You’ve Signed Your Estate Plan, Now What?

By: Jacqueline L. Messler

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.

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Disruptive Technology and You

By: Sandy S. Swartzberg, author of “Conversations With Sam” blog.

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.

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Tax Court Decision in Bartell – Does it Alter Current Planning of Build to Suit Exchanges? Not Much

By John A. Sikora

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.)

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Court Clarifies Tenant-In-Common Interest Subject to Garnishment

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.

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Department of Labor Issues Final Rules on Overtime Exemptions

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.

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Long-term Prognosis for Federal Tax Audits?

By: Robert B. Teuber

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.

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Foreclosing on Abandoned Properties: Creditors Beware

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

An Employer and Employee Restrictive Covenant Dispute in the News: The Law Behind the Headlines

By: Thomas L. Skalmoski

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

Proposed Regulations to Give More Employees Ability to Earn Overtime Pay

U.S. Department of Labor Proposes New Regulations that will Allow More Employees to be Eligible for Overtime Pay 

By: Andrew T. Frost, Esq.

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

The Shoemaker’s Kids Finally Have Shoes

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:

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Tax Law Forum: Data Breach at the IRS

image of IRS logo

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.

Tax Law Forum: Planning Ahead for 2015

image of calendar for April 2016You 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)”.

Tax Law Forum: The IRS is calling

image of Form 1040 headerA 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!

BizTimes article by Nancy M. Bonniwell on Conservation Easements

Attorney Nancy M. Bonniwell recently wrote an article for the Milwaukee BizTimes.  The article can be found here.

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.