Beware of Scam related to Deeds used for a trust

From time to time, there are scams where companies send official looking bills to people who recently recorded deeds to their trust or otherwise. If you receive a bill regarding a deed processing notice, property transfer service or other official looking agency, other than the county assessor's office, these likely are not real. Feel free to contact me with any questions before you send any money.

Increase in the maximum value of assets to avoid probate

The Arizona legislature has passed a law effective on September 12, 2013, which increases the amount of assets which would require a probate. You can avoid probate only if the assets you hold in your name do not exceed $100,000 of real property or $75,000 in personal property (cash, accounts and tangible personal property). This is increased by $25,000. If more than $5000 of wages are to be paid then probate is needed. This amount was not increased Therefore, be sure to utilize your pay on death designations, transfer on death designations or title your assets in your trust.

“State of celebration” for same sex couples.

The IRS has ruled that same-sex couples legally married in a jurisdiction that recognizes same-sex marriages, will be treated as married for federal tax purposes. The ruling applies even if a same-sex couple moves to a jurisdiction that does not recognize same-sex marriages. Therefore, the IRS in a revenue ruling, 2013-17, have adopted a “state of celebration” approach for the treatment of same-sex marriages. For example, if a same-sex couple marries in California, a state that recognizes same-sex marriages, and moves to Arizona, a state that does not recognize same-sex marriages, the same-sex couple will be treated as married for federal tax purposes because they were married in a jurisdiction that recognizes same-sex marriages. Revenue Rule 2013-17 applies to all federal tax laws in which marriage is a factor, including filing status, personal and dependency exemptions, standard deductions, and employee benefits. Take care though, Revenue Rulings do not have the same force of precedence as court cases – the IRS can change its position at any time.

If you have an LLC you need a trust.

If you are a Member in an LLC, or own stock in a corporation, you need to be sure your ownership interest is titled in the name of your trust. There is no "pay on death" designation effective for Member's interest or ownership in your business so, even if the owner is your spouse, you will still need to have a probate on your death, unless ownership is titled in your trust. For married couples, if only one of you is really working the business, then your Operating Agreement or Bylaws can be amended to designate that one as the "designated Co-Trustee" to do the daily business.

Cavanagh Email is down for a bit

I am sorry for any inconvenience but Cavanagh Law Firm is switching servers and it is taking longer than we thought. So we are hoping to be back up some time this after noon June 17, 2013. Please call at 623-815-7451, or contact me through facebook.

How much trouble can probate really be?

Your accounts, whether in a bank or investment institution, and your real property all have legal title requirements. Financial institutions and title companies will not release assets unless the legal requirements are satisfied. If you die with assets in your name, and if those assets total more than $50,000, then a probate court filing will be necessary. The pleadings are lengthy and must be mailed to all of your legal heirs-- whether you want them to receive any money or not. You can avoid the extra cost and time of a probate, by utilizing transfer on death designations or a trust. If minor children involved, the court costs can be several thousand dollars every year. Thus, be sure to have your assets properly titled so courts, banks and title companies do not make things difficult when you or your spouse or loved one dies.

Ever been ill? Who has legal rights to mske sure your doctors or health care providers take good care of you? Hsve a healthcare power of attorney and thete will be certainty that the right petson has the tights to help you.

Who should be you Personal Representstive? I suggest you change the question to "who would you trust to handle your finances if you were sick?" That is the same petson you can trust to handle your finances at feath.

Just a Simple Will?

I can appreciate the desire to have simple documents and a "simple will." Yet, we live in a complicated world, where we have bank accounts, investment accounts, IRAs, doctors, hospitals and then-- if we do not have the right estate planning documentation, we have courts. Therefore, a simple Will does not always meet our objectives. We still need powers of attorney for finances and for health, and to utilize a trust or pay on death designations. Perhaps, most importantly, there is the need for advice-- how to use estate planning documents and avoid court if you get sick or incapacitated. I give my clients advice, not just paper. The articles on my website gives some ideas of the issues I cover.

Who should be the beneficiary of an IRA

Normally, when a client has a trust, I like to have the first beneficiary be the trust and the contingent beneficiaries be the humans. Then, if one of the humans beneficiaries predecease the participant, then the trust will distribute that deceased child’s share per terms of trust and if that includes a minor beneficiary, we can avoid court involvement with a conservatorship because the minor’s share will be held in trust. Conservatorship have gotten very expensive to keep going with all the new court rules. Also, you cannot imagine how many conservatorships I have had to seek because of an IRA for a minor grandchild which exceeds $10,000 (even if it is just a few hundred dollars over). If all of the children or beneficiaries under the trust are over the age of 18, then the Trustee can disclaim the IRA within 9 months and the human contingent beneficiaries can take the IRA. Also, by having the trust be the beneficiary, we allow for a continuity of distribution. If the participant has a charitable interest , then the trustee can use the IRA to distribute to the charity which does not have to pay income tax on distributions, and the children can receive assets which are not subject to income tax (like other investments).

American Taxpayer Relief Act- Where Things Stand

Whether living in the metro Phoenix area or the Sun City Peoria area, most of my clients are interested in the following highlights: All the individual "Bush era" tax rates are retained with the addition of a new top rate of 39.6% imposed on income over $450,000 for married taxpayers filing jointly or $400,000 for single taxpayers. The capital gains and dividend rate has increased to 20% for those taxpayers in the top bracket and remains at 15% for the middle brackets and zero for taxpayers in the 10% and 15% brackets. The estate and gift tax exclusion amount remains unified at $5 million indexed for inflation (in 2012 it was $5.12 Million) but the top rate increases from 35% to 40% effective January 1, 2013. Also, the "portability" election, allowing the surviving spouse to utilize the deceased spouse's unused exemption, has been made permanent. The threshold amount for the extra income taxes passed as part of the Healthcare Reform Legislation did not change. The employee portion of the Medicare tax, normally 1.45% of covered wages, increased by 0.9% on wages exceeding $250,000 for married taxpayers filing jointly. There is an additional Medicare tax on investment income on individuals with modified adjusted gross income greater than $250,000 for married taxpayers filing jointly. The 3.8% tax is on the lesser of the taxpayer's net investment income or the excess of the taxpayer's modified adjusted gross income in excess of $250,000 for married taxpayers filing jointly. Net investment income includes interest, dividends, annuities, royalties, rents, capital gain and passive activity trade or business income.

Estate Tax Exclusion Extended

It appears that the fiscal cliff has been avoided and that has included the Estate Tax Exclusion to be left at the $5 Million, indexed at inflation, so it should be something more than the the $5.12 Million set in 2012. The top estate and gift tax rate was increased to 40% though. Information about the new law is coming in as it is being analyzed. Further, the Bush tax cuts were continued for individuals earning $400,000 or couples earning $450,000. I have not heard reports as to whether the law is permanent or set for several years, like the prior law. Also, we are still waiting to hear if the income cap for additional 3.8% tax for the health care law is still $250,000 or the $400,000/$450,000 applicable to the extension of the Bush tax cuts.