Hyden, Miron & Foster, PLLC Law Blog

Tuesday, July 19, 2016

State Taxes & How They Affect You


A big part of estate planning requires the anticipation of various taxes.   Taxes can range from personal income tax, estate taxes, use tax, and the like.  For example, if you inherit a decedent’s property, you will likely need to pay inheritance taxes to the state.  However, estate taxes are generally removed from the actual estate of the decedent. 

You should also remain aware of your state’s tax laws that may affect you.


Read more . . .


Tuesday, July 19, 2016

Wedding Season = Estate Planning Season?


Wedding Season = Estate Planning Season?

You’ve booked a venue and a DJ for the reception, ordered the flowers, and picked out a cake, but there is probably one critical thing you haven’t even added to your wedding to-do list: met with an attorney about your estate plan. You don’t have to say it, we know what you are thinking, “Why in the world would I want to think about death on my wedding day!?”

Well, to be honest, you probably don’t want to be thinking about death on your wedding day, but you should be thinking about it shortly after the big day. When you pledge to love your spouse until death do you part, and sign that marriage certificate, you are linking your lives together - emotionally, perhaps religiously, and even though most people don’t think about this part, legally. In the eyes of the law, the minute you say “I do,” several things happen.

First, if you are taking your spouse’s last name as your own, or adding it to your name with a hyphen, that happens right then.
Read more . . .


Monday, June 27, 2016

STATE AND FEDERAL TAXES—WHAT IS YOUR LIABILITY?


Are your assets taxed pursuant to the Arkansas Constitution?  Liability for personal income tax depends on your tax bracket, which is determined by your income.  This can seem complicated if there are several tax brackets in your state, as in Arkansas.  You may qualify for an annual personal exemption for any taxes on your income.  This is important because your taxable income may be lowered under the state or federal tax schemes.


Read more . . .


Thursday, June 16, 2016

How to Avoid Redstone Estate Mistakes


What went wrong with Redstone's estate planning?

One would assume that ailing media tycoon Sumner Redstone's estate, estimated to be over $5 billion, would be as perfectly managed as any in the world, but one would be wrong. Redstone, who just turned 93 and suffers from dementia has ended up with a chaotic situation no one envies. Many lawsuits swirl around him and embarrassing details about his sex life and cognitive loss have been released to the press. Although a recent lawsuit brought against him by Manuela Herzer, one of his more recent romantic partners, was dismissed last month, the damage to his reputation had already been done.

Now, his estranged daughter, Shari Redstone, is embroiled in a battle with Philippe Dauman, the apparent heir to Redstone's throne.


Read more . . .


Monday, May 16, 2016

Estate Tax Planning: Year-End Gift Giving


What is a taxable gift for estate planning purposes?

Many individuals can take advantage of year-end gift giving as a means of transferring wealth to their beneficiaries while minimizing the potential estate tax that might be due upon their death. A gift is any transfer for which nothing, or less than fair market value, is received in return; and a variety of gifts are not taxable.  Currently, an estate that has a value up to $5.45 million is exempt from Federal estate taxes ($10.9 million for married couples), and there is no Arkansas estate tax.


Read more . . .


Thursday, March 31, 2016

Building a Better 401(k) Plan

What can my business do to enhance its 401(k) plan?

Today, employees no longer rely on traditional pension plans for their retirement because defined contribution plans like 401(k) and 403(b) plans have replaced guaranteed retirement income, or defined benefit, plans. Defined contribution plans, however, were not designed to be the only source of retirement funding and many plan sponsors are concerned that their employees will not have enough money saved.

Some observers believe it is time to upgrade defined contribution plans so that they function more like defined benefit plans. That being said, most employers believe the onus is on the employees to contribute more to their plans, without considering the possibility of enhancing the employer-sponsored match. What these employers fail to consider, however, is that employees will invariably decide to work longer which will lead to higher healthcare costs. This, in turn, will have a negative impact on the business.

Keys for a Good Defined Contribution Plan

There are a number of ways for a plan sponsor to provide maximum value to a 401(k) plan including:

  • Employer Match -- Increasing the amount employers are willing to contribute may encourage employees to save more
  • First Day Eligibility--The majority of plans now allow workers to begin making pre-tax contributions immediately which can ensure that employees do not fall behind in saving
  • Immediate Vesting -- Top-rated plans offer immediate vesting of employer contributions
  • Fees - Administrative fees for recordkeeping, accounting, marketing and investor education should be stated in a dollar amount in the statement and kept low
  • Investment Options -- Plan participants should have a range of investments to choose from, including mutual funds, asset allocation funds, and target date funds
  • Automatic Enrollment  -- The majority of plans offer automatic enrollment, unless employees opt out, which optimizes participation rates
  • Access to Financial Experts - Because many employees do not have investment knowledge, they should be provided with investment advisory services

Ultimately, plan sponsors need to evaluate their plans in relation to the plan participants with an eye on total plan costs, company generosity, salary deferrals and account balances and encourage participants to maximize their contributions. If you are a business owner looking to establish a defined contribution plan, you should consult with a qualified business attorney with expertise in retirement plans.


Friday, March 18, 2016

End-of-Life Medical Decisions as Part of Estate Planning

What is the difference between a medical directive and a DNR?

Sometimes the most difficult part of estate planning is making decisions about how you want to be treated at the end of your life. Though we all know we are mortal, these decisions force us to confront some unpleasant possibilities. Still, making end-of-life decisions can provide reassurance, giving you the peace of mind that comes from knowing your wishes will be followed when you can no longer make yourself heard.

What is a Living Will?

A living will is an important part of estate planning. Since most of us do not die "peacefully in our sleep" without prior illness or injury, we need to make arrangements regarding precisely which types of medical care we wish to receive when we are seriously ill and approaching the inevitable.

If a person is terminally ill, death is expected to occur within a relatively short period of time. In such situations, providing medical care will simply prolong the dying process, not help to provide any kind of quality of extended life. In such cases, individuals have the prerogative to refuse medical care that would artificially prolong their lives.

There is an essential difference, however between medical care that would force the body to stay technically alive, and palliative care that will keep the patient as comfortable as possible during the dying process. Most people, no matter what their feelings about futilely extending life, opt for palliative care to keep them as pain-free as possible at the end of their lives.

What is a DNR?

A DNR, or do not resuscitate order, is a legal document designed to keep a dying patient from being resuscitated if he or she goes into cardiac arrest or stops breathing. It is basically an agreement between the patient and the medical establishment (doctor, hospital, nursing facility or hospice) stating that the patient does not wish to receive cardiopulmonary resuscitation (CPR) or advanced cardiac life support (ACLS) if their body goes through a sudden life-threatening event.

The major difference between a living will and a DNR is that the former is a legally binding document that the person signs, frequently during the estate planning process, and the DNR is a medical order.

Procedures Denied by a DNR

With a DNR document in place, patients will not receive: chest compressions, ventilation, defibrillation, endotracheal intubation, or medications to revitalize them. Relief of choking caused by a foreign body is typically an exception, since it is creating a painful, terrifying situation for the patient. Treatment is also given for painful breathing, injuries and hemorrhage. The rationale is that the patient does not want his or her life prolonged, but is not consenting to a tortured ending.

The Choice Is Yours

Though it is unpleasant to contemplate your own death, it is gratifying to be able to make advance decisions about one's own future care.  Contacting a qualified estate planning attorney is a good first step toward self-determination, not only in how your assets are distributed, but in how you are medically treated at the end of your life. Remember that the choice is yours. If you want your life extended under any circumstances, you certainly have the right to make this clear in your estate plan.


Wednesday, February 24, 2016

Health Insurance Subsidies ay Affect Tax Refunds for Millions

How will Obamacare directly affect you’re your tax return?

The government-subsidized health program instituted by the Obama administration has allowed millions to obtain health insurance. Most of those who signed up for Obamacare, however, were unaware of the long-term tax consequences involved. For many, it is now coming to light that the income estimate they provided to the government when signing up for the program may affect their tax refund.

Those people who underestimated their income during the application process may be receiving too much of a subsidy. This problem even exists for those who estimated correctly at the time but are now making more money. If a person is receiving too much of a subsidy, he or she will have to pay back this money to the government. Where will this refund come from? Out of your income tax refund.

This can be a major problem for those expecting to receive a certain amount back in their tax refunds. Because the tax-related risks are just now becoming apparent for many, it is unlikely that the people affected by this situation were able to use tax planning to lessen the blow. One way to diminish the amount a person might owe is to report the difference in income to the government right away. This will likely lead to higher insurance premiums throughout the year, but will reduce the amount owed at tax time.

The amount that the government can request back from any one taxpayer or family is capped for most. Only those who make over four times the federal poverty level will be liable for an uncapped amount. The IRS can also use any means to collect the amount owed, including tax liens and levies. This means that if a person does not receive enough in his or her tax refund to cover the liability, he or she will have to pay the amount out of pocket.

If you are interested in tax planning in relation to Obamacare or concerned about tax planning for any other reason, you should speak with a qualified Little Rock, Hot Springs and Conway tax planning attorney today.


Thursday, February 18, 2016

Stopping Elder Fraud

What can be done about the financial exploitation of the elderly?

As the life expectancy continues to rise, elders are faced with increasing challenges. One of the most difficult problems these individuals face is the potential of dementia. Moreover, many retirees are forced to manage their own retirement funds as traditional pension plans are becoming rare. This puts many retirees at risk for elder fraud and the problem is going to get worse as more of the baby boom generation heads toward retirement.

In fact, since 1950, the percentage of the population age 65 and over has risen consistently; by 2030, the figure will hit 20 percent. As more people reach the age of 60, complaints of fraud also continue to rise. The statistics are glaring: there were 65,000 fraud complaints by people 60 or older in 2010; in 2014 the number was over 170,000. Furthermore, according to the insurance industry, the cost of fraud in 2010 had reached $2.9 billion.

What is elder fraud?

Elder fraud involves the financial exploitation of the elderly and comes in many nefarious forms, whether small scams by telemarketers or fraudulent schemes conducted by people who are close to the elderly person. There are increasing reports of caregivers, family members and financial advisors who are taking advantage of the elderly by skimming savings or churning investment accounts.

The Role of Financial Professionals

The problem is compounded by the fact that only half the states have mandatory reporting rules for when financial professionals suspect fraud directed at the elderly. Now, however, state security regulators are joining forces in an effort to make it mandatory for financial advisors to report suspected cases of elder fraud. The Financial Institution Regulatory Authority (FINRA), and the Securities Industry and Financial Markets Association (SIFMA) have floated a number of proposals that would require advisors, their supervisors and the firms that employ them to alert state regulators and adult services groups when they suspect fraud.

There has been push back by industry groups who argue that these requirements would expose advisors to liability if they miss fraud, and that regulators are not equipped to handle more oversight. Ultimately, what is needed is more clarity as new or existing regulations need a suitable enforcement mechanism. In the meantime, if you or a loved one is the victim of a financial scam, speak with a qualified elder law attorney.


Friday, January 29, 2016

Estate Planning for Farm Owners

How can you ensure that farm succession occurs as you desire?

While it may seem that farming families have little need for estate planning, the opposite is true. For successful farms to survive for generations, careful planning is necessary. This message was broadcasted loud and clear at the American Farm Bureau Federation's Annual Convention and IDEA Trade Show this past December in Orlando, Florida.

 

Farmers were encouraged to begin planning not only for future growth, but to strategize about how the next generation will take over and manage their existing operations so that prosperity can be maintained. Contrary to the prevailing notion that farms persist under the ownership of one family for scores of years, only 30 percent of family-owned farms reach the next generation. This is often the result of poor planning combined with failed communication among family members. Families with farms should take serious note: a specific, solid, legally binding plan is necessary for inheritance of a farm to succeed.

As with all estate and succession plans, plans for farm continuance have to be individualized according to the specific circumstances involved. There are several things to be considered, including:

  • Are there children interested in taking over the farm?
  • Are there siblings who don't want to be involved in day-to-day operations?
  • Does the aging parent want to remain involved some of the time?
  • Does the parent want to maintain control? Have daily responsibilities?

    As with other inheritance issues, unless such matters are discussed and agreed upon before the owner's passing, it is likely that conflicts, or at least complications, will follow that event. There are several aspects that need to be gone over with a competent estate planning attorney, hopefully well before mortality is closing in. These issues include:

  • How ownership of the farm will be handled
  • How other assets will be divided among inheritors
  • How taxation will be minimized

 

Often, it is best to consider legal structures, such as trusts, to ensure a smooth transition. Farmers frequently use a type of trust known as an Intentionally Defective Irrevocable Trust. In spite of its odd name, this trust can be very helpful since it allows the parent to move assets from the estate, but remain a legal part of the operation of the entity. With such a structure in place, the farmer can continue to receive cash from the business while transferring it to inheritors.

In terms of minimizing tax liability, a number of strategies may be used. One is that farmers can use deferred payment contracts and prepaid expenses to manage their income taxes. Another is that farmers can pay wages, and make donations of commodities, to their children, so reducing tax liability.

It is well worth the time investment to work with an experienced estate planning attorney in advance of the necessity of dealing with end-of-life and inheritance issues. Professionals who understand the legalities involved in transferring assets and minimizing tax liability are certain to make the farm succession process go more smoothly and profitably. 


Friday, January 22, 2016

Planning for Incapacity

What estate planning documents will apply if you haven’t yet passed away but are unable to make decisions for yourself?


It is a common misconception that estate planning documents are only necessary in the event that an individual dies. However, a well designed estate plan will also make arrangements for the possibility of becoming incapacitated. There are a number of documents that describe your wishes should you become incapacitated or are close to death.

The first and most widely known of these documents is the durable power of attorney. A power of attorney is used to appoint another person to make decisions for you should you be unable to do so for yourself. A power of attorney can be appointed to make medical and financial decisions. These documents are flexible and allow you to give whatever powers you would like to the individual named as power of attorney. You can also elect to put the document into effect the day it is signed or at the time that you become incapacitated.

Another estate planning document that goes into effect if you become incapacitated is a living will. This document allows you to formalize your wishes regarding the type of treatment you should receive and any life-sustaining medical procedures you would like withdrawn at the end of your life. This document makes decisions easier for the loved ones who will be responsible for you at this time.

When executing advanced directives, such as a durable power of attorney or a living will, it is always important to also execute a HIPAA form as well. This Health Insurance Portability and Accountability Act form gives another the authority to access your medical records. This can save a lot of time and aggravation for those who will be responsible for your medical care.

In order to have a comprehensive estate plan, you should consult with an attorney that has expertise in preparing these documents as well as those that reflect your wishes after death, such as a will and/or trust.

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