Posted on April 27, 2008 by Greg Herman-Giddens

North Carolina Probate Not Too Bad? Think Again...

They other day a client came in and said that he had heard that probate in North Carolina was a "breeze."  Wrong!  While probate here is less expensive than in some states, I still counsel my clients to avoid it in most cases.  Here are 10 Reasons to Avoid Probate in North Carolina:

  1. Court fees can exceed $6,000.
  2. Accountings must be filed reporting every penny coming into and going out of the estate.
  3. Documentation of bank accounts and expenditures is required.
  4. A formal inventory of assets is required.
  5. Attorneys fees generally far exceed fees in similar non-probate estates.
  6. All filings are in the public record.
  7. Notices to creditors must be published in the local newspaper.
  8. Delay due to court rules and busy Clerks' offices.
  9. Bond may be required if not waived in the Will.
  10. Stress induced by court deadlines and requirements.

My office handles dozens of probate matters every year, so we have first hand experience with all types of estates.  I recommend avoiding probate to save time, money and aggravation.  Generally, a Living Trust is the best way to avoid probate, but there are other methods as well.  An experienced estate planning attorney to help you make the right decision about handling you estate.

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Posted on April 23, 2008 by Greg Herman-Giddens

Where's My Refund?

Excerpts from a recent IRS Memo:

WASHINGTON — Taxpayers who have filed their federal income tax returns and are expecting their refunds can use the Internal Revenue Service’s online tool, “Where’s My Refund?,” to check on the status of their refunds.

“Where’s My Refund?” is fast, easy, safe and convenient. 

To get to personalized refund information, taxpayers should be ready to enter their:

  • Social Security Number (or Taxpayer Identification Number),
  • Filing status (Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er)),
  • Exact refund amount shown on their tax returns.

Taxpayers can check on the status of their refund seven days after e-filing a return. For a paper return, check four to six weeks after mailing the return. 

“Where’s My Refund?” also includes links to customized information based on a taxpayer’s specific situation. For example if “Where’s My Refund?” shows that the IRS was unable to deliver a refund, a taxpayer can change his or her address online. Taxpayers can avoid undelivered refund checks by having their refunds directly deposited into a personal checking or savings account.

If 28 days have passed after the IRS says it mailed a refund check, “Where’s My Refund?” enables taxpayers to initiate a trace.

Taxpayers without internet access can check the status of their refunds by calling the IRS TeleTax System at 800-829-4477 or the IRS Refund Hotline at 800-829-1954. The TeleTax refund information is updated each weekend. If you do not get a date for your refund, please wait until the next week before calling back.

Some scam artists are sending phony emails, including those relating to “Where’s My Refund?”, to trick individuals into revealing personal financial information that can be used to access their financial accounts.  People who want to access the genuine IRS Web site and the “Where’s My Refund?” feature should go directly to the IRS Web site by typing the address, www.irs.gov, into the address` line of their Internet window.  The only genuine IRS Web site is IRS.gov.

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Posted on April 22, 2008 by Greg Herman-Giddens

Continuation of $100,000 IRA Charitable Rollover Proposed

On April 17, Senators Max Baucus (D-MT) and Charles Grassley (R-IA) introduced a bill for 2008 and 2009 which would extend certain tax laws until December 31, 2009. The bill includes an increase in the AMT exemption for 2008 to $46,200 for individuals and $69,950 for couples, energy credits and tax extenders.   The most notable extension is the Charitable IRA Rollover - IRA owners over age 70½ would be able transfer tax-free up to $100,000 directly to qualified charities, as was allowed last year.

I only had one client inform me that he did the full $100,000 charitable rollover in 2007, but I am certainly in favor of contuining this benefit.  Taking the $100,000 as income and then taking a deduction for the same amount, if possible, is generally not as favorable from a tax standpoint.

 

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Posted on April 16, 2008 by Greg Herman-Giddens

National Health Care Decisions Day

Today is National Health Care Decisions Day. I personally encourage everyone who is at least 18 years of age to have a Health Care Power of Attorney and Living Will (also known as Advance Directives).  These documents will help ensure that your wishes, and not someone else's, will be followed should you be in an end of life situation and unable to communicate.
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Posted on April 15, 2008 by Greg Herman-Giddens

Tax Day - I'm Exhausted!

For better or worse, this has been my busiest tax season ever.  That's the reason I haven't blogged in a while.  I do a lot of returns for decedents, estates and trusts, as well as gift tax returns, most of which are due April 15.  It's now after 7:00 p.m., and I'm getting ready to head out to the post office with the last two extensions.
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Posted on April 6, 2008 by Greg Herman-Giddens

IRS Allows Roth Conversions for Inherited Retirement Plans

In an unexpected announcement (Notice 2008-30), the IRS has stated that it will allow non-spouse beneficiaries of qualified plans (such as a 401(k), 403(b) or employer pension plan) to convert those funds directly to a Roth IRA. 

However, at least for the time being, beneficiaries of an IRA do not have this option.  Another issue is that the employer's plan must allow rollovers to a Roth, since they are not required to do so.

In most cases I recommend that employer plans such as 401(k)s be rolled over to IRAs when eligible, since IRAs generally offer better investment options and more liberal distribution rules.  In North Carolina IRAs are protected from creditors, at least for the original account owner, but this may not be true in all states.  Also, some states (not NC) offer Medicaid eligibility protection for qualified plans but not for IRAs.

The $100,000 income limitation for Roth conversions will disappear in 2010, and the tax due for the conversion can be paid in 2011 and 2012 (by including 50% of the income for the conversion in taxable income for each year).

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Posted on April 4, 2008 by Greg Herman-Giddens

Senate Finance Committee Discusses Gift and Estate Tax Reform

Yesterday a public hearing on possible gift and estate tax reform was scheduled before the Senate Finance Committee.  Click "Continue Reading" for the full text of the report by the staff of the Joint Committee on Taxation.  I could not get the proper formatting to reproduce, so it's a bit difficult to read.

Of primary concern are potential limitations on Dynasty Trusts, discounts for Gifts of Interests in Family Limited Partnerships (and LLCs), and use of Crummy Withdrawal Powers in trusts (which allow use of the $12,000 annual gift tax exclusion for transfers to trusts).

Items for Immediate Consideration: 

  1. Dynasty Trusts (page 33) - take action now to create or fully fund Dynasty Trusts.
  2. Family Limited Partnerships (page 37) - those considering creating a Family Limited Partnership or  Limited Liability Company should do so now.  Those with existing entities should not delay making contemplated gifts of ownership interests. 
  3. Crummy Powers (page 46) - fund Crummy trusts early in 2008 - review the three options.

By the way, the report references the "$11,000" annual gift tax exclusion, which is an error.  The exclusion was increased to $12,000 last year.

Continue Reading...
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