Trusts, Estates and Succession

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The Right To Die Legislation

New Jersey recently enacted the right to die or assisted suicide legislation as the eighth jurisdiction in the U.S. to allow a fatally ill individual to make a decision to end their life. New Jersey joins Hawaii, Colorado, Oregon, Vermont, Washington and California.

The legislation is deemed to be a commitment to individual dignity, informed consent and the right of the individual to make their own health care decisions.  New Jersey affirms the right of a qualified terminally ill patient to obtain medication that the patient may choose to self-administer in order to bring about a humane and dignified death. 

The New Jersey Act – called “Aid in Dying for the Terminally Ill Act” will permit a New Jersey resident individual 18 years of age or older, who has the capacity to make health care decisions and to communicate them to a health care provider, who is in the terminal stage of an irreversible fatal illness, disease or condition with a prognoses based upon reasonable medical certainty of a life expectancy of six months or less as confirmed in writing by a consulting physician to be deemed to  have made an informed decision to request  and obtain a prescription for medication to end their life.  The medication is to be self-administered.

The request by the terminally ill individual must be done in a specific manner:  The individual must make two oral requests and one written request for the medication to their attending physician.  At least 15 days shall lapse between the initial oral request and the second oral request.  Upon the second request, the attending physician shall offer the patient an opportunity to rescind the request.  At least fifteen days must elapse between the initial oral request and the writing of a prescription. 

A health care agent is not authorized to request the prescription or to rescind the initial request. 

The medication must be administered by the patient. 

This decision is not to be made lightly.  Family members may object, religious beliefs may be considered.   Ultimately, the decision rests with the patient to end their pain and suffering.

Household Employees

You have the luxury of a cleaning person.  A neighborhood kid cuts your lawn or shovels your snow.  You have a great babysitter when you need one.  You have someone who runs errands for you.  It is so nice to have people you rely upon and who can help you out. 

But, wait!  Are these individuals considered household employees?  Are they hired by you to work in or around your home?  Are they working under your direction?  Are you able to control the work or services being provided?  If the answer is yes, then you are an employer and have an employee. 

So, what does that mean?  Well, you may need to address the issue of employment taxes. 

If a household compensated any one person in cash wages of $2,100 or more in 2018, household employment taxes must be paid by the employer.  There are some exceptions, such as family members or people under the age of 18, but certain restrictions do apply. 

The household is also responsible for withholding and paying Social Security and Medicare taxes.  There are also federal unemployment taxes if wages of $1,000 or more were earned in any calendar quarter of 2018. 

The “employees” must be eligible to work in the US.  The employer and the employee must complete and file an IRS Form I-9. The employer may need to secure an Employer Identification Number and issue documents at the beginning of each calendar year for the prior year.  You, as the employer, may need to file a tax return for having household employees.  Also, you should make certain that your homeowner’s insurance covers such individuals providing services to you. 

Now you begin to ask yourself if the services or work being provided to you is worth it.  Well, you can relax if your employees are hired through a business or agency.  There are many cleaning and lawn services available.  When you engage their services, you pay the company and the company pays the employees.  That relieves you of the responsibility to deal with the tax-related issues.  Yes, perhaps the charge for these services might be a little higher, but you don’t have the liability of having household employees.

Preparing for Disasters

We are in the midst of hurricane season and while most of us do not have to worry like some, the Internal Revenue Service reminds everyone to develop an emergency preparedness plan. Taxpayers, whether individuals, organizations or businesses, should take time now to create or update their emergency plans.

So, even though we may not be likely to experience a hurricane, there other disasters that could happen – fire, damage from the wind, etc.  What should you do to be prepared? 

  • Important original documents such as birth certificates, insurance policies, Wills, Trusts, passports, car titles, etc. should be kept in a fireproof, waterproof container in a secure space.  If you have a safe deposit box; great.  Otherwise, make certain that your storage is substantial.  Those little fireproof boxes may not withstand intense heat, so do your homework on their durability. 

  • Documents such as deeds are always good to have but as long as they have been filed at the Court House, you needn’t worry about them if they are lost. Copies can always be obtained. 

  • It is a good idea to make copies of your important papers, including income tax returns, and give a hard copy or an electronic copy to a trusted individual.

  • If your home was destroyed, how well would you remember EVERYTHING that is in it?  Take photographs or videos of the content which can help support claims for insurance purposes. 

  • The IRS publishes a Disaster Resource Guide for Individuals and Businesses which is available on their website. 

  • If there is a federally-declared disaster, the IRS has trained specialists to help with disaster-related issues.  If a taxpayer is impacted by a disaster outside of a federally declared disaster area whose records are located in a disaster area, they can receive assistance by contacting the IRS. 

Be prepared.  Should you be unfortunate to suffer a disaster loss, know that there are resources to help you through a difficult time.

Robocalls – How to Recognize Them

IRS scams and phishing, identity theft, this scam, that scam — What’s This World Coming To?

Scammers are creative.  Must be nice not to have anything else to do but come up with new ploys to intimidate and steal from law-abiding citizens.  The elderly are particularly vulnerable in these ploys and so easily fall prey to the scams.  Here are a couple of new ways people have gotten creative:

You get a call that talks about health insurance.  If you listen to the scheme that they can get you better insurance for a lower price, you are then asked to press 1 to speak to an agent.  When you press 1, you may not be directed to a legitimate representative but to a scammer. 

You receive a call from law enforcement stating that a warrant has been issued for your arrest due to your failing to appear for jury duty.  Surely, if you received the notice that you were called for jury duty you would remember.  Don’t fall for this call.  If you have doubts as to being called for jury duty, contact your county clerk’s office. 

A call stating that your Social Security Number has been compromised or that there is an enforcement action against you.  You will be asked to verify your Social Security Number and from there, the scammer will use your SSN to commit crimes.  If in doubt, call your local Social Security Administration office, not the number provided in the robocall.

Medicare fraud is becoming more common.  You get a message from a pain center because someone at your number requested information about medical equipment.  You may qualify for the equipment at a reduced or no cost to you.  You need only press 1 for more information. 

As you can see, scammers are creative.  Don’t buy into the robocalls.

Do You Need To Amend Your Income Tax Return?

So tax season is over and you have filed your returns.  You are finished with taxes for yet another year.  Yippee!

That is until you go to your mailbox and find a corrected income tax statement.  A financial institution discovered an error in what was previously reported and the numbers have changed.  So now what do you do?

Pull out your tax file for 2017 and proceed to file an amended return.  You need to file an amended return if there is a change in your filing status, income, deductions or credits using form 1040X.  It really isn’t as cumbersome as your original return, however.

Should you find that you owe additional tax, you should immediately proceed to pay the additional tax as penalties and/or interest can be assessed.  If you find that you are entitled to a refund, the Form 1040X must be filed within 3 years of the date you filed your original return or within 2 years after the date you paid the tax, whichever is later.

Preparing a Form 1040ZX has three columns which must be completed.  Column A shows your original figures reported on your Form 1040.  Column C shows what the figures should be and Column B reflects the amount of adjustment.  There is also an area for you to explain the reason for filing Form 1040X.  Amended returns cannot be e-filed and the instructions provide the correct address for you to mail your return.  When mailing your return, you should include a copy of the documentation you received which necessitated the amendment.

If you needed to amend your federal return, chances are that you need to amend your state return.  Information can be located on the website for your state taxing authority with regard to the procedure.  Additional information regarding amended returns can be located on the IRS website at www.irs.gov by searching for amended returns or Form 1040X.

Tax Scams Aren’t Seasonal

One might think that since April 15 has passed, so has the season for tax scams. Think again. There is no season for tax scams. They occur 365 days a year. 

The IRS has reported a couple of new variations of tax-related scams. 

They call one of them the SSN HUSTLE.  In this scam, the scammer claims to be able to suspend or cancel a Social Security Number. This is similar to the IRS impersonation scam.  Don’t return calls to robo-call voicemails. And, if you answer a call like this, hang up. Or, if you are inclined to say something, tell them to send it in writing. 

Another scam is that of a fake tax agency. And, this you do get in writing. The claim is that you have delinquent taxes and that there is a lien against you or that your property will be levied upon. This scam can be very confusing because it looks legitimate and to be from the IRS.  If you receive such a mailing, do not call the number that may be in the notice. Call the IRS at 800-829-1040. 

Stay alert. 

Phone scams continue and you should remember that the IRS does not leave a pre-recorded, urgent or threatening message.  Don’t rely on caller ID as these can be fake.

If in doubt, call the IRS at 800-829-1040.

The same goes for email phishing scams. The IRS does not contact taxpayers by email.  Most contacts from the IRS come through the US Postal Service regular mail. Only in special circumstances will the IRS call or visit a home/business. These visits are usually only after other communications have not been successful.

If you think that you may have received an email that appears to be from the IRS that is fraudulent, report it by sending it to phishing@irs.gov. Don’t reply to the email. 

REMEMBER, the IRS will not call you to demand immediate payment and ask for financial information. They will not threaten to bring in law enforcement.

If you receive something that appears to be a scam and you are having a guilty conscience because you do owe or may owe taxes, contact the IRS directly.  Don’t fall prey to a scam. YOU should initiate contact with the IRS by calling them at 800-829-1040.

Don’t be a victim. Outsmart the scammers.

Here’s What Taxpayers Should Know if They Get a Notice From the IRS

Certain taxpayers might get a letter from the IRS this year. It’s called an IRS Notice CP 2000. It gives detailed information about issues the IRS identified. The IRS sends this notice when information from a third party doesn’t match the information the taxpayer reported on their tax return. The notice also provides steps taxpayers should take to resolve those issues.

Here is some information about these notices to help taxpayers understand why they got one and what to do when it arrives:

  • The IRS sends a notice to the taxpayer when a tax return’s information doesn’t match data reported to the IRS by banks and other third parties.
  • This notice isn’t a formal audit notification. It is simply a notice to see if the taxpayer agrees or disagrees with the proposed tax changes.
  • Taxpayers should respond to the Notice CP2000. The taxpayer usually has 30 days from the date printed on the notice to respond.
  • The IRS provides a phone number on each notice. IRS telephone assistors can explain the notice and what taxpayers need to do to resolve any issues.
  • The IRS will send another notice to the taxpayer if the taxpayer doesn’t respond to the initial Notice CP2000, or if the agency can’t accept the additional information provided. It is called an IRS Notice CP3219A, Statutory Notice of Deficiency.
  • The Notice CP3219A gives detailed information about why the IRS proposes a tax change and how the agency determined the change. The notice tells taxpayers about their right to challenge the decision in Tax Court if they choose to do so. Even if they decide not to go to Tax Court, the IRS will continue to work with the taxpayer to help resolve the issue.

On-Line Deposit Accounts

Everyone wants to make the best return on their hard-earned money and many people shop around to find the best interest rate.  In our world today, we may find better rates at on-line banking sites than we can find in our brick and mortar banks.  BUYER BEWARE!

In working on an estate recently, the decedent had accumulated a nice nest egg.  He was diligent not to put more than the FDIC amount ($250,000) in any one banking institution.  In fact, he had a few accounts with on-line banks to earn a good interest rate.  The administration of the estate had progressed to a point of consolidating the accounts after receiving tax clearance and work toward the distribution of the assets.  All was going well until we attempted to collect the balance of an account that was based in California. 

When sending the request to close out the account, we received a response that we needed to file for an ancillary estate administration in California. (Of course they didn’t tell us this back when we communicated with them to notify them of the account owner’s passing.)  This was news to me as I have worked on many estates where the decedents had accounts in banks in other states but never have I encountered this requirement for a bank account. 

After much research and communications with the bank and a lengthy call with the Probate Department of Los Angeles County, I learned that it was, in fact, a requirement to raise an ancillary estate in California.  Normally this requirement exists only when there is real estate in a non-domiciled state.  We merely get an exemplified copy of the probate proceedings from the local Surrogate or Register of Wills, file it with the county in which the real estate is located and we are good to go. 

Well, sad to say, that is not the case in California.  In addition to the exemplified copy of the probate proceedings, there were several other forms required along with a fee of almost $500.  Once the papers are filed, within a month we will be advised of a hearing date (three to four months out) at which the executor must be present in person or by phone.  After the hearing, if there is no opposition, the court will sign an order to appoint the executor (being the same person who has been acting in New Jersey as executor).  Then, and only then, will the Probate Department – in about a month after the order is signed – issue the documentation needed to present to the banking institution to receive the funds and close out the account. 

Whew, what a process!  So now, we will be waiting for another six months before the beneficiaries can receive this asset. 

So, the BIG question is; was the higher interest rate worth this extra cost, delay and hassle? 

The Future of Dying

As we look back in history, the memorialization of the deceased have been very diverse among the cultures of our world. In the U.S., we see a mix of the different cultures based upon personal preferences as well as religious beliefs. 

So, what is ahead in the future with regard to dying and memorialization of the dead?  Taking into consideration that space for ground interment is becoming a concern, the rise in cremations and the building of mausoleums, what will be next?  Cremations are very popular due to the reduced cost from a traditional funeral. 

A recent article that I read stated that, thanks to technology, engineers can transform the carbon from human ashes into diamond gems that are physically and chemically identical to natural diamonds.  Using one pound of ashes, the pure carbon elements are extracted and impurities are removed.  Any remaining ashes are then returned to the family.  With the use of heat at about 2,400 degrees Fahrenheit and pressure, diamonds are created. 

Now, you are saying to yourself that these “memorial” diamonds can’t be the same as genuine diamonds, but it has been proven that they are identical down to the atomic level. Once created, the diamond can be kept in rough form or can be cut and polished the same as genuine diamonds.  So, in about six months, your loved one can be turned into a diamond.  Fascinating.  The cost is based upon the size and cut of the diamond. 

So, you say that you aren’t into diamonds.  Here are a few other alternatives. 

How about a custom-made vinyl record made from your loved one’s ashes?

Or, perhaps sending your loved one’s ashes into orbit, to the moon or even into deep space?

If your loved one liked the ocean, you could consider incorporating a loved one’s ashes into an artificial reef or marine habitat. 

Or, if you are a little more down-to-earth, you could use some of the cremains to grow an indoor tree. 

So, what would be your choice? Hmmmm.

Will You Make Your Kids Angry After You Die?

During my career of doing estate administration, I found in the earlier years that the beneficiaries were more appreciative of what they received.  The children got along and all was well.  However, our society has changed and now there are many cases ending up in court to settle matters which were not able to be settled amicably.  Family members become estranged from one another sometimes over the most trivial matters. 

So, what can you do to keep peace in your family after you go to that great place in the sky?  Here are some basic suggestions for people of all ages to consider:

Is your estate planning up to date – or do you even have your planning done?  This is a very broad term – estate planning – and covers many areas.  Should you die without having completed your estate plan, certain areas will be decided according to law rather than according to your wishes.  These include, but are not limited to, who will inherit your assets, who will become the representative of your estate to handle the administration, who will become the guardian of minor children.  If you don’t want the law to make these decisions for you, then you need to have estate planning done.  Also, the lack of estate planning tends to leave family members feeling like they have a mess to deal with.  Financial records could be incomplete or in today’s world be kept only online and not be evident.  This leaves a mystery of what assets there are and the value.  End of life and postmortem wishes are not known.  Just to name a few.

Estate planning includes addressing the issues stated above, but there is more to it.  A prior blog discussed having the talk with children to let them know what your wishes are, where to locate documents and information when needed, etc.  Keeping too many secrets from your children can present problems.  If you have preplanned your funeral and/or purchased a burial plot, even perhaps planned your memorial service, let your children know where to find this information when the time comes.  If they find it a couple of weeks after you pass, it does no good for any one.  Sharing this kind of information is not easy but it is so helpful.

During your lifetime, there may be a need to have someone act on your behalf to pay bills, handle financial matters, etc. if you are unable to do so.  A Durable Power of Attorney is the document which names an agent to act on your behalf if needed.  Without a Durable Power of Attorney, your family could experience the inability to gain access to your bank account.  Would you want this to happen?

In the event you became unable to make your own medical decisions, a Health Care Directive/Living Will is very important.  This will name an agent to make medical decisions on your behalf according to your wishes.  It provides medical personnel with a point person with whom to discuss your care and how to proceed.  I have seen families with several children and the parents do not have a Health Care Directive.  Each of the children can rationalize why they know what mom or dad wanted and should be able to make the decisions.  However, without a document naming an agent, there is no point person.   This leads to much angst with the family as well as the medical professionals. 

You may have indicated to different individuals your wish that a certain asset was to go to them.  However, if you don’t write it down and after your passing more than one person wants to claim a particular asset, what happens? Each of these persons has their side of the story as to receiving the asset and feels entitled to it.  Once again, angst among the kids.  So, what should you do?

A Last Will and Testament will solve the problem if done properly.  A Will states who is to receive your assets and who is to be the executor to wrap up your affairs.   Generally, a Will addresses the distribution of tangible personal property through a memorandum document which you prepare and place with your Will.  However, failure to complete the memorandum is cause for problems.  Sticky notes on the back or bottom of items are not valid indicators of beneficiaries of items. 

Estate planning also includes making certain that beneficiary designations of life insurance and/or retirement accounts are completed properly.  It should never be assumed that if one beneficiary is designated that they will split the asset with other children.  There may be tax consequences incurred by the designated beneficiary and it would not be fair to have them burdened with tax when they had to share the money. 

An out of date Will can pose many problems.  Let’s say that an unmarried aunt/uncle left nephews and nieces a specific dollar amount in cash.  When the aunt/uncle dies, their assets were insufficient to make payment of these bequests, let alone have any residual to distribute to the residuary beneficiary.  If you have specific bequests in your Will and your financial status changes due to increased expenses, updating your Will to better reflect your current status can save much angst. 

Be realistic when thinking about the disposition of your assets.  If you have a family member with special needs, consider whether an outright distribution from your estate would compromise any benefits they may be receiving.  Would you want the spouse of a child to be able to stake a claim in your child’s inheritance from your estate?  Is there a beneficiary that doesn’t handle money very well?  These are all matters which should be brought up with the attorney who is assisting with your estate planning so that steps can be taken to protect your intentions. 

There are programs on television about hoarders.  While you may not be a hoarder, be realistic about what fills your home.  Have you held on to items just because you think you may be able to use them in the future – even though you haven’t used them in the 10 or 20 years since acquiring them?  The thought of going through the contents of your home can be overwhelming but spending 30 or 60 minutes at a time can help you eliminate your excess.  Charities are always happy to receive donations of items that can be reused.  Leaving your accumulation of excess items is a monumental task for your family to go through.  I’ve cleaned out many houses of clients who passed away and I can tell you that it is not a fun job.  I had no emotional ties to the deceased, but when you think of your children going through each and every item, not only is it a time-consuming job, but it is very emotional.

Be proactive.  Make doing your estate planning a priority or if you have your planning done, review it.  Laws change, people change, change is constantly occurring.  Don’t leave things in a state of disarray for your children to put together like a puzzle without having the picture to look at.  Your intentions are for peace and cohesiveness within your family; not estrangement. 

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