Or, What High-Speed Estate Planning Should Look Like
Or, Trusts for the Benefit of Your Children and Their Issue
I am happy to report that, after many years of active neglect, my wife and I finally got around to updating our estate plan. During the process, I found out that an astoundingly high number of people have not done any estate planning at all. We found that there were several benefits to bringing our plan up to date.
Our Old Plan
Basically, our old plan left everything to the surviving spouse, either outright or in trust, with the remainder interests upon the death of the survivor going to our three adult children outright. At the time this plan was established, there were no grandchildren. Now there are.
Our New Plan
Our new plan is similar to the predecessor in the sense that all of the property is for the benefit of the surviving spouse. The material difference is that, rather than leaving the property to our adult children in equal shares, we are leaving it to trusts for the benefit of each adult child, who is the trustee of his/her trust.
There are three reasons we thought this would be a good idea, which are:
Data Breach at the IRS
Of all the targets available, it really isn’t surprising that hackers would try to gain access to the substantial database of financial information at the IRS. Unfortunately, a successful data breach of the security protocols was accomplished by such hackers beginning in February and into mid-May through the “get transcript” function of the IRS website.
Ordinarily, for someone to get a transcript through the IRS website, they must enter such personal information to authenticate their identity. It appears the hackers already had the information needed to satisfy the existing authentication protocols and simply used the system that existed to access the transcripts. The IRS believes that the needed personal information for the compromised tax accounts was already in the hands of the hackers through the hacking of other databases or identity theft efforts. As a result, the hackers were able to gain access to social security numbers, dates of birth and home addresses on the IRS system. Income information would also have been vulnerable.
Read more at the New Tax Law Forum blog post by Robert B. Teuber: IRS Hacked.
You get an extra weekend to file your tax returns in 2016 thanks to an uncommon mix of holiday’s and weekends. Ordinarily an unextended Form 1040 Individual Income Tax Return is due on April 15th of any given year. However, when the 15th falls on a weekend or legal holiday, the due date of the tax return is the day after the weekend or legal holiday.
Read more by Robert B. Teuber at “Planning ahead – 2015 Forms 1040 will be due on April 18, 2016 (for most)”.
A few days ago, I received a call from a panicked former client. Two years back we had gone through an IRS tax audit and worked out a reasonable payment plan to resolve the remaining tax debt. The client had been honoring all obligations of that payment plan: paying on time, filing on time and not incurring any new debts.
The client’s immediate fear, however, was triggered by a call from a “US Treasury agent.” That “agent” was instructing my client to pay a fictional the balance due by cashier’s check before the end of the day. A failure to do so would mean that local law enforcement would come to his home to arrest him.
New Tax Law Forum blog post by Robert B. Teuber: The IRS is calling…and threatening to arrest me!