Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

A Member of the Law Professor Blogs Network

Wednesday, October 8, 2014

The Medicare Tax Update

Medicare tax

Medicare taxes, which were instituted in January 2013, affect many upper-income Americans with higher taxes both on wages and investment income. 

The Medicare payroll tax is 2.9 percent and applies only to earned income.  You are responsible for 1.45 percent of the tax while your employer pays the other 1.45 percent.  High wage earners now owe an additional 0.9 percent on earned income above $200,000 for individuals and $250,000 for couples filing jointly. 

Previously, taxpayers were not obligated to pay Medicare tax on income generated from investments such as capital gains, dividends and taxable interest.  However, since 2013, you could owe a 3.8 percent Medicare tax on some or all of your net investment income.  Determining what is considered net investment income can be challenging, thus it is a good idea to check with a tax adviser. 

Although reducing the Medicare tax can be difficult if you are still working, one strategy is to maximize your contributions to pretax retirement plans like traditional 401(k)s or 403(b)s.  Moreover, qualified withdrawals from a Roth IRA or Roth 401(k) plan are not included in the tax. 

See Fidelity Voice, Medicare Tax for 2014: What You Should Know, Forbes, Oct. 6, 2014.

October 8, 2014 in Estate Planning - Generally, New Legislation | Permalink | Comments (0) | TrackBack (0)

Monday, October 6, 2014

Ohio's Guardianship System to be Revamped

Guardianship

State representatives in Ohio have drafted legislation to reform the state’s guardianship system, using problems uncovered in a series of stories in The Columbus Dispatch newspaper as a guide.  “This is about protecting the state’s most vulnerable people.  We want to hold those in charge of others responsible and ensure they know what’s expected of them.”

House Bill 624 calls for a ward’s bill of rights.  The bill would also require probate courts to give guardians a handbook that specifies how to care for a ward, manage assets and talk with doctors. 

In May, an investigation by The Dispatch revealed that unprincipled lawyers and selfish family members who are court-appointed guardians for people had been deemed incompetent to handle affairs by the probate judge.  The investigation found there were no statewide standards and that many courts lacked necessary safeguards or ignored their own rules. 

The bill proposes to codify 19 separate rights.  First, a ward must be “treated with dignity and respect.”  Other important rights for wards would force courts to implement other changes as well. 

The bill has bipartisan support and is expected to sail through the Ohio House and Senate. 

See Lucas Sullivan, Josh Jarman, and Mike Wagner, Bill Would Spell Out Wards’ Legal Rights in Guardianship System, The Columbus Dispatch, Oct. 5, 2014.

October 6, 2014 in Estate Planning - Generally, Guardianship, New Legislation | Permalink | Comments (0) | TrackBack (0)

Proposed Changes to Ohio Guardianship System

LawCurrently, Ohio does not have codified statewide standards for the state's guardianship system. Rather, standards that guardians must meet vary by county, and recent investigations in the state have exposed abuse of those in the guardian's care and ineffective enforcement of existing standards.

To address these concerns, Rep. Dorothy Pelanda and Sen. Shannon Jones, are backing House Bill 624. The proposed legislation would create a ward’s bill of rights, and give those appointed guardians by the state's probate courts rights such as being “treated with dignity and respect.” The text of the bill may be read here.

See Lucas Sullivan, Josh Jarman, & Mike Wagner, Bill Would Spell out Wards' Legal Rights in Guardianship System, The Columbus Dispatch, Oct. 5, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

October 6, 2014 in Guardianship, New Legislation | Permalink | Comments (0) | TrackBack (0)

Sunday, October 5, 2014

Supreme Court to Hear Case on States Taxing Out-of-State Income

Supreme court

The United States Supreme Court will hear a case involving a Maryland couple that believes their out-of-state income should not be taxed by their state of residence. 

Brian and Karen Wynne argue that the income they earn in several other states through Maxim Healthcare Services Inc., a company Mr. Wynne partially owns, should not be taxed by Maryland if they pay the income taxes in those other states.  Although Maryland has an out-of-state income tax credit that can be used to offset state income taxes, there is no equivalent credit that can be used to offset county income taxes. 

In Maryland Tax Court the Wynne’s claimed that the partial credit violates the dormant Commerce Clause.  However, University of Maryland Carey School of Law Professor Mark Graber said the dormant Commerce Clause says “there are some state regulations of interstate commerce that are unconstitutional even when Congress does not act. . .  So there is no federal law that prohibits or requires states to give tax credits for taxes paid in other states.  But the claim the Wynne’s are making is that, in fact, Maryland’s failure to do so sufficiently burdens interstate commerce.” 

The Wynne’s counsel explains he believes they “shouldn’t have to pay double taxes” and the way in which Maryland structures its taxes punishes Mr. Wynne for growing a successful business.  Yet, Maryland argued in court documents that it has the right as a sovereign state to tax the entirety of its residents’ income, regardless of where the income was generated or if taxes on that income were paid in other states. 

The Supreme Court will begin its next session on Monday.  The case is set to be argued November 12.

See Ashley S. Westerman, Supreme Court to Hear Case on Right of States to Tax Out-of-State Income, Southern Maryland Online, Oct. 2, 2014. 

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

October 5, 2014 in Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 1, 2014

Delaware Guardianship Rule Change

LawNew amendments to the rules for Delaware courts' regarding court-appointed guardianship requirements became effective on September 19. The amendment changes the requirements of Court of Chancery Rule 180. A court-appointed guardian is no longer required for a minor if their property at issue is valued at $25,000 or less.

See Carl Neff, Chancery Amens Guardianship Rule 180, Delaware Chancery Law Blog, Sept. 28, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

October 1, 2014 in Guardianship, New Legislation | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 30, 2014

U.S. Requires Assistance to Enforce FATCA

PuzzleAs I have previously discussed, the U.S. government has shown a strong commitment to investigating violations and enforcing compliance with the Foreign Account Tax Compliance Act (FATCA). The global anti tax-evasion law that requires foreign financial institutions to reveal account information of wealthy U.S. citizen owned accounts, requires international corporation to effectively enforce. Since refusal to cooperate with the U.S. in FATCA enforcement could result in inability to participate in U.S. markets, participation has been widespread across the globe. However, concern over Canada's commitment to enforcement has arisen due to recent staff and budget cuts that affect Canada's Revenue Agency.

See Robert W. Wood, Armed With FATCA, IRS Hunts Offshore Tax Evaders, While Canada Eases Up, Forbes, Sept. 22, 2014.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

September 30, 2014 in Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Monday, September 29, 2014

Plans to End 'Death Tax' on British Pension Inheritance

Tax CutIt is expected that George Osborne, British politician and Chancellor of the Exchequer, will announce in April an end to the “death tax” for drawdown pensions passed on as inheritance after the accountholder dies. The new plan will abolish the current marginal rate tax if the accountholder dies before reaching age 75 and will reduce the taxes from 55% to the marginal income tax rate if the accountholder is over 75-years-old at death. The new plan, which is intended to assist with economic growth, is planned to be announced at the Conservative Party conference in Birmingham prior to May elections.

See Peter Dominiczak, George Osborne Scraps the 'Death Tax', The Telegraph, Sept. 28, 2014.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.

September 29, 2014 in Current Affairs, Current Events, Estate Planning - Generally, Estate Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Saturday, September 27, 2014

Indictment Shows Strong Commitment to FATCA Enforcement

GAVELAs I have previously discussed, the Foreign Account Tax Compliance Act (FATCA), was enacted in 2010 and requires that foreign banks and other financial institutions report large accounts held by U.S. account holders. The U.S. government's commitment to enforcing FATCA requirements was demonstrated in the recent indictment of financial managers and others allegedly involved in an offshore money laundering scheme for the benefit of their U.S. clients. The case is the result of a complex sting operation that began in 2012 and involved collaboration efforts of multiple government agencies.

See Miriam L. Fisher and Brian C. McManus, Bandfeild Confirms Aggressive FATCA Enforcement Tactics, JD Supra, Sept. 17, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

September 27, 2014 in Estate Planning - Generally, Income Tax, New Cases, New Legislation | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 23, 2014

Canada Eases Up on Tax Evaders

Canada:America

In a move related to budget cuts, Canada’s Revenue Agency is cutting its top staffed focused on international tax evasion.  The move raises concerns that the Canadian government’s crackdown on offshore tax cheats may be all talk.  However, Canada has gone to great lengths to prove that it is going after evaders, most significantly, Canada signed onto FATCA, the Foreign Account Tax Compliance Act, America’s global tax law.

A lawsuit has recently been filed against the Canadian Attorney General challenging the constitutionality of Canada’s FATCA agreement with the United States.  The legal claim is that the agreement violates provisions of the Canadian Charter of Rights and Freedoms.  That document enumerates the right to life, liberty, security of person; security against unreasonable search and seizure; and equal protection of law without discrimination.  This is a serious charge and the allegation that Canada’s FATCA agreement soars in the face of the “principle that Canada will not forfeit its sovereignty to a foreign state.”  Yet for now, due to the fact that Canada signed FATCA, the IRS will receive the data.

See Robert W. Wood, Armed With FATCA, IRS Hunts Offshore Tax Evaders, While Canada Eases Up, Forbes, Sept. 22, 2012. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

September 23, 2014 in Estate Planning - Generally, Income Tax, New Legislation | Permalink | Comments (0) | TrackBack (0)

Yahoo Criticizes Digital Asset Legislation

Yahoo

Many questions arise when it comes to addressing what should come of our personal digital communications after we die?  Should they be treated like physical letters for the purposes of a will?

Yahoo does not think so.  The company is now criticizing new legislation that gives executors charged with carrying out the instructions in a person’s will broad access to their online accounts.  Delaware recently passed legislation titled the “Fiduciary Access to Digital Assets and Digital Accounts Act.”  The measure removes some of the red tape that an estate attorney or other fiduciary would otherwise have to go through to gain broad access to the deceased’s online accounts. 

In a recent blog post, Yahoo stated that the expanded access violates the initial agreement users entered into when they started using services.  “When an individual signs up for a Yahoo account, they agree to our terms of service, which outlines that neither their account nor the contents of their private communications are transferrable at the time of death.” 

Yahoo’s terms of service say it may delete an account and all of the data if it is shown a copy of the person’s death certificate.  The company argues that the new legislation does not offer the correct means to providing a family or fiduciary the information they need when dealing with the loss of a relative.   

See Zach Miners, Yahoo Slams New ‘Digital Will’ Law, Says Users Have Privacy When They Die, PC World, Sept. 15, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

September 23, 2014 in Estate Administration, Estate Planning - Generally, New Legislation, Technology | Permalink | Comments (0) | TrackBack (0)