Remember, whenever a natural disaster or tragedy occurs or a new law goes into effect, scammers are out there with schemes to catch us off guard. They know we live busy lives and that its likely we haven’t had time to familiarize ourselves with the new law, and they hope to take advantage of the situation.

One related scheme already making the rounds is a phone call purportedly from a government employee who tells you that your household has been chosen to be among the first ones to receive health insurance cards as part of the new healthcare law. Before they can mail out the new health insurance cards, however, they need to first verify some data, which includes your name, address, Social Security Number, and banking account information.

Other scammers are telling seniors that they will lose access to their personal doctors or worse – their entire Medicare coverage – unless they obtain a new card or enroll in a certain Medicare plan. These claims are completely false. This new law does not require people with Medicare coverage to obtain any new insurance plan.

Sometimes these callers will offer to help you understand the new Health Insurance marketplace for a fee. Do not give them payment information. While there are people who are qualified to offer assistance with the new law, they are not allowed to take payment for their services.

Also, be careful of new unsolicited offers for discounted products or health services related to the Affordable Care Act. Many of these offers are not legitimate. These fraudulent offers and discounts may even be disguised as health insurance, or the caller may even claim to be an insurance agent who wants to offer you a “special deal” or help you avoid a penalty.

For seniors, the open enrollment period for Medicare Part D and Medicare Advantage Plans was not changed by the new law, so don’t let a scammer convince you otherwise.

As with all unsolicited contact asking for personal information, the only safe approach to an unexpected call is to not divulge anything about your personal information.

When searching for information about the Affordable Care Act on your own, be cautious of imposter websites designed to look like they are legitimate sources of information. Since each state can decide its approach to making sure its citizens are compliant with the Act, it is important to know where to seek this information. California provides its own resource website called Covered California. It’s website address is: www.coveredca.com. You can also found helpful information on the federal government’s website.

I hope you find this information helpful to protect yourself from the scammers.

The post Protect Yourself from Affordable Care Act Scams appeared first on Desert Law Group | Kimberly T. Lee.

As to the federal estate tax, the exemption will remain at $5.12 million per person and indexed for inflation, with a tax rate increased from 35% to 40%.

One interesting fact is that, for one day, everyone’s taxes went up. This happened because the former tax cuts expired on December 31, 2012. Although the deal includes provisions that will apply the tax cuts retroactively, everyone technically had higher taxes on January 1, 2013.

Importantly, republicans and democrats were finally able to agree on how much a person or couple should bring in before they are considered a “high income earner.” This definition is particularly important because high income earners will see an increase in their taxes. Under the deal, high income earners are individuals who take in $400,000 per year, and married couples who take in $450,000 per year.

Those considered high income earners should be aware that their marginal income tax rates are set to reach 39.6 % this year. For the remainder of taxpayers, their previous tax rates were extended. Moreover, the respective tax brackets for these taxpayers was permanently indexed for inflation.

Other important changes are:

• Dividends and capital gains will be taxed at a rate of 20 % for those individuals earning more than $400,000 or couples with an annual earnings of more than $450,000. It will remain the same for couples and individuals below the thresholds.
• There will be an additional 3.8% Medicare Surtax from the Affordable Care Act on dividends and capital gains for individuals earning over $200,00 and couples earning over $250,000.
• The Alternative Minimum tax exemption is permanently indexed to inflation.
• Unemployment insurance benefits will be extended for one year.
• Many tax credits will be extended including those for green energy and 50 percent depreciation on business purchases.
• Medicare reimbursements for doctors were restored.
• The targeted spending cuts (sequester) will be delayed for two months to allow new Congress to tackle the tough issue of controlling expenses.

I think I’m going to enjoy a glass of milk to digest these changes since the “Milk Cliff” was averted.

The post The Fiscal Cliff Deal: Things You Should Know appeared first on Desert Law Group | Kimberly T. Lee.

We all know the convenience of living so much of our lives online—in fact, some in the younger generation can’t imagine living any other way. The age of the internet, the iPad and the cell phone means that we have unprecedented freedom and global access; it also means, however, that huge portions of our lives are locked away behind password protected accounts, many of which our friends and relatives aren’t even aware. Online accounts are incredibly convenient, but they can create huge problems if your executor or agent has no way to retrieve your online passwords, assets or contacts after you die.

Estate planners are not blind to this development. They understand that, according
to one article, “family heirlooms and records aren’t what they used to be. “Nowadays everything from photos and music to financial statements and tax documents are increasingly likely to be created, stored or accessed via computers, mobile phones or other devices.”

Unfortunately, while people understand how important digital assets are, very few of them plan
for those assets. “More than half of survey respondents age 45 and older with digital property believe it’s very or somewhat important to put plans in place for their personal and financial online assets, yet 57 percent haven’t made such provisions.”

Some large online service providers are developing policies to deal with the transfer of accounts upon the death of the user, but the process is rarely a simple one. Some companies require a death certificate before they will agree to shut down an account or turn over the contents, but rarely will an online company transfer actual ownership. It could take months or years of headaches and frustration before your heirs have access to any assets or information locked behind these online protections.

What this means as far as asset protection is that when you talk to your attorney or financial planner about protecting your assets it’s not just about physical assets anymore; digital and online accounts and assets must be part of the conversation.

The post Estate Planning for Your Digital Assets appeared first on Desert Law Group | Kimberly T. Lee.

It seems, however, that
you failed to take advantage of this opportunity and instead chose to remain
with us here on earth where politicians love to tinker with taxes.  Despite this poor decision on your part,
don’t despair. There is another opportunity this year — and one you can enjoy
while still alive!

You probably have heard
but if not, here is a Wall Street Journal article which explains the unique
situation before the end of 2012, allowing a $5.12 million gift tax exemption.

There is an old proverb
that says it is better to give with a warm hand (that is, while alive) than
with a cold one. Usually however, there are significant taxes on lifetime gifts
over a certain amount. This year there is no such tax on amounts of up to $5.12
million.  This gifting can save you a lot
of money in estate taxes.

Here’s the catch,
though. It must be accomplished by Dec. 31, 2012. Time is running out. So if
you think you might be interested in exploring this option, please call our
office immediately so we can assist you in accomplishing your goals.

The post The Year of Gifting appeared first on Desert Law Group | Kimberly T. Lee.

A recent article from Reuters describes the ongoing saga of the Tweten family of California, and how the disappearance of the federal estate tax in 2010 caused (and may still be causing) a lengthy legal battle between father and daughters. Leonard Tweten and his wife of 58 years, Eileen, founders of Magnolia Audio Video, established a trust in 2008 which utilized a common formula clause to help minimize estate taxes.

“The formula clause typically divides the estate so that children get the amount of assets in the federal estate tax exclusion (currently $5 million per person), with the rest going to a marital trust for the surviving spouse. This allows the full amount of the exclusion to pass to the heirs tax-free.”

This formula clause is a wonderful tool when the estate tax exclusion amount hovers around $2 million, exactly the amount it was in 2008 when the Twetens set up their trust. Unfortunately, “in 2010, the exclusion was unlimited, because there was no estate tax. So when Eileen died in April of that year, her whole estate, rather a few million dollars, would have gone to the kids, leaving Leonard out of the money.”

The Twetens were not unaware of the exclusion, and made an eleventh hour change to their trust only 12 days before Eileen Tweten’s death. Unfortunately, their efforts were not enough. “The couple’s adult daughters, Nancy Crowe and Janet Houston, petitioned the court to invalidate that amendment on grounds of forgery and incapacity, while their father petitioned to allow the trust’s modification.”

The court eventually had to throw out the amendment, “noting that it had not been notarized as required by the trust”, but sided with Leonard Tweten in spite of this, letting the original intent of the Tweten’s estate plan stand. The Tweten’s daughters, however, plan to appeal the court’s decision.

The lesson we can all take away from the Tweten’s experience is that no matter how safe you may feel with your current estate plan, it is absolutely essential to review your trust regularly, and consult your estate planning attorney about any changes to estate tax law that may have been enacted since your last review. Contact our office for more information.

The post Changes in Estate Tax Law Require Regular Review of Estate Plans appeared first on Desert Law Group | Kimberly T. Lee.

When it comes to the legal rights of the undead Chodorow believes that “The important question is determining whether zombies should be considered truly deceased or partly alive. That distinction is crucial financially.” The article continues searching for answers to this and other particularly unusual questions in a hilarious but educational vein. Never has estate planning been so interesting—or trendy!—and yet readers will find themselves learning a little bit about the law in spite of themselves. Consider the following:

“But there are some tax downsides to zombiedom. When you actually die — for clarity, let’s call this ‘die-die’ — the appreciation in the value of your assets is wiped out for tax purposes. Say a vintage car you bought for $50,000 is worth $100,000 when you die-die. Under I.R.S. rules, this doesn’t cost your heirs taxes on the $50,000 gain when they sell it. Instead, the car is valued at $100,000.”

It’s the Stepped-up basis rule applied to the undead.

The article is obviously written in fun, but it brings up some legal issues that even the living would do well to think about. There have been a lot of changes to gift tax and estate tax law in the past few years, and if you haven’t created your estate plan, or if you have an estate plan but haven’t reviewed or updated it recently, you may have worse things to worry about than a zombie apocalypse. Call our office and make sure your assets and your family are protected from every kind of disaster.

The post Should Zombies Pay Estate Taxes? appeared first on Desert Law Group | Kimberly T. Lee.

All of this is about to change, however, thanks to new laws being enacted by thehttps://www.huffpost.com Department of Labor. CNN Money reports that “A new federal rule took effect July 1 that requires 401(k) plan providers to disclose certain 401(k) fees, and employers to distribute these disclosures to plan participants by Aug. 30.” The hope with this new disclosure rule is that it will increase transparency, and help both employees and employers stay aware of how much their “free” 401(k) may or may not be costing them in administrative fees.

We live in a culture of constant demands and distractions, and it is all too easy to fill out the paperwork to set up a 401(k) with an employer and then forget about it, assuming that as long as nothing changes, everything will keep working the way it’s supposed too. Things do change, however, both in the world of investment and in our own lives. All too often we see clients who miscalculate their 401(k) growth in relation to their retirement needs, or whose valuable retirement savings is lost to taxes when the owner passes away unexpectedly. In all cases, it is important not only to be aware of what’s happening to your savings, but also to be proactive about protecting it, and this is where our office can help.

Whether you are already retired or just getting started with your savings, our firm can help you evaluate your assets, plan for their growth and upkeep, and ensure that they end up in the right hands if something should happen to you. The temptation to procrastinate or bury your head in the sand can be strong, but the knowledge of the consequences of inaction can be stronger. Contact our office and let us help you protect your retirement savings for yourself and your loved ones.

The post Do You Know How Much Your 401(k) Is REALLY Costing You? appeared first on Desert Law Group | Kimberly T. Lee.

According to the article cited above, “GRATs offer a perfect vehicle for wealthy investors who put money in start-ups, while other trusts don’t.” But we don’t recommend GRATs only to wealthy startup investors. GRATs are “an excellent way to shift wealth to others at little or no tax cost and with minimal legal and economic risk.” As such, they can be the perfect tool for business owners, professional investors, and many others.

Setting up a GRAT allows the investor/grantor to give assets over to the trust for a pre-determined number of years. During this time the assets appreciate and the grantor receives “annual payments adding up to the asset’s original value plus a return based on a fixed interest rate determined by the Internal Revenue Service.” At the end of the trust term the assets (at their new value) are transferred to the beneficiary named in the trust with none of the usual gift or estate tax on the appreciation.

This makes GRATs sound like the perfect (and perfectly simple) tool, but nothing is perfectly simple. The pre-determined lifetime of your GRAT will depend on your individual circumstances, as well as the tax laws at the time, so you’ll want to make sure you have the help of an experienced and knowledgeable attorney helping you design your trust. Contact our office for more information.

The post Facebook Founders Use GRATs to Avoid Excessive Taxation; You Can Too appeared first on Desert Law Group | Kimberly T. Lee.

It has been said that funerals and memorial services are for those who are left behind after the death of a loved one, not the one who has passed away; and while this is true, it is also true that most meaningful service is one which accurately reflects the personality and wishes of the loved one it is memorializing. For this reason, some people are choosing to plan their own funerals or memorial services before they pass away.

A recent article in the Wall Street Journal describes how funerals and “last rites” seem to be going through a change. “While religion and family tradition have dictated last rites for hundreds of years, funerals today are changing dramatically. Baby boomers, in particular, are shifting to more personalized—and less religious—memorial services, often calling them ‘A Celebration of Life.’”

The article goes on to describe a new website (MyWonderfulLife.com) which helps people make plans for their own funerals. While we’re glad more people are aware that they have this option, none of this is news to estate planners, who have been helping their clients plan, share, and pay for their own funerals, memorials, and disposition of remains for years.

Thinking about your own death and funeral may sound morbid, but many people are pleasantly surprised at how much of a celebration of life it can be. Please contact our office to get started on your own plans, or for more information.

The post Planning for Death Can Be a Celebration of Life appeared first on Desert Law Group | Kimberly T. Lee.

The sad announcement of his death has many people now wondering “what next?” How will this change the company he started? What will happen with his family? As this article from ABC News relates, “The ever-private Steve Jobs was famously secretive when it came to Apple’s new products. As with his personal life, the future of Steve Jobs’ wealth [and family] will also stay under the radar.”

The article mentioned above states that “Given Jobs’ vast wealth and penchant for privacy, he likely set up private trusts for his family and charitable purposes.” Private trusts would certainly have been the logical thing to do, under the circumstances. Trusts are a much more flexible, powerful, and private tool than a simple will when it comes to estate planning. Trusts are useful under any circumstances, but they provide a much greater amount of control and protection of assets, especially when dealing with large estates.

If Steve Jobs did choose to create trusts to protect his estate then it is possible that we may never truly know how he chose to distribute his wealth. It is probably safe to assume, however, that in addition to providing for his family and loved ones, he may have left a considerable amount to charitable or visionary endeavors. His words and actions during life provide a clue about how he thought about wealth: “Being the richest man in the cemetery doesn’t matter to me…Going to bed at night saying we’ve done something wonderful…that’s what matters to me.”

The post Death of Steve Jobs Saddens the World appeared first on Desert Law Group | Kimberly T. Lee.