Kansas & Missouri Estate Planning

Recordkeeping Key When Caring For Senior Parents In Overland Park, KS

Are you spending any time and money taking care of your parents in Overland Park or elsewhere? Do you intend to take any tax deductions for your assistance? If yes, then mind your recordkeeping or you may forego the deductions.

The case of Estate of Olivo v. Commissioner is most instructive.

Forbes examined the Olivo case in an article titled “Mother's Day? Son Claims $1.2M Tax Write-Off For Helping Mom.” From the title of the article, it is clear that the son may have been a bit generous in his claim. To make matters even more interesting, the son was a tax attorney.

Background: Anthony Olivo was the son/tax attorney. He took nearly ten years away from his law practice to care for his parents. Accordingly, Anthony lost his law practice income. However, he did collect fees from his parents for managing their estates. When Anthony’s mother died, he sought to deduct $44,200 in administrator’s fees, $55,000 in accountant’s and attorney’s fees, and a whopping $1,240,000 for a near-decade’s worth of lost wages (he did manage his own firm, after all).

The IRS raised an eyebrow, and then raised it further when they took a look at his documentation of all of these fees and amounts. Problem: there was no contract, no invoice, and no evidence. Not good.

Even when Anthony was handling the estate and filing the tax return he didn’t keep track of his time and just estimated. Also, not good.

In reality, not everything claimed may have been deductible. Nevertheless, the lack of recordkeeping killed any chance for success.

If you and you loved ones are entering a period of caregiving, then a little forethought and planning can go a long way. In the end, a little recordkeeping goes a long way in making your claim.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Forbes (May 8, 2013) “Mother's Day? Son Claims $1.2M Tax Write-Off For Helping Mom”

When Having “The Talk,” Experts Advise Going To Mom First In Overland Park, KS

When I was a wee lad, I always knew my mother was an easier "touch" than my father. Such is the nature of mother-child relationships. Question: Have you had “the talk” with your senior parents? You know, the one about their finances? According to experts, ask Mom first (whether you live in Overland Park or elsewhere).

Fidelity Investments specifically suggests that moms are the best source of open dialogue, even when it comes to the “money talk.” In fact, MarketWatch recently considered this in an article titled “In family-money talks, start with mom.”

A summary of the numbers from that article:

In the survey of 975 parents and 152 adult children, 64% of mothers said it was “not at all difficult” to start a conversation with an adult child about their finances; only 54% of fathers felt the same way. In addition, 79% of women, versus 69% of men, reported having had “comprehensive discussions” with their adult children about estate planning or wills.  The same was true of 66% of women vs. 56% of men about health and elder-care topics and 70% of women vs. 55% of men about running out of money in retirement.

Although there are many reasons why moms might be the best to approach, most of them are mere conjecture. More important, however, is the reality that senior parents really do not enjoy talking about their finances. That is understandable.

All that noted, “the talk” needs to be had, sooner rather than later.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: MarketWatch (May 7, 2013) “In family-money talks, start with mom”

Take RMD From Your Inherited IRA In Overland Park, KS

Not all assets are inherited in the same way. Take IRAs, for example. When does the IRA of your deceased spouse become “yours,” what should you do with it, and what do you need to know to stay out of tax trouble?

The Slott Report recently addressed the consequences of a surviving spouse inherit the IRA of their deceased spouse when both have reached age 70 ½, the age for Required Minimum Distributions (RMDs). The article titled “Inherited IRA: When do You Own It?” noted that one must be very careful.

For starters, the inheriting spouse must be the “designated” beneficiary. Assuming that is the case, what happens when your spouse dies in December and has not withdrawn the required RMD? Must you as the surviving spouse calculate your RMD on both account balances, your spouse’s and your own?

RMDs are always tricky because the penalties are steep, with a 50% penalty tax on the amount required but not taken. Be sure to get competent legal and tax advice before proceeding whether you live in Overland Park or elsewhere, if you are the designated beneficiary of an inherited IRA.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: The Slott Report (May 6, 2013) “Inherited IRA: When do You Own It?”

Kansas and Missouri Weekly Estate Planning Digest - Overland Park, KS

In case you missed them, here are our five blog posts from this past week for your convenience. I welcome your feedback regarding any of these posts and your input regarding any areas of particular interest you would like for me to cover.

Blessings,

 

 

 

Separate Estate Planning Goals, Separate Attorneys In Overland Park, KS?

Marriage is a partnership. Any partnership requires working together and, perhaps, compromise. But what if there is disagreement, especially when it comes to your estate planning?

Don’t Let The Government “Escheat” Your Family Inheritance In Overland Park, KS

Practicing proper estate planning is not that hard, especially the basics. The biggest mistake is have no estate plan. Why? Your life’s work may escheat to your state treasury by default.

Charging Order Challenges In Overland Park, KS
The structure of your business is, in essence, not just about taxation. That is a given. You want a structure that protects you from liabilities of the business itself in Overland Park and elsewhere.

Giving Your IRA For Good In Overland Park, KS
Not having enough retirement income from the old IRA can be a pretty serious problem. On the other hand, having too much retirement income outside of the IRA can be a bit of a problem, too.

IRS Getting Greedy Over Old “Gifts” In Overland Park, KS?
So, how long does (or can) the IRS scour your financial history to find taxable gifts? Well, it seems they do (or can) go back some 41 years.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

 

IRS Getting Greedy Over Old “Gifts” In Overland Park, KS?

So, how long does (or can) the IRS scour your financial history to find taxable gifts? Well, it seems they do (or can) go back some 41 years.

Whether you are a billionaire or a regular “Joe” (or "Jane") in Overland Park or elsewhere, a recent case is worthy of note.

Enter the case of Sumner Redstone and a 1972 inter-family legal proceeding. The IRS, however, has elected to construe this “proceeding” to be a gift with much in past due taxes and penalties.

Bloomberg recently reported on this unique fact pattern in an article titled “Billionaire Redstone Challenges IRS on Tax for 1972 Gift.” Normally the IRS is bound by a statute of limitations set to about 6 years. However, an exception to this rule includes the failure to file a tax return like the allegedly missing gift tax return of Mr. Redstone.

Apparently, the difficulty arose over certain shares of National Amusements Inc. and a family legal agreement resulting in a “transfer” of shares. The IRS is now calling that “transfer” a “gift” with $1.1 million in taxes, penalties, and interest due and owing.

According to Richard Behrendt, a former estate and gift tax auditor turned director of estate planning, “This is unheard of… I can’t remember ever hearing of anybody going back 41 years to raise an issue. It’s really unprecedented in my experience.”

Note: Mr. Redstone may have become a target, given the fact he is the chairman of both Viacom and CBS, not to mention National Amusements and all the related subsidiaries of the three. Reportedly, Mr. Redstone is worth approximately $4.9 billion besides. Nevertheless, this 41-year-look-back is a strange precedent.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Bloomberg (May 1, 2013) “Billionaire Redstone Challenges IRS on Tax for 1972 Gift”

Giving Your IRA For Good In Overland Park, KS

Not having enough retirement income from the old IRA can be a pretty serious problem. On the other hand, having too much retirement income outside of the IRA can be a bit of a problem, too.

Have you heard of the Charitable IRA Rollover?

A Charitable IRA Rollover lets you give to your favorite charities in Overland Park and elsewhere while avoiding taxes on IRA distributions. Consequently, this is a very popular win-win strategy for taxpayers who would rather be “voluntary philanthropists” as opposed to “involuntary philanthropists.”

A recent Kiplinger article titled “Who Can Transfer IRA Funds to Charity?” explains the ins and outs of Charitable IRA Rollovers. Essentially, not everyone has the option to transfer their IRA distributions directly to charity. For starters you must be older than age 70 1/2 (i.e., the same age upon which you are required to take Required Minimum Distributions from your IRA). And not by coincidence.

Read the original article for a better perspective on the politics behind the planning. Suffice it to say Congress has elected to give you a choice between taxation and charitable giving. The Charitable IRA Rollover gives you this option.

Beware! All of this must be done according to Hoyle or you may get caught in a tax trap. Nevertheless, this alternative is well worth considering as part of your overall retirement, estate and charitable planning.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Kiplinger (April 30, 2013) “Who Can Transfer IRA Funds to Charity?”

Charging Order Challenges In Overland Park, KS

The structure of your business is, in essence, not just about taxation. That is a given. You want a structure that protects you from liabilities of the business itself in Overland Park and elsewhere.

Since the very structure of your business is a means to protect both you and your business, it is worth understanding and maintaining this fortress.

Have you heard of “charging orders.” These are legal wedges creditors try to employ to try and drive a wedge between you and your business. If your business is an LLC (Limited Liability Company) or an LP (Limited Partnership), then there is more you should know about charging orders. This was addressed in a recent Forbes article titled “The Misunderstood Charging Order.”

While this is a complex subject, basically a “charging order” is a creditor’s first and last tool to extract your interests and capital from your business (assuming they do not try to "pierce the veil"). In a corporation, a charging order can allow a creditor to actually gain a debtor’s stock interests in the business. This can be disastrous. “Limited” company structures are specifically designed with “charging order protection” in mind and this is worth understanding.

The original article goes into greater detail, but essentially a “charging order protection” is a means by which a creditor can place a lien on your LLC membership interests and claim any distributions. Fortunately, however, a creditor cannot claim the membership interest itself and sabotage the business.

Certainly there is much more to know on the subject of asset protection, to include on the subject of company structures themselves. Although some this discussion tends toward the academic, only you know your personal needs and the corresponding needs of your business. Plan accordingly.

 

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

 

Reference: Forbes (April 30, 2013) “The Misunderstood Charging Order” 

Don’t Let The Government “Escheat” Your Family Inheritance In Overland Park, KS

Practicing proper estate planning is not that hard, especially the basics. The biggest mistake is have no estate plan. Why? Your life’s work may escheat to your state treasury by default.

At the very least, a proper will can avoid legal craters like the escheat rule in Overland Park and elsewhere.

Escheat is the principle that there is no such thing as estate-limbo. Basically, an estate can sit in limbo for only so long before it gets swallowed up by the state where the decedent last resided. Consider the case of Roman Blum in New York, as reported in a recent Forbes article titled “N.Y. State Could Get $40 Million From Man Who Died Without A Will.” You can read all of the details in the original article, but Mr. Blum likely did not intend the State of New York to benefit from his life’s work as a real estate developer.

For whatever reason, many otherwise responsible Americans do not take time to meet with an estate planning attorney to ensure the proper administration and distribution of their estates. The failure to make proper estate plans is really a plan to fail at your estate planning.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Forbes (April 28, 2013) “N.Y. State Could Get $40 Million From Man Who Died Without A Will"

Separate Estate Planning Goals, Separate Attorneys In Overland Park, KS?

Marriage is a partnership. Any partnership requires working together and, perhaps, compromise. But what if there is disagreement, especially when it comes to your estate planning?

In Overland Park and elsewhere, marriage counselors stay in business because of marital disharmony. Commonly, they represent both spouses and seek to find common ground in a team approach. When it comes to estate planning, however, attorneys face a potential ethical dilemma. For example, estate planning attorneys cannot favor one spouse over the other, nor can they cannot keep the secrets of one spouse from the other spouse in the course of “dual representation.”

While there is no sense starting trouble, sometimes spouses really do have different estate planning interests. This can create an marital conflict for the spouses and an ethical conflict for their estate planning attorney, as explored in a recent Forbes article titled “Ethics in Estate Planning for a Married Couple.” This certainly is an issue of concern for attorneys (and their malpractice carriers), not to mention for their clients to understand and appreciate. 

Indeed, at certain junctures it might be necessary for spouses to even engage separate attorneys to wrangle their way through an estate planning impasse. This happens many times with prenuptial and postnuptial agreements, but in other places besides.

Perhaps you do not need separate counsel? Great! In the end, however, proper estate planning requires planning for the wishes of each spouse and their marriage, as well as the loved ones and others impacted in the process.

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.

Reference: Forbes (April 26, 2013) “Ethics in Estate Planning for a Married Couple”

Kansas and Missouri Estate Planning Weekly Digest - Overland Park, KS

In case you missed them, here are our five blog posts from this past week for your convenience. I welcome your feedback regarding any of these posts and your input regarding any areas of particular interest you would like for me to cover.

Blessings,

 

 

 

Obama Budget Proposal Targets Estate Planning Tools In Overland Park, KS

Have you been tracking the budget battle storm clouds forming on the horizon? Estate planning attorneys certainly are keeping a wary sailor's eye cast in the direction of the President’s budget proposal. Why? It targets a number of important estate planning techniques in Overland Park and across the nation.

Time To "Spring Clean" Your Estate Plan In Overland Park, KS

We all are familiar with the annual family ritual known as “spring cleaning.” With the changes in the estate tax laws, this may be a good time for some “spring cleaning" when it comes to your estate plan, too.

IRS Scrutinizing Pass-Through Entities In Overland Park, KS

Trusts can incredibly powerful tools. They can accomplish many goals and, depending on the type of trust, can secure some legitimate tax advantages. Little wonder ObamaCare may be changing all of that in the hunt for revenue to pay for the program.

Mind The Post-Mortem RMD On Inherited IRAs In Overland Park, KS
When an elderly loved one passes away their legal and financial affairs come to an end. However, there is an important exception – their final RMD on their IRA.

Post-Mortem Digital Asset Planning In Overland Park, KS 
Have you noticed more and more articles popping up about your “digital assets”? When the background chatter in the media finally catches your attention about something, that usually is a sign to start paying attention whether you live in Overland Park or Anchorage.

 

Remember: When making your financial, tax and estate plans, don't go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS, and to download free tools to help you organize your estate, visit my estate planning website.