Legendary Coach Dean Smith: Being Generous Doesn’t Mean A Large Amount

March Madness is a glorious time of year for most American’s. We all, albeit unsuccessfully, fill out our brackets with the hopes of winning our office pools, sometimes cheer on the underdogs even though it would be a bracket buster just because they deserve to win, and we enjoy the quality company of our family and friends, which is most important. A story emerged a few days ago that legendary coach, Dean Smith, left each of his varsity letter players $200 for “dinner out”. What a nice jester. An important lesson can be learned from this nice gift. It does not take a large sum of money to make large number of people smile. $36,000 worth of checks were sent to the 180 varsity letter players during his over three decade career at the University of North Carolina at Chapel Hill.

While $36,000 is a large amount to handout, the joy of spreading that to 180 past varsity players is the crux of this story. Estate planning is a great opportunity to make people smile. The amount does not need to be large, but the thought is what counts. Coach Dean Smith could have easily forgotten about the players he coached but, because of the bequest, great memories are revived for the 180 varsity players. Basic estate planning is a great opportunity to direct how items from your estate will be directed once you pass. This is not limited to money, but also personal belonging such as photos, family heirlooms, jewelry, etc. To take care of your basic or complex estate planning needs, contact Adam Bullock with Ratliff Law Firm today at (865) 932-3441 ext. 706.

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

How do I know when I need to update my estate planning documents?

An estate plan is one of the most important set of legal documents for a family to consider. Many individuals draft these documents and think they are set for life. However, over time, situations change; there are new people in their lives, some friends and relatives slip away, children become adults, their business outgrows their expectations, or simply their preferences change. Below is a list of items that will affect your estate plan. If you answer yes to any of the questions below it is likely your situation has changed too, and your estate plan should be reviewed.

• Have your beneficiaries changed?  Since your plan documents were drafted do you have more children or grandchildren or has anyone’s marital status changed?

• Have your assets changed? Have you bought or sold a home or other personal property or has the value of any of your assets changed since your plan documents were signed?

• Has there been any change in your business? Has your business changed in size or value? Do you have new partners? Has your business incurred new debt?

• Are there any assets that you have not transferred into your Trust?

• If you have a Living Trust, are the Medicaid triggers in place to ensure that Medicaid planning will start at the appropriate time?

• Has your health changed? If there has been a significant change in your health you may need to make changes to ensure that medical and health care expenses are covered.

• Has the person you named in your plan as your Power of Attorney, Executor or Trustee had their health decline, moved or has your relationship with them changed since drafting your plan? Are they still the right person for the job or do you want to appoint someone else? Does this person have their own estate plan?

• Are there any charitable gifts that you have not clearly outlined in your plan?

• Has your Estate suffered a disaster? A flood, fire, tornado or hurricane could destroy or decrease the value of your assets or account values have changed, which can cause an imbalance in benefits among beneficiaries?

• Since you signed your plan documents, have you changed your mind about any aspect of your plan?

Again, an estate plan is not something you complete once and forget about until your death. Different stages in life and situations require updates to your documents. An estate plan is something that grows with you and your beneficiaries and should be evaluated periodically to ensure your final decisions provide for your beneficiaries as you did in life. If you are unsure whether or not your plan needs updating please contact Ratliff Law Firm at 865-932-3441 to discuss your circumstances.

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

Self-insuring Healthcare of Your Employees….It Can Make "Cents"

 

As the cost of health insurance soars many businesses are looking for solutions to help offset the overall cost of health insurance. According to a recent article, over 82 percent of businesses with at least 500 employees self-fund their healthcare insurance compared to less than 30 percent of employers with under 500 employees. However, the trend of those under 500 employees self-insuring is on the rise. Self-insuring is not a new idea or concept and with the Patient Protection and Affordable Care Act ("PPACA"), it makes sense for a lot of companies to look at this strategy. I recommend looking into self-insuring if you are over or close to 100 employees. Furthermore, even if you were able to provide a minimum value plan at renewal last year this year may be different story.

Due to minimal participation in minimum value plans, the cost of providing these plans to your employees will greatly increase. Buying insurance is like buying eggs from farmer. The farmer will sell you a dozen of eggs for $2.00. However, if you want to buy 100 dozen eggs the farmer will be able to sell you the eggs cheaper. Right now there is a perception going around that the employer mandate is going to "go away", but the fact of the matter is that the employer mandate is the law of the land as of today. You should not bank on the fact that the employer mandate is going to disappear. By beginning to work with Ratliff Law Firm now you will be able to secure your spot for self-insuring and likely receive cheaper rates from third-party administrators ("TPAs"). Waiting until October or waiting until you get your first IRS bill or DOL/IRS audit is NOT what your business wants or needs to do. Self-insuring possibly saves you money, can be better for your employees, and prepares you in the event of audits or IRS bills. Do not delay to see if self-insuring your healthcare insurance can benefit you. For a more in depth conversation on how self-insuring healthcare can benefit you call Adam Bullock at (865) 932-3441 ext. 706.

 

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

Estate Planning and Facebook

As we rush headlong into the 21st century, technological advances create new issues when someone passes away. What will happen to someone’s social media presence after they pass? This question has received media attention lately after Facebook announced its new legacy feature in February. 

Essentially, Facebook allows you the option of either having your account deleted at your death or memorialized. Choosing to have the page memorialized essentially freezes your account, and the word “Remembering” is added before your name. If you choose to memorialize, you must choose a legacy contact. Your legacy contact is allowed to do things like post messages, respond to friend requests. These posts will not under your name, but the name of your legacy contact. Additionally, your legacy contact cannot log into your account, remove or change past posts, photos and other things shared on your timeline, read messages you've sent to other friends, or remove any of your friends. You can select whether or not to give your legacy contact access to your account’s data archive (e.g. for downloading pictures, old posts, etc.) For more information, see Facebook’s explanation.

Having access to someone’s social media page after they pass away would allow for effective communication of memorial services or other announcements to friends and relatives. Additionally, Facebook serves as the modern day photo-album; having access to a Facebook page after death allows loved ones to download cherished family photos. While this feature is an improvement, there are still certain shortcomings. For example, as of the date of this post, it is not possible to name a Legacy contact who is not on Facebook.

Social media creates new issues for estate planning. For example, say someone names one person a legacy contact for their Facebook account, and a different person as their personal representative under that person’s will. It is an interesting question at this point who would have greater authority to control decisions related the Facebook account: the legacy contact or the personal representative? On Facebook’s page explaining the data archive they state, “Facebook may provide access to this type of information [old messages, photos, etc.]  in response to a valid will or other legal consent document expressing clear consent.”[1] How Facebook interprets as ‘clear consent’ in a will or other document may certainly prove to be a heated issue in coming years as access to Facebook accounts become a bigger and bigger part of people’s lives.  

You should investigate your own estate planning documents to see if social media is adequately addressed. As social media becomes an ever increasing portion of our lives, it accordingly affects of our estates. Proper estate planning will address these issues.

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[1] After opening an account, open your settings. Choose Security and then Legacy Contact. Click “learn more” under Data Archive Permission

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

Community Property Trust

Tennessee allows Community Property Trust (“CPT”) and has since 2010 when the legislature passed the Tennessee Community Property Trust Act of 2010.  The advantages of having a CPT, especially if you are a business owner, are great.  Essentially, the CPT allows you to pass on your business on to loved ones without a significant (or sometimes any tax burden).  For example, Mom and Pop Sporting Goods Store (worth $4.5 million) has been in business for 50 years and they come to see me about their estate planning.  One of their main goals is to pass the family business on to their children with as little taxes as possible.  One option I let them business owner clients know about is a CPT for them together and both executing separate Revocable Living Trusts (“RLT”).  The purpose of the CPT is when the first spouse dies, the other spouse will receive the business on step-up basis.  That said, the icing on the cake is that when the second spouse dies, the beneficiaries also receive a step-up basis.  This is outstanding news for small and large business owners alike.  Proper estate planning should not be delayed.  Contact me, Adam M. Bullock, at Ratliff Law Firm to secure peace of mind for your loved ones.  abullock@ratlifflawfirm.com or (865) 932-3441 ext. 706.

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

The “Angel of Death” loophole

UPDATED 1-30-15

President Obama laid out his proposed agenda in last week’s State of the Union address. Among the many initiatives his administration is proposing, the most significant to estate planning are the tax increases.

The President proposed eliminating what Michael Kinsley called the “Angel of Death” loophole. Under the current tax code, if you bought stock at $10/share and when you died that stock in your estate was worth $100, no long term capital gain would be owed on the $90 gain in value over your life. If however, the President’s proposal were adopted, the $90 would be taxable at applicable long term capital gains rates.

There would of course be many exemptions and complications, but that is the main idea. For example, the President has proposed an exemption for the first $100,000 of capital gains tax per individual ($200,000 for couples), which would eliminate all but the more wealthy estates. The President is proposing many other tax increases including increasing the top rate for long term capital gains tax and taxing certain 529 plan distributions, among others.

Given that Congress is under Republican control, these proposals aren't expected to be considered. Many interpret this proposal as a way to frame the political debate for the coming elections. However, Congress will do its best to prevent a return to gridlock, and this may prod some action in the tax code. This will be an important conversation to monitor this year because of its potential to significantly affect estate plans.

Update 1/30/2015: The Obama administration has dropped the 529 Plan tax from its proposal. For more information, see David Wessel’s article in the Wall Street Journal.

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.

King Could Root Out the Tax Credit Recipients

The latest hurdle for the Patient Protection and Affordable Care Act (“PPACA”) comes on the King v. Burwell decision.  The case directly challenges the tax credit both families and individuals receive to, you guessed it, make healthcare more affordable.  In a recent poll by The Robert Wood Johnson Foundation two predictions were made: (1) 9.6 million people would lose coverage if the tax credit disappears after the King decision; and (2) the total number of people who are both uninsured and nonelderly would increase to 8.2 million.  Dan Cook, King ruling would reach beyond subsidies, benfitspro.com, January 23, 2015,

http://www.benefitspro.com/2015/01/22/king-ruling-would-reach-beyond-subsidies?eNL=54c16db6160ba03b139cc3c0&utm_source=BenefitsProNewsAlert&utm_medium=eNL&utm_campaign=BenefitsPro_eNLs&_LID=174299334. 

So why is this a big deal for everyone?  Insurance premiums are generally based on the number of people in the pool.  Think of insurance like buying pens for the office.  If you call the office supply company and want order one pen it could be a $1.00.  However, if you agree to order 500 pens the cost per pen could be reduced to 50¢.  It all has to do with the number of people in the pool.  Less people in the pool means higher premiums for everyone.  Higher premiums equal more people, those beyond the cusp of receiving or needing a tax credit, simply will not be able to afford healthcare insurance.  Moreover, this equals higher premiums for people and businesses who are able to provide health insurance for themselves and their employees.  This cycle could, and may, go on forever.  Until the King decision is released, all we can do is speculate. 

This is not intended to be legal advice and does not form an attorney-client relationship with any reader.