News & Legislation, Uncategorized

Tax Season Results in Increased Telephone Scam Calls to Seniors

irsphonescamWith only one week remaining until this year’s tax filing deadline, the Senate Special Committee on Aging has announced that the Committee’s fraud hotline is experiencing an increased number of reports of scam artists who call seniors pretending to be IRS officials. Through this scam criminals generally demand immediate payment and threaten retaliation, such as home foreclosure and even arrest, if payment is not made.

The IRS has released several tips to help taxpayers identify suspicious calls that may be part of a scam:

  • The IRS will never call a taxpayer to demand immediate payment, nor will the agency call about taxes owed without first having mailed a bill.
  • The IRS will never demand that a taxpayer pay taxes without giving him or her the opportunity to question or appeal the amount claimed to be owed.
  • The IRS will never ask for a credit or debit card number over the phone.
  • The IRS will never threaten to bring in local police or other law enforcement groups to have a taxpayer arrested for not paying.
  • The IRS will never require a taxpayer to use a specific payment method for taxes, such as a prepaid debit card

If you are concerned that you, or a loved one, has been a victim of such a call or other related contact, please report the incident to the Aging Committee’s toll-free Senior Fraud Hotline: 1-855-303-9470. These reports enable the Committee to investigate and help put a stop to scams targeted to seniors.

In addition to calling the Aging Committee Fraud Hotline, seniors can report potential instances of scams or fraud to the local division (Detroit) of the FBI or the Michigan Attorney General’s Office.

News & Legislation, Useful Tips

Scam Involving Property Deeds

scam-300x169For the past several months, we have received several phone calls from frantic clients who have received an official-looking letter from a company called “Property Transfer Services” which contained language that indicated that some transfer of their property had taken place. The letter is not a bill – far from it, actually. It is a scam. These types of solicitations crop up every few years and often scare people into sending money to get copies of their deeds, which they can get for a nominal fee from their local county registrar.

The letter reads something similar to, “Property Transfer Services recommends that all Michigan homeowners obtain a copy of their current Deed.” The cost for the service, according to the letter, is $83.00, and the letter gives a due date.

In an attempt to get the word out to seniors in our community, please let loved ones know that they should not respond and definitely should not send payment.

As you may know, you can get information about your home or other real estate through your local county register of deeds. Most deeds are available online either for free or a nominal cost of $1.00 per page.

News & Legislation

California Widow’s $27-Million Estate Goes to Alzheimer’s Group

Downpayment-Gift-300x207Here’s a really cool story from the West Coast: A childless widow who lived privately and modestly in a small Southern California city has left her entire $27-million estate to the Alzheimer’s Association of Orange County.

The bequest from Helen Banas—who died in August at the age of 95, her wealth unknown to neighbors—is the largest ever for the charity. Ten million dollars will go to the national Alzheimer’s Association, with the rest to the Orange County chapter.

Ms. Banas inherited money from her husband, Alfons, a stockbroker who died in 1958, and built her assets through investing. Friends said she had determined to leave her money to an Alzheimer’s group 20 years ago after the death of her mother, who suffered from the disease. For more details, see the full article as printed in the Orange County Register.

News & Legislation

Inside Joe Paterno’s Estate Planning Ploy

joe-paternoJoe Paterno’s transfer of home ownership to his wife in July most likely was not an attempt to shield assets before a sexual-abuse scandal hit Pennsylvania State University’s football program. Instead, the move by the legendary coach more likely was made to take advantage of expiring estate tax rules, lawyers said. Mr. Paterno switched ownership of his ranch-style home in State College, PA from joint ownership with his wife, Susan, to her full ownership on July 21 in a $1 transaction, according to documents filed in Centre County, PA.

A New York Times story suggested that the move could have been an effort to shield the home from future lawsuits that may arise from the child abuse scandal that was first revealed early this month. But attorneys familiar with Pennsylvania law said that the property already was protected from creditors because it was jointly owned and therefore couldn’t be subject to creditors of only one of the spouses. The only way that the house, valued at $594,484, could be exposed to creditors is if both Mr. Paterno and his wife were targeted in a lawsuit, lawyers said.

News & Legislation

Study Findings Support The Value Of Advance Healthcare Directives, Living Wills And Other Means Of Making End-Of-Life Treatment Preferences Known

images (8)According to a new study in the New England Journal of Medicine, one in four elderly Americans require someone else to make decisions about their medical care at the end of their lives.

Here’s the good news: the study found that planning improved the likelihood that a patient’s wishes would be followed and reduced emotional trauma among family members. “The results illustrate the value of people making their wishes known in a living will and designating someone to make treatment decisions for them, the researchers said,” The Associated Press reports. “In the study, those who spelled out their preferences in living wills usually got the treatment they wanted. Only a few wanted heroic measures to prolong their lives. The researchers said it’s the first accounting of how many of the elderly really end up needing medical decisions made for them.”

I have long advocated that every adult should have a durable power of attorney for healthcare decisions as an integral part of a comprehensive estate plan.

Now for the bad/surprising news: according to a recent article in the Washington Post, five years after the court fight over allowing Terri Schiavo to die, most Americans still don’t draft the legal documents that spell out how far caregivers should go to keep them alive artificially. End-of-life experts estimate only 20 percent to 30 percent of U.S. adults have advance directives, the same as before the Schiavo case. Even in polls of older Americans, who fill out such forms at higher rates, there is little if any change from 2005.

Have you taken the time to clarify your end-of-life wishes, what you want out of your final years, how you want to be cared for, where you want to live and so on? You should have this important conversation with your loved ones, and you should memorialize your wishes in the appropriate legal instrument drafted by a trained attorney.

News & Legislation

President Obama Signs Tax-Cut Bill Setting Estate Tax Exemption at $5 Million for Two Years

Barack ObamaCongress has passed and President Obama has signed into law the deal extending the Bush tax cuts that he struck with Congressional Republicans. The legislation restores the estate tax for two years at a 35 percent tax rate, with estates up to $5 million exempt from paying any tax ($10 million for couples). If Congress does not change the law in the interim, in 2013 the estate tax will revert to what it was scheduled to be in 2011 — a 55 percent rate and a $1 million exemption. The $801 billion tax-cut bill makes several other significant changes to wealth transfer taxes:

  • The new $5 million estate tax exemption and 35 percent rate are retroactive to January 1, 2010. The heirs of those dying in 2010 will have a choice between applying the new rules or electing to be covered under the rules that have applied in 2010 — no estate tax but only a limited step-up in the cost basis of inherited assets. This will benefit the heirs of tens of thousands who died in 2010 with relatively modest estates and who would have been subject to capital gains tax on inherited assets above a certain threshold.
  • The law makes the estate tax exemption “portable” between spouses. This means that if the first spouse to die does not use all of his or her $5 million exemption, the estate of the surviving spouse could use it.
  • The law unifies the estate, gift and generation-skipping transfer tax exemptions at $5 million. (For 2010 there is no generation-skipping tax, while the gift tax exemption has been $1 million for a number of years.) A 35 percent tax rate will apply to gifts or transfers over the $5 million threshold. (There is no change in the $13,000 annual exclusion amount for gifts.) These high exemption levels mean that “[t]he rich will have a two-year window in 2011 and 2012 to protect huge amounts of their estates from taxation for generations,” wrote estates attorney Kevin Staker on his Estate Tax News Blog.

But that window is open even wider than was previously assumed because of an additional loophole for the wealthy in the new law. Although taxpayers have until December 31, 2010, to transfer funds outright to grandchildren and avoid the generation-skipping tax, there’s the risk that the grandkids will squander the sudden influx of cash. As Forbes blogger Janet Novak explains in a recent post, “the money doesn’t (as most planners had believed) have to be distributed outright to the grandkids to qualify for the 0% rate. Instead, according to the fine print in the tax deal, it can be put in a trust for them, [noted estate planning lawyer Jonathan] Blattmachr says. That means, he explains, that money can be taken from an existing multigenerational trust, declared subject to the 2010 GST tax, and deposited in a new trust for grandkids’ benefit, with the GST tax now pre-paid at a 0% rate.” Novak says Blattmachr has been telling his estate planning attorney peers, “Cancel your ski trip or trip to Hawaii. This is a once-in-a-lifetime opportunity.”

The generous estate tax provisions were the main sticking point for progressive Democrats. A vote in the House on an amendment to increase the estate tax, including lowering the exemption to $3.5 million, was defeated by a vote of 233 to 194. After some minor changes to the bill were made, it passed the House by a 277 to 148 margin, after having been approved overwhelmingly by the Senate 81 to 19.

The site Politico quotes one senior House Republican aide as saying, “I’m trying to remember something that we passed under Bush that was this good.” The new tax law presents previously unavailable planning opportunities, especially for the well-off.

Just click on the following link to read the full legislation, titled the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” as originally introduced.

News & Legislation

Steinbrenner Fourth Billionaire in 2010 to Escape Taxes, If Not Death

100713George-Steinbrenner1New York Yankees owner George Steinbrenner is the fourth known U.S. billionaire to die during 2010, according to Forbes magazine. Why is this significant? Because there is no estate tax in 2010, meaning that the U.S. Treasury has lost billions in tax revenues unless Congress acts between now and the end of the year to reinstate the tax retroactively.

Steinbrenner was worth an estimated $1.5 billion, meaning his heirs could save as much as $600 million in taxes because he died this year. Steinbrenner’s wealth — mostly consisting of the Yankees, a new stadium and a regional cable network — could pass to his wife tax-free even if the estate tax were in effect, but this year she might have an incentive to disclaim (or turn down) any bequest, which would allow the assets to pass to Steinbrenner’s four children free of federal tax. (But Steinbrenner’s family would have to pay a huge capital gains tax if it were to sell any highly appreciated assets, since along with the disappearance of the estate tax, there is no “step-up” in the cost basis of inherited assets during 2010.)

The other billionaires to die in 2010 are Janet Morse Cargill of the family that founded Cargill Inc. (net worth: $1.6 billion), Texas pipeline magnate Dan Duncan ($9.8 billion), and California real estate mogul Walter Shorenstein ($1.1 billion). By rough calculation, their deaths in 2010 have cost the government some $6.5 billion.

Motivated by the billion-dollar estates passing to heirs tax-free, Sen. Bernard Sanders (I-VT) and four co-sponsors have introduced a bill that would return the estate tax to the 2009 exemption level of $3.5 million but add a progressive tax rate structure that would start at 45 percent, rise to a top level of 55 percent, and add a 10 percent surtax on billionaires. The proposal would be retroactive to the start of 2010.

The Responsible Estate Tax Act (S. 3533), introduced on June 24, 2010, is cosponsored by Sens. Sherrod Brown (D-OH), Al Franken (D-MN), Tom Harkin (D-IA), and Sheldon Whitehouse (D-RI). According to its sponsors, the proposal would bring in at least $264 billion over a decade while exempting 99.7 percent of Americans from paying any estate tax. The retroactivity provision would likely face a court challenge from heirs of wealthy individuals such as Steinbrenner.

“At a time when we have a record-breaking $13 trillion national debt and an unsustainable federal deficit, people who inherit multimillion- and billion-dollar estates must pay their fair share in estate taxes,” three of the senators said in a letter accompanying the bill’s release.

The year without an estate tax is a creature of the Bush tax cuts. Under the provisions of a tax-cut bill enacted in 2001, the value of estates exempt from the tax gradually went up over the past eight years while the tax rate on estates was reduced. During 2010, according to the 2001 law, the estate tax disappears entirely, only to be restored in 2011, potentially, at a rate of 55 percent on estates of $1 million or more, which is where things stood before the 2001 change.