Clients generally do not enjoy meeting with estate planners. In completing estate planning, clients have to face tough questions about what will happen if they become incapacitated and what will happen to their property when they die. But now you’ve done it. You’ve signed the documents. It’s over with. Stick the documents in the safe and forget the whole thing. But wait! There are a few steps to complete once the documents are signed to make sure the plan is actually implemented.
These are my thoughts on how you can either be the victim or you can take advantage of disruptive technology. However, whatever you do, you cannot avoid it.
The concept of disruptive technology is not new. It is one of the founding principles of the United States and the American Dream. In fact, it is enshrined in our Constitution:
Article 1, Section 8, Clause 8 of the United States Constitution, known as the Copyright Clause, empowers the United States Congress: To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.
Alexander Hamilton, who has recently become so famous for his ability to rap, firmly believed that the key to success and prosperity was for America to be a manufacturer and a technological leader.
The long-awaited Tax Court decision in Estate of George H. Bartell, et al. v. Commissioner (briefs were filed in 2007) was issued recently (147 T.C. No. 5). The court held that property to which an exchange “facilitator” engaged by a taxpayer takes legal title from a third party, but in which the facilitator does not hold burdens and benefits of ownership, is property the taxpayer can acquire to complete an exchange under Internal Revenue Code Section 1031.
Briefly stated, the principal facts of the case are that the taxpayer held appreciated real property (i.e., property having a value in excess of its tax basis) it wanted to transfer in a nonrecognition transaction under Section 1031 (such property, “relinquished property”). The taxpayer located land on which it wanted to construct improvements, and then use in its business (such land and improvements, together, the “project”). The taxpayer wanted to exchange the relinquished property for the project under Section 1031. (The petitioners were the shareholders of an S corporation, Bartell Drug Co. (“Bartell Drug”), which was the subject of the tax examination; for convenience, references below to “taxpayer” are generally to Bartell Drug.)
By: Barry White
There are a number of different ways that multiple parties can own real estate together. One way is as “tenants-in-common.” Tenants-in-common each own a separate undivided interest in the property. A recent Supreme Court of Wisconsin case decided what portion of a payment due tenants-in-common could be garnished to satisfy the debts of one of the owners.
By: Andrew Frost
On July 6, 2015, at the behest of President Obama, the U.S. Department of Labor (the “DOL”) proposed new rules regarding the exemption of executive, administrative, and professional employees from the minimum wage and overtime pay requirements of the Fair Labor Standards Act (the “FLSA”). The proposed rules did not change the job duties tests for exemptions, but did increase the salary basis tests with annual adjustments to place the salary thresholds at the 40th percentile of full-time salaried employees. The DOL released the final overtime exemption rules this morning, with an effective date of December 1, 2016.
Syracuse University has released its analysis that Federal tax audits of corporations with $250 million or more in assets have declined by 34 percent since 2010. Compared to the same time last year, there has been a 22 percent decrease in these large business audits. Undoubtedly this decrease is due to the overall reduction in the funding of the IRS over the past many years. Notwithstanding this reduction, the IRS has also indicated that federal tax audits of partnerships are expected to increase following a change in partnership audit rules.
By: Adam R. Finkel
The economic downturn in 2008 and the crash of the housing market left banks and other creditors holding notes on properties with little to no value. Foreclosure filings followed in mass, leaving mortgagees with judgments of foreclosure. Under Wisconsin law, however, these judgments of foreclosure do not transfer title of the properties to the mortgagees automatically. The properties remain titled in the mortgagors’ names even after judgments of foreclosure are rendered, and after many individuals have abandoned the properties. Although Wisconsin foreclosure filings have drastically slowed since their peak in 2009, many of the properties that were foreclosed upon from 2008 through 2014 still remain titled in the original mortgagors’ names because the properties were never sold. Continue reading
These recent news headlines tell the tale of a typical dispute between an employer committed to protecting itself from the potential of a departing employee’s unfair competition and an employee wanting to pursue a new employment opportunity: “Kohl’s sues departing executive/Retailer says IT employee knows ‘dangerous’ information about long-term growth strategy” (Milwaukee Journal Sentinel, August 4, 2015), “Kohl’s in job change fight/Company tries to enforce noncompete contract” (Milwaukee Journal Sentinel, August 6, 2015), “Kohl’s fights retailer over exec” (Milwaukee Journal Sentinel, August 7, 2015) and “Kohl’s loses effort to block exec/Judge refuses to stop official from taking higher-paying job” (Milwaukee Journal Sentinel, August 11, 2015). This legal case involved a restrictive covenant — a common device used by employers to protect their business information and customer relationships from unfair competition by a former employee. What are restrictive covenants? Who should be aware of them? Are they enforceable in Wisconsin? Continue reading
U.S. Department of Labor Proposes New Regulations that will Allow More Employees to be Eligible for Overtime Pay
On July 6, 2015, the United States Department of Labor (DOL) released proposed revisions to the regulations that govern the rules regarding which employees are exempt from the overtime pay requirements set forth in the Fair Labor Standards Act (FLSA).
Generally, under the FLSA, employers are required to pay employees 1 ½ times their normal hourly rate of pay for any hours worked in excess of 40 in any given work week. The current regulations exempt employees from the overtime pay requirement if the employees meet the regulations’ definitions for executive employees, administrative employees, professional employees, outside sales employees or any of the other less-common exempt positions. Continue reading
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.
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!
Many of us take pride in where we live or own land, and often worry about changes from potential development. Fortunately, conservation easements enable landowners and heirs to preserve land and water resources for a public or agricultural benefit even while retaining ownership of the property. They not only preserve habitat, farmlands, scenery and recreation, but they can also provide tax benefits to the landowner and the estate following death.
While the assistance of legal counsel is needed, the proposition is relatively simple. A landowner contractually enters into an easement agreement with a government entity or a community-based, nonprofit land trust, such as Tall Pines Conservancy, to protect the parcel into perpetuity from development. The land is still owned by the individual and can be passed down to the next generation or sold, as with any asset, but the easement will remain with the land after that transfer or sale.
Such easements can provide landowners with an income tax deduction and potentially reduce property taxes for both current and future owners. In some cases, it might keep the value of an estate below the federal estate tax exemption threshold of $5.43 million because a conservation easement reduces the economic value of the land by restricting commercial and residential development on the property.
A qualified appraiser will establish in advance how the easement will affect the property’s worth – understanding, of course, that public and environmental benefits are not factored in. For example, farmland may be more valuable as a residential subdivision. But if the easement agreement stipulates that it remain in responsible agricultural use – e.g., farmed with sustainable best practices that protect the watershed from harmful runoff – the appraised value will be limited as well. Property that includes wetlands, forests or other natural features can be similarly valued.
Your first step to investigate conservation easements is to talk to a land conservancy, then consult with legal and financial advisors and your family when appropriate. Preserving a natural resource may not only provide a substantial economic benefit, but also leaves a lasting environmental legacy.
–Nancy Bonniwell is an estate planning and business law attorney at Weiss Berzowski LLP and serves on the board of directors at Tall Pines Conservancy. Susan Buchanan is executive director of Tall Pines Conservancy.
Welcome to the new online home of Weiss Berzowski LLP.
Major sections of our new website include:
- Business Law
- Employee Benefits
- Employment Law
- Estate Planning
- Real Estate Law
- Tax Law and Tax Litigation
Our Firm and Our People:
- Affiliations with many local, regional and national legal and business groups
- Support of community organizations within our networks
- WBB’s annual events and conferences
- Lists of attorneys, paralegals and administration staff, including their vCards, a file format for electronic business cards enabling efficient business communication.
- Announcements – Developments and happenings at the firm
- Blog – Our attorneys write blog articles on relevant legal topics that apply to your business. Like everything else, the law is changing at an increasing rate. It is our job to stay up to date with these changes, to keep your business informed and up-to-date. We analyze all of the legal details, and inform you of what you need to know on the important legal issues of the day.
- Publications – Where Weiss Berzowski LLP has been featured in outside published venues. Here you’ll find insightful content explaining new laws, legislation and perspectives (trends) having potential impact upon your business operations. We sift through the legalese and distill it down to understandable and actionable recommendations.
- The WBB Reporter – Our e-newsletter featuring commentary and perspectives by our attorneys, and news from WBB. Sign-up for our E-Newsletter Mailing List here.
In addition, our new payments page allows you to pay your invoices online, or make an advanced fee payment, with your major credit card.
By: Peter J. White.
Have you ever thought about becoming your own boss and starting a business out of the comfort of your own home? Believe it or not, if you use part of your home for business, you may be entitled to deductions on your tax return.
Do I Qualify?
To qualify to deduct expenses for the use of a home, a taxpayer must use a part of his home exclusively and regularly as his principal place of business, or as a place where he meet clients or patients in the regular course of business. The specific business area does not need to be separated from the rest of the house. But, if it is used for both business and personal use (i.e. an “office” in the rec room), the “office” does not meet the exclusivity requirement. Continue reading
By: Richard J. Rakita. Virtually every residential tenancy agreement provides for a security deposit from the tenant which is held by the landlord in order to protect to some extent the landlord’s right to certain obligations from the tenant. Wisconsin law has several statutes and provisions in its administrative code which regulate the use of that security deposit by the landlord. To be more specific, the landlord can only deduct certain items from the security deposit. These items consist of the following:
- Damage, waste or neglect;
- Unpaid rent;
- Failure to pay a utility service provided by the landlord;
- Failure to pay a utility service for which the landlord could become liable based on tenant’s nonpayment;
- Failure to pay a municipal permit fee for which the landlord could become liable based on tenant’s nonpayment; or
- Any other payment for a reason provided in a nonstandard rental provision document.
In connection with the first permitted deduction (tenant damage, waste or neglect), the statute specifically excludes damages as a result of normal wear and tear or other damages or losses for which the tenant could not reasonably be held responsible under applicable law. Continue reading
By Randy S. Nelson.
Imagine facing a legal question and unable to find an answer. Every lawyer’s nightmare? Perhaps. But that was often the challenge estate planning attorneys faced prior to passage of the new Wisconsin Uniform Trust Code, says Randy Nelson of Weiss Berzowski LLP. Continue reading
As the average age of Americans continues to rise, more cases of dementia are diagnosed, and the need for assistance for the elderly rises, estate planners are often faced with issues of capacity. One child may be closest to mom or dad, and end up taking on the majority of the responsibility for a parent’s care.
What happens if mom suddenly wants to change her will to give a majority or all of her assets to caretaker child, resulting in the disinheritance of the rest of mom’s children? Let’s say that disinherited siblings object to mom’s new will. What will they have to prove? A recent case from the Wisconsin Court of Appeals clarified the law on how someone challenging a will can prove that the will was the result of undue influence. Continue reading
By Michael M. Berzowski. On August 24, 2014 while doing some yard work, I lost my footing, fell and managed to break both bones in my lower right leg along with some cartilage and tendon damage plus some bone chips in the heel area. As a result of this experience, I thought it might be a good idea for you to do some planning in the event that you experience a similar mobility robbing event.
Probably most important to stay in your communications loop is insuring that you can access your work computer systems at home. Included in this is checking to see if they are all accessible. I know that on occasion some may not be accessible, for example possibly Word docs. Test your system. Continue reading
The comments and opinions expressed in this blog are intended for informational purposes only and do not constitute legal advice. Reading or using the information in this blog does not create the existence of an attorney-client privilege. Due to the changing nature of the law, the blog posts may contain dated material. For an update on the current law and the application of the law to your particular facts and circumstances, consult a legal advisor. The information contained herein is not a substitute for obtaining legal advice from a qualified attorney licensed in your state.