Hyden, Miron & Foster, PLLC Law Blog

Wednesday, May 20, 2015

Medicaid Planning: 5 Tips to Consider in Planning for Long-Term Care Costs

One of the most misunderstood aspects of long-term care is whether coverage is offered by Medicare, and for how much. Below you’ll find several tips with regard to planning for long-term care, including qualifying for need-based coverage through the government’s Medicaid program. 

Tip #5: Medicare Will Not Cover Long-Term Care Costs: This is an important starting point for many seniors, and may come as a surprise. Medicare coverage for around-the-clock skilled nursing is generally only available for a maximum of 100 days, and is designed to effectuate proper healing post-surgery or after a debilitating fall. If coverage is needed beyond this time period, enrollees must either pay out-of-pocket, or consider other options. 

Tip #4: Medicaid Eligibility Planning Should Begin Today: As you consider your possible long-term care needs, the best time to start planning is today. An experienced elder law attorney can walk you through the financial steps necessary, whether you need care immediately or in 20 years. No matter your situation, don’t delay – the longer you wait to plan, the more you could lose in the long run. 

Tip #3: Qualifying for Medicaid Requires Financial Need: In general, an applicant qualifies for Medicaid once he or she has $2,000 or less in countable assets (not including the applicant’s home or vehicle).  There are also every strict income limitations. The maximum amount of income varies for each state.

Tip #2: An Irrevocable Trust May Help: An irrevocable trust may help protect assets from the costs of long-term care. Reason being, once an asset is irrevocably retitled into the name of a trust, the previous owner no longer has access to the asset, thereby reducing his total countable assets. 

Tip #1: Advance Planning is Necessary to Avoid the Look-Back Period: Whether you plan to transfer an asset outright to a family member, or into an irrevocable trust, the transfer must have occurred more than five years from the date of application for long-term care coverage through Medicaid. If the time span is any shorter, Medicaid will impose a penalty.

For more information about proper Medicaid planning, contact the elder law attorneys of Hyden, Miron & Foster, PLLC, by calling (501)482-1787 or (888)770-1848. 

Monday, May 18, 2015

5 Common Notices From the IRS (And how a tax attorney can help)

The IRS is notorious for sending out millions of notices each year. The following are some of the most common notices and disputes asserted by the IRS, followed by practical advice for those unwittingly on the receiving end of IRS correspondence. 

#5: CP01B Notice: Probably the tamest of the bunch, this notice simply describes some missing information necessary for processing. If you receive one of these, simply log on to the IRS website or call, and the issue should be resolved quickly. Don’t delay. as most correspondence includes a response deadline. 

#4: CP11 Notice: This notice will arrive if the IRS believes you miscalculated your taxes and owe additional money. This notice may also be accompanied by an underpayment penalty if the discrepancy represents a certain percentage of your adjusted gross income (AGI). If you are facing a sizable tax bill and believe the IRS may be in error, check with your accountant first. If the dispute cannot be resolved, a tax attorney can help you properly dispute the IRS’s adjustments. 

#3: LT14 Notice: If you owe outstanding taxes do not avoid the problem; the IRS will not go away – ever. An LT14 notice asserts that agents have been trying to reach you and have been unable to do so.  The IRS offers options for payment of your tax liability - online payment agreement, installment agreement, and offer in compromise. However, avoiding payment of the tax liabilitywill only make it worse, and the IRS will have no choice but to file a tax lien. 

#2: Personal Audit: Personal audits are rare, and often come about in the context of high-earning, high-deducting individual taxpayers. We highly recommend seeking representation for assistance with your tax audit, especially if the IRS is alleging significant discrepancies. Sometimes, the audit will reveal very minimal issues – or none at all. 

#1: Business Audit: Like an individual audit, a business audit will generally come about if the IRS believes a company may be underreporting, sheltering assets, or engaging in fraudulent measures to avoid tax liability. Working with a trained tax professional through the process will be vital in achieving a workable outcome.

The worst thing you can do when you receive an IRS notice is to do nothing. The experienced tax law team at Hyden, Miron & Foster, PLLC can help. For more information, call (501)482-1787 or (888)770-1848. We have offices in Little Rock, Conway, or Hot Springs Village.

Monday, May 11, 2015

Estate Planning for Major Milestones

When it comes to updating an estate plan, there is no better time to make changes than immediately following one of life’s major milestones, including a birth, death, divorce, marriage or adoption within the family. Regularly updating an estate plan not only helps ensure the will or trust is honored when the time comes but also helps protect against unintentional disinheritances or bequests. It is also advisable to make changes to an estate plan upon major financial transitions, such as receipt of a sizable inheritance, retirement, promotion or entering into long-term care.

Marriage and divorce are two of the most significant milestones from an estate planning perspective. For most Arkansas couples, the surviving spouse is named as a beneficiary in the decedent’s Will. Under Arkansas law, if, after making a will, the testator (the person who made the Will) becomes divorced, then all provisions in the will in favor of the testator’s spouse so divorced are revoked.  Even though the ex-spouse would not inherit under your Will, you would want to amend your estate plan to ensure that your property passes as you intend.  

The birth of a child or grandchild or the death of a beneficiary is another milestone that should prompt prudent planners to make a change in their estate plans. In most wills, the term “child” or “children” is defined to include after-born children and those children (adopted or biological) who were not contemplated at the time the will was drafted. However, not every will is drafted to include this language, and it may be possible to unintentionally omit a child or grandchild for failure to update the language of a will or trust. Even if you omit (by not naming) a child in your Will, under Arkansas law they can receive a portion of the estate. Under Arkansas law, in order to disinherit a child, the testator must specifically mention the child and refer to the class in which the child is a member.

If you have experienced a significant milestone in your life and you need to implement or update an estate plan, the experienced attorneys at Hyden, Miron & Foster, PLLC can help. We have offices in Little Rock, Conway, and Hot Springs Village. Contact us today by calling (501)482-1787 or (888)770-1848.

Wednesday, April 15, 2015

Five Things to Know if You Need More Time to File Your Taxes

You know what today is – April 15. If you need more time to file your taxes, you can get an automatic six month extension from the IRS. Here are five things to know about filing an extension:

1.    Use IRS Free File to file an extension. You can use IRS Free File to e-file your extension request for free. Free File is only available through IRS.gov. You must e-file the request by midnight on April 15.

2.    Use Form 4868. You can also request an extension by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You must mail this form to the IRS by April 15. Form 4868 is available on IRS.gov/forms at any time.

3.    More time to file is not more time to pay. An extension to file will give you until Oct. 15 to file your taxes. It does not give you more time to pay your taxes. You still must estimate and pay what you owe by April 15 to avoid a late filing penalty. You will be charged interest on any tax that you do not pay on time. You may also owe a penalty if you pay your tax late.

4.    Use IRS Direct Pay.  The safe, fast and easy way to pay your tax is with IRS Direct Pay. Visit IRS.gov/directpay to use this free and secure way to pay from your checking or savings account. You also have other electronic payment options. The IRS will automatically process your extension when you pay electronically. You can pay online or by phone.

5.    IRS helps if you can’t pay all you owe.  If you can’t pay all the tax you owe, the IRS offers you payment options. In most cases, you can apply for an installment agreement with the Online Payment Agreement tool on IRS.gov. You may also file Form 9465, Installment Agreement Request. If you can’t make payments because of a financial hardship, the IRS will work with you.

Wednesday, April 1, 2015

Taxpayer Bill of Rights

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the Internal Revenue Service. Explore your rights and our obligations to protect them.

The “Taxpayer Bill of Rights” takes the multiple existing rights embedded in the tax code and groups them into 10 broad categories, making them easier to find and understand.

#1 The Right to Be Informed 

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.

#2 The Right to Quality Service 

Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service.

#3 The Right to Pay No More than the Correct Amount of Tax 

Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.

#4 The Right to Challenge the IRS’s Position and Be Heard 

Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions, to expect that the IRS will consider their timely objections and documentation promptly and fairly, and to receive a response if the IRS does not agree with their position.

#5 The Right to Appeal an IRS Decision in an Independent Forum 

Taxpayers are entitled to a fair and impartial administrative appeal of most IRS decisions, including many penalties, and have the right to receive a written response regarding the Office of Appeals’ decision. Taxpayers generally have the right to take their cases to court.

#6 The Right to Finality 

Taxpayers have the right to know the maximum amount of time they have to challenge the IRS’s position as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt. Taxpayers have the right to know when the IRS has finished an audit.

#7 The Right to Privacy 

Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing.

#8 The Right to Confidentiality 

Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information.

#9 The Right to Retain Representation 

Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. Taxpayers have the right to seek assistance from a Low Income Taxpayer Clinic if they cannot afford representation.

#10 The Right to a Fair and Just Tax System 

Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through its normal channels.

Friday, March 27, 2015

Farm Property, Estate Planning and Arkansas Probate Law

Can a Will along with Guided Business Planning and Administration Help Farm Families Pass Their Farms on to the Next Generation?

In Arkansas, almost 90 percent of farms are family-centered sole proprietorships passed from generation to generation. Yet, despite good intentions on the part of individuals who hold the deed, succession can go poorly without a Will and without sound business planning. 

The Advantages of a Will

Without a Will, Arkansas law determines how personal property and real property (including farm property) are divided. By creating a Will, a farm owner can devise property as he or she sees fit. The farm owner can use the Will to name someone to serve as personal representative of his or her estate and also name someone to operate the farm during the probate process.

The Advantages of Business Planning

Business planning can reduce property succession concerns by creating a corporate structure for the farm, thus allowing for the ownership and inheritance of shares in the family business to pass to the next generation. Unlike partnerships and sole proprietorships, other business structures (such as a corporation or limited liability company) do not end with a shareholder’s death. Bylaws and Operating Agreements can be drafted to place restrictions on the transfer of the ownership interest. This can help to ensure that the business interests remain in the family.  

With offices in Little Rock, Conway, and Hot Springs Village, the estate planning law firm of Hyden, Miron & Foster, PLLC is available to help families plan for business succession. Our team of attorneys can address your estate planning concerns via the creation of Wills, trusts, and entity formation.  To contact us, call (501)482-1787 or (888)770-1848.

Friday, March 20, 2015

Home Office Deduction

If you use your home for business, then you may be able to deduct expenses for the business use of your home on your income tax return. Check out the Top Six Tips about the Home Office Deduction provided by the Internal Revenue Service.

Friday, March 6, 2015

Effects of a Fraudulent Tax Return

The filing of fraudulent tax returns is an increasingly common form of identity theft. Thieves file a fake return in the victim’s name in order to receive a refund check. Both federal and state tax authorities are dealing with this problem and trying to come up with a solution.

If you are the victim of identity theft and a fraudulent tax return has been filed in your name, it may make the process of filing your taxes and collecting a refund more lengthy and difficult. Identity theft victims may need to wait months and sometimes years to have their refunds restored. Reduced IRS funding and staff levels could result in victims waiting even longer this year.

The FBI is investigating how fraudulent returns were filed in 19 states through TurboTax software. Intuit, Inc., manufacturer of the software, temporarily stopped sending state returns earlier this month after learning of attempts to use fraudulent identification information. In Arkansas, there has been no fraud yet detected, but a review of filed returns continues. Still, it has been reported that the Arkansas Department of Finance and Administration is accepting returns from TurboTax.

Intuit claims its system was not breached and that the stolen information came from other sources. The information could have come from various incidents of widespread hacking into millions of accounts held by retail chains and health insurance companies reported over the last couple of years. Once a Social Security number is obtained, creating fake W-2s is relatively easy because of personal information available on social media and other websites.

This is a multi-billion dollar problem, with the IRS paying an estimated $5.2 billion in fraudulent tax refunds in the 2013 tax season (while preventing $24.2 billion more from being paid) according to the U.S. Government Accountability Office. As bad as that is, state taxing agencies are less able than the federal government to detect the fraud. 

Filing early, before the identity thieves do, is one possible remedy. After it is established that a person has been the victim of tax return theft, the IRS issues a personal identification number that changes every year.

If you have been the victim of tax fraud or have general questions about income taxes, contact the attorneys at Hyden, Miron & Foster, PLLC, at (501) 482-1787.

Monday, February 23, 2015

What is the difference between an immediate and a springing power of attorney?

financial power of attorney is an important document that is beneficial for everyone to have. It allows others to handle your financial affairs if you are unwilling or unable to do so. The person with this ability, known as the agent, should be someone you trust completely. Anyone you designate as agent should be honest, dependable, and have the necessary skills to effectively manage your finances.

A financial power of attorney can be broad or narrow. You can allow your designated agent to have access to all of your financial accounts, holdings and investments, and make all financial decisions on your behalf, including selling real estate. Alternately, you can prepare a financial power of attorney authorizing an individual to have access to a checking account and pay only specific bills (perhaps mortgage, utilities, and insurance) in the event that you become incapacitated. This ensures that your house will be kept in order and that related accounts remain up to date while you are unable to manage them.

Your agent has a fiduciary duty to you, so the agent must act in your best interest and not abuse the power granted to him or her for self-benefit. If dishonest decisions are made, you can revoke the power of attorney, name another agent, and sue the former agent to get your money back.

Powers of attorney can be "immediate," which means they go into effect as soon as they are signed, or they can be "springing," which means they go into effect after a certain event. Typically, a "springing" power of attorney springs into effect when the person creating the document becomes incompetent, mentally or physically, and is no longer able to handle his or her financial affairs. This usually requires a doctor to certify the person as incompetent.

If you have questions about how a financial power of attorney could help you or a loved one, call estate planning attorneys Hyden, Miron & Foster, PLLC, today at (501) 482-1787 or (888) 770-1848.


Thursday, February 12, 2015

What do I need to do if I have not received my W-2?

By: Tiffany Parker Nutt

Most wage earners receive their W-2 forms for 2014 by the end of January 2015. You will need your W-2 in order to file an accurate income tax return. Your W-2 shows your gross income and the taxes withheld from your pay for the previous year. If you have not received your W-2 by mid-February you should contact your employer (or former employer) and request a copy. Also, make sure your employer has your current mailing address.

You can also call the IRS at 1.800.829.1040 if you do not receive your W-2 by February 23, 2015. After February 23, 2015, the IRS will send a letter to your employer on your behalf. When you call the IRS you will need the following information:

  • Your name, address, Social Security number and phone number;
  • Your employer’s name, address and phone number;
  • The dates you worked for the employer; and
  • An estimate of your wages and federal income tax withheld in 2014. You can use your final pay stub for these amounts.

Individual income tax returns are due on or before April 15, 2015. If you have not received your W-2 by this time you have two options. You may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. You can estimate your wages and taxes withheld as best as possible (i.e., information from your final pay stub). Alternatively, you can submit Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You will receive an additional six (6) months to file your tax return. Please note, Form 4868 is not an extension to pay any tax due; it is only an extension of time to file your income tax return. Payment is still due on April 15, 2015.

Friday, January 2, 2015

Can a court invalidate a will or trust?

It is unfortunate, but sometimes an individual goes through the trouble and expense of creating an estate plan only for their beneficiaries to end up in court facing a lawsuit – or contest.  A will or trust contest is a legal proceeding filed to challenge the validity of one of these documents.  If the challenge is successful, the court throws out the document and it is as if it never existed.  

Will and trust contests can be pursued for a variety of reasons.  While each state is different, there are some reasons, which are common across the country.  These include claims that the document was not executed pursuant to state law.  Also, a certain level of mental capacity is required to create a will or trust, so a challenge might include a claim that the person making the will or trust did not have the requisite capacity.  Another common basis for a contest involves a claim that the person making the will or trust was subject to undue influence or was the victim of fraud.  

Although not everyone has this ability, there are various people who can challenge a will or trust.  Beneficiaries, those who have been chosen to inherit from the current will or trust or a previous one, can bring a contest.  Also, heirs at law, or those who stand to inherit pursuant to state law, can challenge a will or trust.  

There is always a possibility that a will or trust may be challenged.  But, there are certain steps an individual can take to lessen the likelihood that this type of conflict will arise.  One way to avoid a contest is to disclose the estate plan to others.  Individuals should not keep the estate plan a secret and should, at the very least, let others know that it exists, without getting into all of the specific details.  Disinheriting a beneficiary is a common cause of conflict, and therefore, an individual might consider options other than cutting them out altogether.  For example, certain stipulations relating to the inheritance can be built right into the will or trust.  It is also important to update an estate plan frequently to ensure that changes to beneficiaries and assets are accounted for. Most importantly, individuals should always consult with an experienced estate planning attorney to have the best chance of avoiding conflicts. Contact the experienced attorneys at Hyden, Miron & Foster, PLLC at 501.376.8222. 

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