Alcova Richmond

Is Your Estate Plan in Order? These Updates Should Help

law-news:

Why do you need an estate plan? Many reasons, for sure, but one sticks out: estate planning gives you an opportunity to say how you want your estate – investments, insurance policies, personal property, retirement plans, and more – to be handled once you’re gone. 

Even if you already have a plan, however, it likely needs an update: laws, families, even your wishes change over time. 

So whether you’re just getting started or revising your plan for the umpteenth time, these recent updates will help:

Estate Planning Considerations: Documentation and Peace of Mind (Baker, Donelson, Bearman, Caldwell & Berkowitz, PC):

“In addition to the ‘bare minimum’ estate planning documents … and other instruments (such as a Revocable Trust) your attorney may draft for you, be aware that your estate plan also includes documents your attorney did not necessarily draft, such as the beneficiary designations on life insurance policies and retirement accounts.” Read on»

Unfortunate Reminder of the Need for Powers of Attorney (Davis Brown Law Firm): 

“When most people think of estate planning, they think of drafting a will or trust to say what happens to property after death. Arguably more important is what happens when you are alive but unable to make decisions following an unforeseen and unfortunate event.” Read on»

To Will or Not to Will (Law Offices of Adrian H. Altshuler & Associates):

“You have a will in place. You think that you have fully protected your family when you die. You may be surprised to discover exactly how many things wills can’t do. While wills are useful and inexpensive legal documents for many people seeking a quick and easy way to do their estate planning, they are often ineffective in many respects.” Read on»

Are Your Children Prepared to Handle Your Wealth? in The Estate Planner (Shumaker, Loop & Kendrick, LLP):

“Stories of ‘trust fund babies’ who’ve squandered the wealth their parents carefully set aside for them to ensure their financial well being are all too common. If you’ve built up a large estate and are eager to share your wealth with your children, you may be concerned about their ability to handle it. Fortunately, there are steps you can take to help ensure they won’t blow through their inheritance at a young age.” Read on»

Separated But Not Divorced: Don’t Wait To Update Your Estate Plan (Bean, Kinney & Korman, PC):

“Many people have the misconception that they cannot update their estate plan or even prepare a new Will if they are separated but not yet divorced from their spouse.  This is not true.  An estate plan can be updated at any time so long as the person has mental capacity and is over the age of 18. The fact that someone is separated from their spouse does not bar them from changing their estate plan, but there are points that must be taken into consideration.” Read on»

Make a New Year’s Resolution to Review Your Estate Plan in 2013 (Partridge Snow & Hahn LLP):

“Your estate plan takes into account the size and nature of your assets at the time you executed it. Have your assets changed significantly, such as conversion of real estate or a business interest, or through inheritance of additional assets? If so, you may wish to review your estate plan to make sure these changes have been taken into consideration.” Read on»

Estate Planning After The American Taxpayer Relief Act Of 2012 (Leonard, Street and Deinard)

“The American Taxpayer Relief Act of 2012 (ATRA) was signed into law on January 2, 2013, ending twelve years of uncertainty concerning the federal estate, gift and generation-skipping tax rates and exemptions. With the passage of ATRA, the estate, gift and generation-skipping tax exemption amounts remain fixed at $5 million per person (indexed annually for inflation to a 2013 amount of $5.25 million per person).” Read on»

Estate Planning Implications of American Taxpayer Relief Act of 2012 (Wendel, Rosen, Black & Dean LLP) 

“The Act made ‘portability’ of a deceased spouse’s unused estate tax exemption amount permanent.  Thus, if a proper portability election is made at the death of the deceased spouse, the surviving spouse may use the deceased spouse’s unused estate tax exemption for gift tax purposes and the surviving spouse’s personal representative may use it for estate tax purposes.” Read on»

2013 Estate Planning Update (McCarter & English, LLP):

“As 2012 drew to a close, your estate planning attorney’s attention was diverted from the ball drop in Times Square to whether Congress would drop the ball with respect to the fiscal cliff.  Congress, however, passed the American Taxpayer Relief Act of 2012, which became law on January 2, 2013… So was it worth the scramble to make gifts in 2012 now that the higher exemptions have been made permanent? Absolutely. It always makes sense to make gifts during one’s lifetime (assuming one can afford to make the gifts).” Read on»

Is There Life After Death for Your Digital Assets? (Field Law):

“Do you have digital (electronic) assets? Do you have electronic property that has value? ‘Value’ is a subjective question. It may mean monetary value (such as a vast digital music library, or a four-digit PayPal seller account)… Electronic accounts that contain information of a personal or sensitive nature may also be ‘valuable’ to the extent that it is vital to you to either prohibit or restrict access to such information on your death.” Read on»

Non-Tax Reasons For Creating An Estate Plan (Varnum LLP)

“The non-tax reasons for creating an estate plan … are often more important than the tax reasons for creating an estate plan. It is time to get ‘back to the basics’ with estate planning!” Read on»

Transferring home ownership to your children (Adler Pollock & Sheehan P.C.):

“If you’re considering giving your home to your children, talk to your estate planning advisor first to make sure you do it the best way for your situation. Many people mistakenly believe they can transfer their home to their children while retaining the right to continue living in it for the rest of their life, and remove a substantial portion of the home’s value from their taxable estate. It’s a simple, inexpensive way — they reason — to avoid probate and reduce estate taxes.” Read on»

U.S. Estate Planning For Expatriates (Charles ‘Chuck’ Rubin)

“Code §2801 imposes U.S. transfer taxes on transfers by former U.S. persons who have expatriated if the transfer is to a U.S. person. This tax is imposed on the U.S. recipient. A recent article … points out several planning considerations for such expatriates if they have U.S. persons who will be recipients of gifts or testamentary transfers.” Read on»

Estate Planning Pitfall: You’ve named a minor as beneficiary of your life insurance policy or retirement plan (Adler Pollock & Sheehan P.C.):

A common estate planning mistake is to designate a minor as beneficiary — or contingent beneficiary — of a life insurance policy or retirement plan. Insurance companies and financial institutions won’t pay large sums of money directly to a minor. Instead, they’ll require costly court proceedings to appoint a guardian to manage the child’s inheritance. And there’s no guarantee the guardian will be the person you’d choose.” Read on»

Should you donate life insurance to charity? (Adler Pollock & Sheehan P.C.)

“For the philanthropic minded, donating a life insurance policy to a favorite charity should rank high on their list of possible giving strategies. Why? Because doing so is an excellent opportunity to make a larger donation than may otherwise be affordable. However, donating life insurance isn’t right for everyone.” Read on»

—- 

Find additional Estate Planning updates at JD Supra Law News»

Are Your Digital Ass(ets) Covered? Estate Planning in the 21st Century

Great article… what are your digital assets?

law-news:

“Most people understand the need to protect, and assign, their assets after their death. They know who will care for their children or pets, who will receive the family heirloom brooch, and who will inherit their financial assets. In this day and age, however, there is a new category of assets to consider: digital assets.” (Janet Brewer) 

It’s 2013 – do you know what your digital assets are? And more importantly: do you know what will happen to your Facebook page, online bank account, cloud storage of childhood photos, etc. when you’re gone? 

How to plan for the transfer of your digital property? The first step is figuring out what you’ve got, writes Lisa Statt Foy of Field Law:

“Do you have electronic property that has value? ‘Value’ is a subjective question. It may mean monetary value. However, it can also mean sentimental value. Electronic accounts that contain information of a personal or sensitive nature may also be ‘valuable’ to the extent that it is vital to you to either prohibit or restrict access to such information on your death.” 

Then follow these three rules of thumb to incorporate digital assets into your estate plan:

1. Make your wishes known:

“[A] plan might include a comprehensive inventory of such assets, and the relevant login credentials. It would also document your wishes with respect to specific assets, and explore the logistics by which your Executor can secure such assets and fulfill your wishes. For example, you may wish to instruct your Executor to delete your email accounts without reading or publishing the contents, or direct your Executor to access your Facebook account and obtain a download of all of the account contents for the interest and records of your family (currently Facebook accounts cannot be continued on death of the holder).” (Field Law) 

2. Don’t force your heirs to rely on an incomplete paper trail:

“… consider the number of accounts you may have for which you have no paper records. As we become more environmentally friendly and try to eliminate paper, we are often eliminating many important records which were once accessible. Would your personal representative know of online banking accounts for which you don’t have a debit card or checks (ie, no paper evidence)?” (Davis Brown) 

3. Consider outsourcing management of your passwords:

“In recent years, several companies have established Web-based services that store user names, passwords and other digital assets and make them available to your loved ones according to your instructions. For example, a service might release your information after two or more trusted ‘verifiers’ confirm that you’ve died or become incapacitated.” (Shumaker, Loop & Kendrick) 

—- 

The updates:

• Is There Life After Death for Your Digital Assets? - Field Law 
• Social Media and Other Digital “Assets” After Death - Davis Brown Law Firm 
• “Planning your digital legacy” in The Estate Planner - January/February 2013 - Shumaker, Loop & Kendrick, LLP 

—- 

Related reading: 

• Digital Assets: The New Frontier In Estate Planning - Dickinson Wright 
• Facebook, Flickr, YouTube, Twitter - Where does it go when you do? - Fein, Such, Kahn & Shepard, P.C. 

—- 

Find additional updates on Digital Assets at JD Supra Law News»

5 Income Tax Filing Dos and Don’ts

Great Tax Tips!!!

law-news:

Working on your 2012 taxes? Here are five “dos and don’ts” to help get the job done right:

1. Don’t blame the computer:

“The so-called ‘TurboTax defense’ is raised by taxpayers to avoid penalties – they claim reasonable cause for their tax return errors because they used TurboTax or similar return preparation software to prepare the erroneous tax return. That is what Brenda Bartlett claimed when she was penalized for not reporting all her income on her tax return…The Tax Court rejected her defense, since the problem was that Brenda entered the information incorrectly into the program – not that the program made a mistake.” (Charles “Chuck” Rubin) 

2. Do get proof of donations: 

“Contributions by cash or check of less than $250 must be substantiated by a bank record, such as a cancelled check or a written communication from the donee organization, noting the organization’s name and address, and the date and amount of the contribution. A contribution log is insufficient.” (Duane Morris) 

3. Don’t overstate your home-office deduction:

“For years, taxpayers have viewed the home office deduction—which allows you to deduct a portion of your rent, mortgage payment, real estate taxes and utilities—as an easy way to reduce their tax bill. But the IRS takes a firm position on what does and does not qualify as a home office. Before you deduct your home office, read the rules carefully to ensure that yours qualifies.” (Lawyers.com) 

4. Do consider a gift tax return to record transfers of wealth:

“Some transfers require a return even if you don’t owe tax. And, in some cases, it’s desirable to file a return even if it’s not required. Generally, you’ll need to file a gift tax return for 2012 if, during the tax year, you … [m]ade gifts that exceeded the $13,000-per-recipient gift tax annual exclusion (other than gifts to your spouse that qualify for the marital deduction)…” (Adler Pollock & Sheehan) 

5. Don’t hide offshore assets:

“[T]axpayers [who] do not come forward now, will face the IRS with the presumption that there conduct in avoiding disclosure was ‘willful’ and they will likely face the worst case civil penalty assessments if not criminal prosecution. The maximum civil assessment under the FBAR rules (as part of the Bank Secrecy Act) is a civil penalty of 50% of the highest account balance per year or $100,000 whichever is greater. Under the IRC the willful (civil fraud) penalty for not reporting taxable income is 75% of the unreported income per year, plus interest.” (Sanford Millar) 

—- 

The updates:

• Turbotax Defense Fail - Charles (Chuck) Rubin 
• Tax Season Alert: The IRS May Attempt to Disallow Your Charitable Deductions - Duane Morris LLP 
• 6 Ways to Increase Your Chances of an IRS Tax Audit - Lawyers.com 
• Estate Planning Pitfall: You’re unsure whether you need to file a 2012 gift tax return - Adler Pollock & Sheehan P.C. 
• IRS Expanding Offshore Enforcement - Sanford Millar 

—- 

Find additional Tax Law updates at JD Supra»

Mortgage Closing Costs Down 7.4 Percent in 2012

A shrinking pool of qualified buyers has mortgage lenders using lower closing costs to attract business. The site, Bloomberg.com reported on August 6th about Bankrate’s yearly survey of lenders. Bankrate is a FL-based provider of financial data.

The survey was conducted in June 2012. It discovered that nationwide, the origination and title costs on a $200,000.00 home average $3,754.00 nationwide. That figure is down 7.4 percent from 2011. Among the 50 states, NY’s were the highest for closing costs, averaging in at $5,435.00. That figure reflects a 12 percent decrease from 2011. Following NY was TX, with average closing costs at $4,619.00-that’s down 6.6 percent from last year. PA was in third place with homebuyers paying around $4,467.00 at closing.

Keep in mind that the Bankrate survey measured the closing costs lenders charge along with those from third-party agents for items such as appraisals and title insurance. For the purpose of the survey, prepaid components such as association fees, interest, property insurance, and taxes were not included.

Among the least expensive markets for mortgage closings were: CO-$3,199.00. KS-$3,193.00, and MO-$3,006.00.

Greg McBride, a senior financial analyst for Bankrate advises borrowers to seek three estimates so they’ll find the best deal. He also suggests that borrowers should, “Zero in on the fees that the lenders themselves are charging,” McBride said. “Base your comparison on that.”

(via afr1)