NC will increase some court fees, including certain estate fees, effective August 1, 2007. The filing fee for estates goes up to $60 (from $50). Click here for the entire memo from the Administrative Office of the Courts.
Even more reason to use a living trust!
Continue Reading...A recent U.S. Tax Court case held executors liable for the penalty for the late filing estate tax return despite their attempt to blame their lawyer for the untimely return. Decedent, a U.S. citizen domiciled in Germany, died on September 10, 1999. She had two wills - U.S. and German. Two individuals, Roisen and Helman, were nominated as executors. They hired an attorney, who sought an extension of time for filing the estate tax return. The return was eventually filed on September 19, 2001, although the last date is could be timely filed was December 10, 2000. The IRS imposed a $233,359 penalty for late filing the return. The surviving executor argued the penalty should not be imposed because the return was late filed as a result of reasonable cause, not willful neglect. He argued that his attorney failed to advise him the return was due. The court found that the executor’s expectation that an attorney will file a return does not relieve the executor from his statutory duty to timely file the return. An executor might be excused if he reasonably relied on incorrect advice, such as no return was required, but here there was no evidence the executors even knew the filing deadline had passed, much less any evidence that they received errant advice.
Estate of Zlotowski v. Commissioner, T.C. Memo 2007-203 (July 24, 2007)
Lesson learned: You can't always blame the lawyer! Executors need to keep themselves informed about estate matters, including tax and other deadlines.
In 2005 a Private Letter ruling was issued by the IRA approving a specially designed "IRA Trust" that offers maximum protection and flexibility while allowing the beneficiaries to "stretch" their shares of the IRA over their life expectancies. The IRA Trust can also be used for employer provided retirement plans, such as 401(k)s, 403(b)s, 457 Plans, etc.
Having spent a great deal of time studying the IRA distribution rules and the advantages of using an IRA Trust, I am now recommending them to just about every client whose retirement account balance exceeds $200,000.
Continue Reading...
Today I received the following email, which is clearly fraudulent. If you get such an email, DO NOT RESPOND unless you like having money stolen from your bank account:
This is Francis V. from the Refund Operations Department at Internal Revenue Service
(United States Department of the Treasury).
After the last annual calculation of your fiscal activity we have determined that you
are eligible to receive a tax refund of $103.82.
Please submit the tax refund request and allow us 2-4 days in order to process it.
A refund can be delayed for a variety of reason. For exemple (invalid records or
applying after the deadline).
The good news is that Internal Revenue Service will make this refund directly to your
visa and/or mastercard linked
to your checking/savings account instead a check or a direct deposit.
To access the form for your tax refund, please continue to our secure server
form at: _____________________ My Note: I removed the link to prevent anyone from clicking on it.
Important: Do not use credit and/or american express or discover cards. Only cards that
are linked to your checking/savings account are accepted.
Regards,
Francis V.
Internal Revenue Service - Tax Refund Specialist
Beware!
The IRA you inherited from your parents, or that your kids might inherit from you, may not be safe from lawsuits. Jim Roberts, of Glast, Phillips & Murray, P.C. in Dallas, reports on a U.S. Bankruptcy case interpreting Texas law on this issue:
Federal law provides protection for most qualified plans, including 401(k), pension and profit sharing plans.But protections for Individual Retirement Accounts (“IRAs”) are a matter of state law. Most, if not all, states provide that IRAs are exempt. But there is a growing body of case law questioning the exemption of inherited IRAs. Click "Continue Reading" for the remainder of the article.
Will North Carolina be next? This ruling means that IRA Trusts are crucial for protecting IRAs that will pass to family members. Even if the state in which you live protects inherited IRAs, you children could live in or move to a state such as Texas, which does not.
Continue Reading...Living Trusts are a common estate planning technique for avoiding probate and facilitating management of assets in the event of incapacity. If someone has a living trust, it usually makes sense to transfer transfer his or her real property to the trust as part of the trust funding process. This is particularly important for out-of-state real estate, so that no probate will be required in that jurisdiction.
The transfer is done by way of a new deed, which will need to be prepared by an attorney licensed in the state in which the property is located. The cost is usually about $200 per deed.
However, here are some things to be aware of when transferring your real estate to your living trust:
1) Mortgage - Virtually every mortgage has a due-on-sale clause, which means the mortgage company can call the loan due if you transfer your property. However, the federal Garn-St. German Act (Title 12 of the US Code 1701-j-3; aka the Federal Depository Regulations Institutions Act of 1982), provides that there is no due-on-sale violation when a property is placed into a legitimate inter-vivos trust by a borrower who is a natural person, so long as the borrower is, and remains, a beneficiary of the trust; and the trust is revocable and does not confer occupancy rights to another. This covers most living trusts. Of course, you are still liable for the mortgage after the property is transferred to the trust.
2) Title Insurance - When you buy real estate, you generally obtain title insurance to cover you should there later be a question about your legal ownership of the property. As part of the process of transferring your real estate to your trust, you should contact the title insurance company to ensure that your coverage will continue under the trust. Make sure you have it in writing.
3) Homeowner/Hazard Insurance - Likewise, contact your insurance company or agent to make sure your property will still be insured. Again, if it the wording is not in the policy itself, get it in writing.
4) Rental Property - If you have rental property, you should not put it directly in the trust. I always recommend owning rental real estate in a Limited Liability Company to protect your other assets should your tenant sue you. Your living trust can then own the LLC.
5) Married Couples - When married couples own property together in NC, it is generally Tenancy by the Entirety, which means no interest in the property can be sold without both spouses agreeing, the property is protected from creditors of either spouse. This is an important benefit, which is lost if the property is placed in trust. An estate planning attorney can counsel you as the best way to handle it based on your particular set of circumstances.
6) Time-Shares - Time-Shares are generally considered real property and thus will trigger probate in the jurisdiction in which they are located. Thus, it's a good idea to put them in a living trust also.
7) Foreign Property - Countries with legal systems based on English law, such as Canada, Australia, New Zealand, Bahamas, Bermuda,, British Virgin Islands, Cayman Islands, South Africa, etc., generally recognize trusts, so you may be able to change ownership to either your U.S. trust or a trust prepared pursuant to local law. Civil law countries (most other countries in the world) may not recognize trusts.
A recent New York Times article cautions senior citizens that certain designations, such as Certified Senior Adviser (CSA), are used by unscrupulous insurance salespersons and financial advisers to imply knowledge or expertise they do not have. Many such designations are easily obtainable by taking short courses and passing simple exams, and are practically meaningless in measuring competence or ethical standards.
Other designations, such as Certified Financial Planner (CFP), Chartered Life Underwriter (CLU) and Chartered Financial Consultant (ChFC), require extensive study, rigorous exams, and background checks, and provide a much better method of judging a prospective adviser.
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