News Items of Interest

PLAN AHEAD FOR YOUR DIGITAL DEMISE

Fri, 11 Jun 2010 11:15:20 -0500

On May 25, 2010, I posted an item entitled "Plan for Continued Access to Digital Assets Upon Death or Disability."

Following up on that entry, I wanted to bring to your attention an interview on the NPR radio show called Talk of the Nation on June 9, 2010, in which the host, Neal Conan, interviewed Robert Roper, a columnist for Obit Magazine, about "digital death." A written transcript of the interview, as well as the recorded interview is available for your consideration.

The Bipartisan Tax Fairness and Simplification Act of 2010

Thu, 10 Jun 2010 13:38:48 -0500

On February 23, 2010, The Bipartisan Tax Fairness and Simplification Act (BTFS) of 2010 was referred to the U.S. Senate Committee of Finance for consideration. The bill proposes numerous changes to the Internal Revenue Code as well as the continuation of cuts, some set to expire this year, such as the Earned Income Tax Credit. The bill establishes a new Retirement Savings Account and a new Lifetime Savings Account to consolidate the three existing types of IRAs, allowing couples to set aside as much as $14,000 in tax-free savings.

Also among the bill's objectives is a change to how capital gains and dividends are taxed. Under BTFS, 35% of capital gains from investments held for 6-12 months, not exceeding $500,000, would be tax free. To the extent of 35%, any gains from investments held longer than a year and income from qualified dividends would be tax free. Qualified dividends are generally dividends from any share of stock in a domestic corporation or a foreign share of stock that is readily tradable on an established security market. Further progress on the bill will not be made until it is scheduled for consideration on the calendar of the Senate Committee on Finance; as of June 9, 2010, we have no information on when that will be.

Appraiser Must Sign Appraisal and Form 8283 Per IRS Chief Counsel Advice

Tue, 8 Jun 2010 11:00:32 -0500

A Portion of the E-mail is quoted below:

Sent: Wednesday, May 05, 2010 12:29:09 PM
Subject: Who signs form for appraisal

This is to confirm our conversation regarding who can sign Part III (Declaration of Appraiser) on Form 8283 and the corresponding appraisal. As discussed, Form 8283 and the appraisal may not be signed by the appraisal firm. Both documents must be signed by the individual who completed the appraisal.

The language contained in Part III of Form 8283 and the instructions clearly indicate that the individual appraiser must sign the form and acknowledge that a false or fraudulent overstatement may subject the individual to a penalty under section 6701(a). Section 170(f)(11)(E) and Treas. Reg. sections 1.170A-13(c)(3) and (5) state that a qualified appraisal is conducted by a qualified appraiser who is an individual meeting specific requirements. Treas. Reg. section 1.170A-13(c)(5)(iii) further states that if 2 or more appraisers contribute to an appraisal, each appraiser must sign the appraisal. The statutory language defining an appraiser as an individual and the regulations requiring each individual appraiser who works on the appraisal to sign the appraisal clearly indicates that a person, not a firm, must sign Form 8283 and the appraisal.

TEMPORARY REPEAL IN 2010 OF ESTATE AND GENERATION-SKIPPING TAXES REQUIRES YOUR ATTENTION

Tue, 25 May 2010 08:39:39 -0500

Dear Friends

As you may already know, the federal estate tax rules changed drastically in 2010, and could change radically again in 2011. We want to advise you of what has happened and encourage you to review and re-evaluate your estate plan as soon as possible.
Congress passed legislation in 2001 that had the following results:
• The federal estate and generation-skipping taxes were repealed for one year commencing on January 1, 2010. The gift tax remains in effect with a $1.0 million lifetime exemption and a top gift tax rate of 35%.
• The step-up in basis rules (which gave a "fresh-start" fair market tax basis for most assets inherited from a decedent) were replaced with adjusted carry-over basis rules. These new basis rules permit a step-up in basis of up to $1.3 million for assets inherited by all heirs and an additional $3.0 million for assets bequeathed to a spouse.

PLAN FOR CONTINUED ACCESS TO "DIGITAL ASSETS" UPON DEATH OR DISABILITY

Tue, 25 May 2010 08:27:43 -0500

If you, like many others, rely upon email, social networking, and e-commerce, you must give serious consideration to what will become of your accounts and how they will be accessed in the event of your death or disability. In such cases, internet service providers may require court orders to allow access to your family or have other burdensome documentation requirements. As a result, access to email accounts that provide billing notices and business communications and online bank and brokerage accounts may be unavailable to family members for lengthy periods of time following the onset of a disability or death.

Legal Guide for the Seriously Ill Released by the ABA

Wed, 17 Feb 2010 14:41:31 -0600

Press release from American Bar Association

WASHINGTON, D.C., Dec. 18, 2009 -- The onset of a serious illness or injury can affect much more than a person’s health. Knowing what steps to take to get one’s financial and legal affairs in order is often vitally important not only to the affected individual, but to his or her loved ones as well.

The "Legal Guide for the Seriously Ill" -- a project by the American Bar Association Commission on Law and Aging commissioned by the National Hospice and Palliative Care Organization -- was designed for both the seriously ill individual and those caring for someone who is seriously ill. The guide explains “Seven Key Steps” in a brief, clear way while offering additional tips and resources for readers looking for more detailed information and guidance.

Senate passes bill to permit 2010 Haitian relief contributions to be deducted on 2009 returns

Mon, 25 Jan 2010 15:59:17 -0600

RIA Checkpoint reports that on January 21, the Senate by voice vote approved H.R. 4462, a bill that would allow donors to accelerate the income tax benefits of charitable cash contributions for the relief of victims of the earthquake in Haiti. The bill had previously been passed by the House on January 20 by voice. The bill is now cleared for signature by the President, which is expected to occur this week.

When signed the bill will allow individuals who make charitable contributions to aid Haitian earthquake victims to elect to claim an itemized charitable deduction on their 2009 tax return (instead of having to wait until next year to claim the deductions on their 2010 tax return). The election would apply only to Haitian relief contributions made in cash after Jan. 11, 2010, and before Mar. 1, 2010. If the election is made, Haiti relief donations would be deductible on the 2009 return, not the 2010 return.

WALKING AWAY FROM A MORTGAGE

Fri, 15 Jan 2010 08:14:20 -0600

More than 10 million households have 'underwater mortgages,' in which the property is worth less than the outstanding balance on the mortgage. These homeowners cannot take advantage of lower rates or refinancing deals, and their homes are likely to go into foreclosure. An interesting discussion regarding foreclosures, Deeds in Lieu of Foreclosure and "short sales" was broadcast on NPR's "Talk of the Nation" radio program on January 14, 2009.

HOUSE TO CONSIDER BILL TO PERMANENTLY EXTEND ESTATE TAX

Tue, 1 Dec 2009 08:28:33 -0600

H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Business Act of 2009, has been added to the House floor calendar for consideration the week of Nov. 30. The bill would extend the estate tax provisions, due to expire at the end of this year under current law, and allow a $3.5 million estate tax exclusion and a reduction in the maximum estate and gift tax rate to 45% after 2009. Specifically, it would repeal the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) that eliminate the tax on estates and generation-skipping transfers and the step-up in basis provisions for property acquired from a decedent for estates of decedents dying after 2009.

Beware of IRS’ 2009 "Dirty Dozen" Tax Scams

Tue, 21 Apr 2009 10:04:52 -0500

On April 13, 2009, the IRS issued its 2009 “dirty dozen” list of tax scams, including schemes involving phishing, hiding income offshore and false claims for refunds.

“Taxpayers should be wary of scams to avoid paying taxes that seem too good to be true, especially during these challenging economic times,” IRS Commissioner Doug Shulman said. “There is no secret trick that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”

The scams in the announcement are illegal and can lead to problems for both scam artists and taxpayers who risk significant penalties, interest and possible criminal prosecution.

New Tax Developments

Fri, 17 Apr 2009 09:25:41 -0500

While the new law tax changes in the American Recovery and Reinvestment Act of 2009 were the most significant developments in the first quarter of 2009, many other tax developments may affect you, your family, and your livelihood. These other key developments in the first quarter of 2009 are summarized below.

Clarifying guidance on waivers of RMDs for 2009.
Retirement plan account participants, IRA owners, and their beneficiaries do not have to take required minimum distributions (RMDs) for 2009. The IRS has issued guidance clarifying that:

If you would have been required to make RMDs for 2009 and you do make withdrawals in 2009 (that are not RMDs for 2008): (a) you might be able to roll over the withdrawn amounts into other eligible retirement plans; but (b) you must still include any previously untaxed portion of the withdrawal that you do not roll over in your gross income.

Weighing theTreatment Options for Prostate Cancer

Tue, 14 Apr 2009 07:46:34 -0500

As I get older I notice the incidence of prostate cancer among my male friends increasing; not something of which I was conscious twenty or so years ago.

An interesting article appeared in the April 7, 2009, edition of the Wall Street Journal (pages B9 and B11) written by Melinda Beck entitled "Prostate Cancer: Weighing Options." In it she presents a grid comparing various treatments, including active surveillance, to a prostatectomy, radioactive seeds, and various drug therapies.

I bring it to your attention simply as a quick summary of the treatment options and as a springboard for

Covenant Not to Compete -- Enforceable

Thu, 26 Mar 2009 14:55:23 -0500

In a dispute involving a covenant not to compete, the Court of Appeals of the State of Michigan, on March 24, 2009, decided that the covenant not to compete contained in the employment contract for Dr. William G. Stahl, III ("plaintiff"), with U.P. Digestive Disease Associates, P.C. ("defendant"), was not enforceable.

The covenant not to compete in his two year employment contract read:

Covenant Not to Compete. PHYSICIAN pledges active and industrious performance of duties in the CORPORATION’S best interests. To that end, if PHYSICIAN separates from employment service with the CORPORATION, PHYSICIAN shall not compete with CORPORATION within 150 miles of the City of Marquette for a period of two (2) years after such separation, unless the terms of such competition have been agreed to in writing by the Board of Directors of the CORPORATION, acting by the remaining Stockholders.

Keep It Simple

Wed, 4 Mar 2009 09:20:46 -0600

I saw a recent quote by Mark Cooney, an Associate Professor at The Thomas M. Cooley Law School that dealt with the use of plain language. It brought to mind an article entitled "Legalese and the Myth of Case Precedent" of which I was one of the authors. It appeared in the October 1985 edition of the Michigan Bar Journal. It examined the use of “legalese” in an Offer to Purchase Real Estate and argued for the use of plain language. Mr. Cooney said: "The utilization of inflated language characterized by exceptional verbosity is not the most efficacious methodology for accomplishing the communication of sophisticated ideas. To sound smart, make it simple."

Top 10 Estate Planning Techniques

Fri, 9 Jan 2009 15:48:38 -0600

On February 17, 2009, I will be participating as a faculty member for a seminar entitled "Top 10 Estate Planning Techniques" sponsored by National Business Institute. My presentations will be on the use of "Revocable Living Trusts" and "Gifting Strategies Including Annual Exclusion Gifts." Further information is available on the web.