CNBC offers this advice to parents whose children want more money. If you need counsel on estate planning or gifting options to your children, give me a call to schedule a convenient appointment.
(c) 2012, Stephen M. Johnson, Esq.
Category Archives: Estate Planning
The Diverse 1%
As much as some populists would like us to think that the 1% fit into a mold and are as predictable and uniform as the rising sun each morning, the New York Times provides a more nuanced portrait of the wealthiest 1% of Americans.
(c) 2012, Stephen M. Johnson, Esq.
The Politics of Estate Planning
Estate planning tactics look to become a hot political issue this election cycle. The Daily Mail reports on rumors that former Gov. and Republican Presidential Candidate Mitt Romney may have a small fortune in offshore bank accounts. Of course, affluent Democrats and Republicans alike engage in estate planning, including some controversial tactics. Having an offshore bank account or trust is perfectly legal assuming that the formalities and tax reporting requirements are followed. But in politics, facts often matter less than perceptions, feelings, and opinion. If I can help you with questions about trusts, estate planning, or offshore bank accounts, please call me at your convenience.
(c) 2012, Stephen M. Johnson, Esq.
Wealth Tax?
Robert Frank, of the Wall Street Journal’s Wealth Report blog, offers this reflection on practical problems of a wealth tax. A wealth tax sounds like a variation of a property tax, which has historically been a local or state level levy. Just as various deductions, loopholes, and definitions of “income” have developed in the income tax context, so one would expect similar issues for a wealth tax (including valuation issues discussed in the article by Mr. Frank). A wealth tax is the wrong message to send to entrepreneurs and capitalists – we’re going to punish your success. And economics teaching that tax increases in a down economy are counterproductive. What do you think? Do you support or oppose a wealth tax? Why?
(c) 2012, Stephen M. Johnson, Esq.
Here Comes an IRS Audit: Depending on Your Income
CNBC has this article about your chances of facing an IRS audit. If you earn $200,000 or more per year, your audit chances are 1 in 25 (4%). For those earning $1 million plus each year, your audit chances are 1 in 8 (12.5%). If your annual income is under $200,000, your audit chances are just 1 in 100 (1%). One suspects that these audit odds are primarily politically motivated, rather than actually driven by tax evasion or income under-reporting data or similar metrics. In any case, as long as you keep careful financial and tax records and retain your records for several years, audits shouldn’t be a big concern, just a time consuming issue to deal with. If you find yourself in an audit situation or needing tax and/or estate planning advice, give me a call or send me an email to setup a convenient appointment.
(c) 2012, Stephen M. Johnson, Esq.
Take Your Time …. Hurry Up!
A brief story: In high school trigonometry class, my math teacher used to give us frequent quizzes over basic trigonometry equations and other pre-calculus functions. I vividly recall him pacing up and down the thin aisles of desks (about 20 or 30 students), cradling his hands behind his back, and looking out over the class through his glasses while calling out “take your time,” then “hurry up!” a few seconds later. It was a charming eccentricity if you weren’t knee deep in a math problem, or an annoying interruption if you were racking your brain to remember that math formula you had stayed up late the night before trying to learn.
The changing economic realities, increased life spans, and increasing standards of living are causing many retirees to go on the “hurry-up offense” with retirement planning. There’s a similar phenomenon in estate planning. The tolling of the New Year bells draws closer, you get married and have a child, you get divorced, a relative dies and you receive an inheritance, or you or your spouse get the dreaded grim health news from the doctor. Time to visit your estate planning attorney.
While several “hurry-up offense” estate planning tactics that can be helpful, I recommend confronting these issues when you are healthy and have some time to contemplate how you want your last affairs handled. We all know that it’s best to make big decisions when you’re calm, relaxed, and feeling great. A Will or trust, living will, and durable financial and medical powers of attorney are the estate planning building blocks that every adult needs. Cross an item off your new year’s to do list, or make a new resolution to take care of your estate planning needs this year. Need to do any digital estate planning for your computer, email, Facebook, LinkedIn, online banking, or other valuable electronic information? Have a small business you’re looking to transition, or thinking about family business succession and your kids? We can help with that too. Call or email us any time to set up a convenient appointment and start off 2012 right with the peace of mind that good planning brings.
(c) 2012, Stephen M. Johnson, Esq.
2011 Tax Deadline Extended
Some news you can use, for lawyers and accountants (and others) preparing or filing 2011 tax returns. Because April 15, the traditional tax deadline, falls on a Sunday in 2012 and the 16th is a D.C. holiday (Emancipation Day), your 2011 tax returns won’t be due until Tuesday, April 17, 2012. Of course, you can still file for a 6 month extension via Form 4868, which pushes your (individual income tax) due date out to October 15, 2012 (the IRS also has extension forms for other filers). As one of Kansas City’s favorite sons (and H&R Block co-founder), Henry Bloch, titled his memoir, Many Happy Returns! It’s a good book that relates a fascinating story of perseverance and growing a family business into an accounting and tax empire, written with warmth and charming anecdotes by a gem of a gentleman.
If I can help you with your individual, corporate, or fiduciary tax returns for 2011, give me a call or send me an email.
(c) 2012, Stephen M. Johnson, Esq.
Conflicts of interest
This Daily Mail article highlights a classic case of lawyers (and accountants) getting removed from a case by the judge because of conflicts of interest, in the Clark case, for each being slated for an $8 million bequest from the estate. This is a classic legal ethics question that confronts estate planning attorneys – can the lawyer accept a gift from the estate of the deceased? Short answer is “no.” If a lawyer drafts estate planning documents for family members, the relative is entitled to independent legal counsel if they so choose and the lawyer may not receive more than an intestate share of the estate (e.g. what they would’ve received if the relative had died without a will). A client can theoretically leave gifts to their lawyer or other professional advisors in a will or trust, but those gifts are automatically suspect and best practice is to only be paid your attorney’s fees and not accept gifts from a client’s estate.
If you need legal counsel with year end estate planning or if you’re an attorney who has a conflict of interest and need independent legal counsel to help, give me a call or send me an email. Merry Christmas and see you in the New Year – 2012, here we come!
(c) 2011, Stephen M. Johnson, Esq.
Time to Sell Your Small Business?
Interesting NY Times article about business owners thinking of selling in the current economy. There’s a wonderful piece of old-fashioned, homespun wisdom quoted: “success is when opportunity and preparation intersect.” Successful business people have to be alert for new and emerging opportunities to capitalize on those venues and maximize their enterprise profitability. Perhaps a few business successes come down to being in the right place in the right time, serendipity, or luck, but most business people (and certainly most lawyers) would say that chance favors the prepared – you have to do your homework, which will often show you openings or opportunities that your competitors don’t see. Or as one early rising quipster put it, the comfort of being awake near dawn is “my competition is still sleeping,” so an edge or lead can be acquired. In this economy, business people and successful individuals must capitalize on every edge or lead they can find or create to distinguish themselves and get ahead.
The article’s advice reminds me of a piece of financial/investment advice I read a couple years ago in The Great Depression Ahead by (gloom and doom) economist Harry S. Dent. If I can help you in the process of selling your business or thinking about the pros and cons of the sale decision, give me a call or email me to set up a convenient appointment. If you are going to sell your business, getting the wheels of the deal in motion before December 31 is ideal for tax purposes.
(c) 2011, Stephen M. Johnson, Esq.
Estate sales
Here’s a fascinating Washington Post story about an estate sale for the wife of U.S. Supreme Court Justice Potter Stewart. The estate sale offered a window into Washington social life during Justice Stewart’s career and also allowed a few aspiring lawyers to obtain some classic memorabilia, such as the Justice’s briefcase. A lawyer’s soft leather briefcase, just like his or her pen and legal pad (or computer and smart phone), is an integral part of the lawyer’s practice and professional image and reputation.
If you need help organizing an estate sale, administering the estate of a loved one or close friend, or advice on your own estate plan, give me a call or email at your convenience.
(c) 2011, Stephen M. Johnson, Esq.
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