The health bills passed in Congress will prohibit states from using "asset tests" to screen people applying for Medicaid -- which critics charge will enable those with yachts and million-dollar properties to get taxpayer-financed medical coverage.

The more lax rules -- which New York put in place on its own Jan. 1 -- require applicants for public health insurance to provide only proof of income, not other assets.

"This is a screening system that is going to be fraught with abuse and fraud. You have no finger imaging, no photo identification card, and now no asset test," said state Sen. Martin Golden (R-Brooklyn).

Other critics say the new policy will drive up health-care costs.

"It's an abuse of the taxpayers' generosity . . . If somebody has a million dollars of assets, why wouldn't we expect them to use their own assets before they ask their neighbors to pay their health-care bill?" said Dennis Smith, policy adviser with the Heritage Foundation, a conservative think tank.

Paterson and other Democrats claim stricter asset tests unnecessarily impede access.

The changes have made "applying for benefits less onerous for struggling families and local governments," said Paterson spokesman Peter Kauffmann.