Full Service Law Firm in Mt. Laurel Township, NJ | Capehart Scatchard
FINAL-LOGO-SMALLER-FOR-WEBSITE-Trusts-Estates-Business-Succession-Blog-2

Trusts, Estates & Business Succession Blog

This blog is published by the attorneys in Capehart Scatchard’s Wills, Trusts & Estates group. It addresses issues related to estate planning, wills, trusts, succession planning, tax and tax codes.

View OTHER BLOGS

Where Are the Originals of Estate Planning Documents That Have Been Superseded?

Hmmmm, good question.  Probably one that you have never thought about. 

This issue came up for discussion during a recent departmental meeting.  As attorneys change firms, they may bring files and other documents with them to their new firm.  And, sometimes, those documents include originally signed Last Wills and Testaments of individuals who may not establish themselves as clients of the new firm.  So, what is the attorney to do with regard to the original Last Will and Testament of someone who isn’t a client?  And, have you been notified of the relocation of your documents as you should have been?  How long is an attorney expected to hold an original document not having been notified if the person has died?

Well, that is left to the attorneys to address, but in the meantime, here is what you can do proactively to help avoid such situations. 

First of all, if you have prepared Wills in the past, do you know what has happened to the superseded originals?  Were they left with the attorney who originally prepared them (even though you have had new ones prepared by a different firm)?  Were they destroyed?  Do you have them tucked away in a safe deposit box or filing cabinet at home?

Remember that the latest Will – hence Last Will and Testament – is considered to be the latest version of your wishes and intentions with regard to your estate and is the version to be used for administering your estate.  Having old Wills around could raise some issues or create emotions to surface.  Consider these situations to get your thoughts going:

  • You have been divorced and old Wills name your former spouse as beneficiary or fiduciary.  But, you have proactively had new estate planning completed. 
  • You have changed your mind as to the beneficiaries or fiduciary and have signed new documents. What could happen if old documents are found and once-named beneficiaries find out that they no longer are beneficiaries?
  • You have made out various Wills and have either destroyed or misplaced the most recent Will.  If the most recent Will is not found, the possibility exists that an older Will could be probated and followed after your death.

So, now that I have you thinking, there is no better time than the present to confirm that your estate planning is in order.  You may want to:

  • Contact previously used attorneys or firms that you used to ensure that they do not have any original estate planning documents.
  • Look around your home or in your safe deposit box for the originals of superseded document and dispose of them to avoid confusion.
  • Now is as good a time as any to review your most recent documents to confirm that your estate plan expresses your intent and wishes.
  • Finally, never make any handwriting notations on the original documents as this could be cause for invalidating them. 

Duties of a Trustee

You have completed your estate planning and have created a trust.  Do you know what the duties of your named trustee are?

You are probably thinking – the trustee has to take care of the assets, pay any related bills, file any required income tax returns and make distributions.  Am I on the right track to your thinking?  Well, you are not wrong, but you are not entirely right.  Here are duties which are usually silent when thinking of what the trustee should be doing:

  • Duty of Good Faith.  The trustee has a duty to administer the trust “in good faith”. This includes protecting the trust property. 
  • Duty of Loyalty.  This is defined as loyalty to administer the trust solely in the interest of the beneficiaries.  It prohibits the trustee from engaging in self-dealing transactions or activity that involves or creates a conflict between the trustee’s fiduciary duties and their personal interests. 
  • Duty of Impartiality.  When there are multiple beneficiaries, the trustee must act impartially with investing, managing and distributing trust assets. 
  • Duty of Prudence.  Administering the trust prudently includes the exercise of reasonable care, skill and caution.  The test of prudence is one of conduct not of performance.  The trustee is to be judged on their action or decision and not on the outcome.  This would also include prudent investing. 
  • Duty to Make Trust Property Productive.  The use of reasonable care and skill to make the trust property productive includes the duty to obtain suitable investment returns and other benefits consistent with the purpose and intent of the trust. 
  • Duty to Inform and Report.  Beneficiaries are to be kept reasonably informed about the trust and its activities to allow them to protect their interests. 
  • Duty to Control and Protect Trust Property.  The trustee shall take reasonable steps to take control of and protect the trust property. 
  • Duty to Enforce and Defend Claims.  Reasonable steps to enforce claims of the trust and to defend claims against the trust are one of the duties of a trustee.  If attorney fees and costs are incurred by the trustee in doing so, the trustee is entitled to reimbursement as long as it is determined that the trustee did not breach the trust. 

So, as you can see, there is more to being a trustee than may be thought.  It is important to ensure that the party you are selecting as trustee will be able to “perform” these duties.  Otherwise, there could be claims against the trust and/or trustee for mismanagement of the trust. 

While these “duties” are addressing the duties of a trustee, they also pertain to executors of an estate.  Does your trustee and/or executor measure up to carrying out these duties?

Would You Help Someone Die?

What would your reaction be if someone you loved asked you to help them die? 

If someone was diagnosed with a terminal illness and the loved one was taking the necessary steps to acquire the medication necessary to end their life in their own timing, how would you feel? 

It is becoming more available for people to obtain the medication to make the decision of when to end their life.  Is this considered suicide?  Is it a drug overdose?  How would the cause of death be defined? 

This is a very difficult place to be.  You may see the daily agony of the loved one while dealing with their illness.  Or, perhaps the loved one is still feeling fairly well but wants to live life to the fullest in the time they have remaining.  Or, perhaps the loved one asks for you to stay with them until the end. 

There are many circumstances that must be factored into making such decisions in addition to how you would feel about being there.  Your personal circumstances – employment, availability, financial status will need to be considered.  The totality of what will be involved needs to be considered.  And, last but not least of the things to be considered would be your feelings.  You will need to be able to live the rest of your life with the decision you make. 

Also to be considered would be the possible consequences on you and your participation in helping the loved one to administer the medication when the time comes.  Have you thought about the possible criminal aspect?  There are only a limited number of states that have death with dignity laws.  If the state doesn’t have a death with dignity law, then your participation could well be viewed as a crime. 

A decision such as this is not to be considered lightly – for both the ailing loved one as well as yourself.  If you are faced with such a situation, you may want to take time to think about your participation for there are many facets in your decision – emotional, ethical, perhaps religious or spiritual as well as criminal.   Also, you may wish to contact legal counsel to determine what the state laws are currently. 

Hopefully, you will never be put into such a situation, but if you are, think about the whole of the situation and not just the final outcome for your loved one.

Special Saturday Help from IRS Available Without an Appointment on April 9, 2022

As the federal tax filing deadline approaches later this month, the Internal Revenue Service announced that many Taxpayer Assistance Centers (TACs) will be open around the country this Saturday, April 9, 2022 for face-to-face help.

This special Saturday help is available from 9 a.m. to 4 p.m., and no appointment is needed. Normally, TACs are only open by appointment on weekdays.

“We are inviting anyone who wants or needs some assistance to stop by,” said IRS Wage & Investment Division Commissioner and Taxpayer Experience Officer Ken Corbin. “We designed these extra weekend hours to make it easier for taxpayers to resolve an issue, inquire about their account or work with the IRS if they have an obligation they cannot meet. Whatever the case, face-to-face help will be available on this special day without an appointment.”

People can also ask about reconciling advance Child Tax Credits or Economic Impact Payments or inquire about various other services available while at an IRS office. If assistance from IRS employees specializing in these services is not available, the individual will receive a referral for these services. IRS staff will schedule appointments for a later date for deaf or hard of hearing individuals who need sign language interpreter services. Foreign language interpreters will be available.

Taxpayers can make payments by check or money order. The IRS will not accept cash during these events.

Come prepared with paperwork

The IRS urges individuals to bring the following information:

  • Current government-issued photo identification
  • Social Security cards and/or ITINs for members of their household, including spouse and dependents (if applicable)
  • Any IRS letters or notices received and related tax and financial documents

During the visit, IRS staff may also request the following information:

  • A current mailing address, and
  • Bank account information, to receive payments or refunds by Direct Deposit

2018 Federal Income Tax Refunds

Time to think – or to check – did you file a 2018 federal income tax return?  If not, might you be entitled to a refund? 

Hmmmm, so now is the time to check your 2018 return.  Currently, there are over $39,000,000 in refunds due to an estimated 39,000 taxpayers in New Jersey, with Pennsylvania having almost 60,000 taxpayers entitled to a portion of $59,000,000.  So, it just might be worth your while to check out your 2018 return.  

Why might this be important to you?  If April 18, 2022 passes and you have not filed a 2018 return, if you are entitled to a refund, your time has expired.  Believe it or not, the IRS doesn’t want to keep your money and would rather give it back to you, but without a return being filed, they can’t.  And, the statute for refunds expires on April 18, 2022. 

In cases where a federal income tax return was not filed, the law provides most taxpayers with a three-year window of opportunity to claim a tax refund. If they do not file a tax return within three years, the money becomes the property of the U.S. Treasury. For 2018 tax returns, the window closes April 18, 2022, for most taxpayers. The law requires taxpayers to properly address, mail and ensure the tax return is postmarked by that date.

The IRS reminds taxpayers seeking a 2018 tax refund that their checks may be held if they have not filed tax returns for 2019 and 2020. In addition, the refund will be applied to any amounts still owed to the IRS or a state tax agency and may be used to offset unpaid child support or past due federal debts, such as student loans.

Tax year 2018 returns must be filed with the IRS on paper at the center listed on the last page of the Form 1040 instructions. Current and prior year tax forms (such as the tax year 2018 Form 1040, 1040A and 1040EZ) and instructions are available on IRS.gov – Forms and Publications.  However, taxpayers can e-file tax year 2019 and later returns. If you are missing information, you can request duplicate tax documents from employers, banks, etc., or you can get information about ordering account transcripts at IRS.gov. 

Credit Report Errors

When was the last time you checked your credit report?  Have you ever checked your credit report?  Do you know how to check your credit report? 

With the pandemic, errors have doubled on credit reports.  Why?  Certain programs implemented during the pandemic, such as forbearance periods on federal student loans and federally backed mortgages, have ended up impacting credit reports as a result of complications of processing delays and suspended payments being marked incorrectly.  So, just when you think that you were doing what was necessary to protect your credit rating, it could have impacted you negatively.   These negative impacts could result in higher interest rates on loans or credit cards, being turned down for a job or an apartment lease.  Even if you aren’t applying for a loan, a job or an apartment lease, you should still take a look at your credit report. 

The pandemic has enabled everyone to get a free weekly credit report from each of the three nationwide credit reporting bureaus until April 20, 2022.  Historically, you could check each of the three bureaus once a year without impacting your score.   

AnnualCreditReport.com provides a form for you to complete to enable you to review your credit reports online.  If an error is found, you need to contact the credit reporting agency to dispute the error either online or via mail.  Within 30-45 days, the bureau is to have investigated the matter and responded with their results in writing.  If the information is found to be in error, then it will be corrected.  If you still dispute the results after an investigation, request that a statement of the dispute be included in your file and future reports.  You can also contact the creditor that reported the information and dispute it with them directly.  If the creditor finds the information to be incorrect, they must notify the three reporting bureaus for updating or deletion. 

If you have been a victim of identity theft, additional action may be needed by you to have a fraud alert or a security freeze placed on your credit report. 

While correcting an error can be time-consuming and emotionally draining, it is important that you do your part to make certain incorrect information is resolved as it can have an impact on you in more ways than you might realize.

IRS Taxpayer Advocate

It is so common to hear grumblings about the IRS and all of its downfalls, but did you know that there is a Taxpayer Advocate? The duties and responsibilities of the advocate are to address concerns of taxpayers and improve the service that we as taxpayers receive.

So, exactly what does this Taxpayer Advocate do?  Well, first of all, there is an annual report to Congress (who oversees the IRS and sets the budget for the IRS) and the 2021 Annual Report was released in January.  Here are some highlights of the report that I thought I would share so that you would have some insight into the Taxpayer Advocate and the reporting done from that office:

  • During 2021, 77 percent of individual taxpayers received refunds.
  • The 478 million Economic Impact Payments made totaling $812 billion and the Advance Child Tax Credit payments to over 36 million families totaling over $93 billion implemented by Congress were handled by the IRS.
  • Since 2010, the IRS workforce has decreased by 17 percent, while its workload has increased by 19 percent. 
  • These statistics help to explain why, as of late December, 2021, the IRS had paper filing backlogs of 6 million unprocessed original individual income tax returns, 2.3 million unprocessed amended individual income tax returns and more than 2 million employer quarterly tax returns.  Add to that about 5 million pieces of taxpayer correspondence.  That’s a lot of work to be accomplished.
  • E-filed returns were affected due to discrepancies between amounts claimed on the returns and the amount in the IRS records.  This resulted in more than 11 million math error notices being sent to taxpayers.
  • It was noted that the IRS “Where’s My Refund?” tool was not always able to answer questions due to unprocessed returns and does not provide for information on delays.
  • Telephone service was the worst it has ever been with a record 282 million calls being made to the IRS and only 11 percent of those calls were able to be answered.

These are but a few issues encountered within the IRS.  And, having recognized these mind-blowing numbers, the Taxpayer Advocate Service has made recommendations to correct the problems, including, but not limited to:

  • Utilization of scanning technology and reducing barriers to e-filing. 
  • Deployment of “customer callback” technology on all telephone lines so that callers do not have to wait on hold and can receive a return call.  This is not the end-all and be-all solution, but it could very well help.
  • Improvement of online taxpayer accounts and allowing taxpayers to communicate by secure email.
  • Providing the public with periodic information about delays on IRS.gov. 

In addition, the National Taxpayer Advocate Service made 68 legislative recommendations for consideration by Congress.  A few of them are:

  • Providing sufficient funding for improvements to taxpayer service and modernized information technology systems.
  • Authorizing the IRS to establish minimum standards for paid tax return preparers.
  • Expanding the U.S. Tax Court’s jurisdiction to hear refund cases.

If you are interested in reading more about the annual report prepared by the Taxpayer Advocate, visit taxpayeradvocate.irs.gov/AnnualReport2021. 

Fingers are pointed at the IRS but we must remember, the IRS can only do what Congress gives them the ability to do.

Protecting Your Personal Information

There has recently been a story in Philadelphia regarding the theft of information from a person while hospitalized.  The end result was not pleasant with the theft of money from the hospitalized person’s assets.

Stop and think for a minute – you go to the hospital – whether in anticipation of being an inpatient or even perhaps to the ER and end up becoming an inpatient.  What do you take with you?  Most likely your wallet because it has all of your information – insurance cards, identification, most likely credit cards and/or debit cards.  Perhaps even your Social Security card.  Yep, you need many of those items to “register” for medical treatment. 

But, what do you do with your wallet once you are “registered”?  Do you continue to take it with you on your tour of the hospital or do you give it to someone who accompanied you to the hospital?  Most of us might think that we need to keep the information with us – just in case. 

So, now you are an inpatient and there are so many people in and out of your room.  And, you aren’t even aware of who might come in while you are sleeping or perhaps out of your room for a procedure or a test.  And now I ask you – how “safe” is your wallet? 

We find similar situations when someone is in a nursing or rehab facility.  What do they need to keep with them?  The answer is as little as possible.  Why take the chance that your information and/or assets can be compromised when if you need the information, you can call a family member to bring it to you when they come to visit. 

The protection of information is also important if you have in-home caregivers for loved ones.  Is this type of information available to a caregiver?  Is it in a common area or has all sensitive information been secured?  And, what about mail?  Some people are still getting paper statements for accounts and this would also be a potential means to obtain sensitive information.

In our world of technology today, many of us carry cell phones.  If you have a cell phone, it is very likely that it is password protected or opens only with facial recognition or fingerprint.  Would you be keeping your cell phone with you if you were hospitalized?   If so, this may not be a foolproof way to protect your information but a little better way to protect it.  If the phone has a password requirement that is the most secure way.  But, as technology has advanced, we have the convenience of facial recognition or fingerprint recognition to “unlock” our devices.  While temporarily turning off facial or fingerprint recognition when faced with a medical crisis may not be what you think of, it is something that is important. 

Think ahead.  Don’t become the victim of the theft of information or assets while hospitalized or in a care facility or even being in your own home.  Have a plan in place.  Who will have access to your information and/or assets?   You would be surprised how creative people can be when the temptation is there.  Stay one step ahead of them. 

The State Of State Taxes

Through the years, I have heard people make comments such as “_____ (insert your state of residence) has such high taxes”.  And, yes, it does seem like some states have higher taxes than others, but when speaking of taxes, one should be thinking about what type of tax is being talked about. 

Stop and consider that some states have higher sales tax rates than others and what is taxed for sales tax purposes varies from state to state, i.e., clothes are taxed in New York.  Certain food items may be subject to sales tax in some states.

Real estate taxes are a big topic of discussion.  Yes, in New Jersey we definitely pay our fair share.  But, what is included in these tax bills – usually the local municipality, school district and county.  In some states, they get these type of tax bills but also other assessments for a variety of things, including but not limited to roads, emergency services, even trash pickup.

Income tax rates vary from state to state as well as what is income taxable.  Some states tax retirement income while others don’t.  Some states provide for a deduction for medical expenses, while others don’t.  The differences go on and on. 

Gift taxes are a type of tax that most people do not encounter unless they have the means to be making significant gifts.  Many states do not have state gift taxes, but there are a few that do – California for one.

Personal property tax is a tax seen in some states based upon the value of certain assets at the end of the year. 

Finally, let’s look at death taxes.  There are 13 jurisdictions in the US that impose an estate tax on assets of a decedent at the time of death.  This is based on the overall value of the assets.  New Jersey and Pennsylvania do not have estate taxes.  Then there are inheritance taxes which are usually based upon the relationship of the decedent and the beneficiary.  Yes, both New Jersey and Pennsylvania have inheritance taxes, but there is a difference.  In Pennsylvania, a child inheriting from a parent’s estate is subject to inheritance tax, while in New Jersey this inheritance would not be inheritance taxable.  There are four other states that have inheritance taxes. 

Bottom line – Taxes are hard to escape and we all end up paying taxes in one way or another.  I saw a chart a few years ago that when you analyze all taxes in each state, we all end up paying approximately the same in taxes, depending upon our financial situation (value of assets, income, etc.)  So, let me ask – what’s the best state to live in for tax purposes?  That’s really a loaded question. 

Income Taxes for the Remote Worker

Have you been one of the workers that, due to Covid-19, your workplace has changed and you have been/are working remotely from your place of business? 

If so, here are a couple of things to consider when preparing your individual income tax return:

  • In what state are you working remotely?  Is it different than the location of your employer/regular workplace?  If you reside in a different state, could your wages be considered as non-resident income?  Could you be required to file state/local income tax returns in both your place of residence as well as your employer’s locale? 
  • What are the deductions and tax implications for claiming expenses for home offices on your personal income tax return?  Are they deductible – most likely not but for certain situations.

WOW – those two items could have major impact on your taxes.  So, what should you do? First and foremost, educate yourself.  Become acquainted with the Remote and Mobile Worker Relief Act of 2021. 

If you have a professional prepare your taxes, make certain that they are familiar with the ins and outs of remote workers.  Don’t just assume that they will know that you may have a Form W-2 issued by your employer in one state and know that you didn’t work in that location. 

All paid preparers must have a Preparer Tax Identification Number or a PTIN.  If your preparer does not have one, you may want to find someone who does.  For a preparer to obtain a PTIN is not difficult but it proves that the preparer is registered with the IRS to prepare taxes.  The IRS publishes a directory of tax professionals for reference.  And, always remember that sometimes the expression “you get what you pay for” is true.  Just because you could have your taxes prepared cheaper does not mean that the preparer is a professional and will stand behind the return they prepare.  Credentialed professionals are required to have continuing education to keep up with the changes and laws. 

Protect yourself.  Be truthful with regard to your taxes.  Because, if you don’t, you could face interest and penalties for incorrectly prepared returns.  Remember, in our electronic world, the taxing authorities have access to information that could catch up to you.  Finally, if you are paying someone to prepare your taxes, do your due diligence and ensure that they have the credentials to do so.  (Many preparers in the pop-up locations at this time of year do not have the familiarity with tax laws that true tax professionals have.)

Capehart Blogs

Insurance
Bicyclists Covered by Auto Insurance with Limited Tort Must Establish a Permanent Injury to Sue for Pain and Suffering
Firm News
Shareholder Claire Ringel Retires
Liability
Municipality Found Immune From Liability for Pedestrian Accident Under Both Tort Claims Act and Landowners’ Liability Act
Subscribe to Blog Updates

Capehart Blogs

Tags
Alternative Energy Alternative Energy - Solar Alternative Energy - Wind Appellate Division automobile accident automobile insurance Burlington County Bar Association Cannabis Law Charity constructive notice coverage discovery dismissal Diversity & Inclusion Diversity & Inclusion Committee duty of care employees employers Employment Law evidence insurance Liability Litigation Litigation Quarterly Lorman Millennium Seminars NBI negligence New Jersey Workers' Compensation Act New York Law NJ Law notice Pennsylvania Law personal injury Public Entity Newsletter Real Estate and Land Use school law slip and fall statute of limitations summary judgment Taxes Tort Claims Act trip and fall Workers' Compensation Workers' Compensation Newsletter

Contact Information

  • Capehart Scatchard
  • (856)-234-6800
  • Email