Obamacare Delay of Employer Mandate Provisions

Have over 50 employees and worried about providing healthcare by 2014?  You’ll have some extra time.

Last Tuesday, the Obama administration announced that it will delay implementation of the employer mandate provisions of the Affordable Care Act (the “ACA”, also known as “Obamacare”) until January 1, 2015.

The requirement would have required any employer with more than 50 employees to provide health insurance with a minimum level of benefits to all of its employees by January 1, 2014 or face a penalty of $2,000 per employee.  The Administration announced the delay because of the complexity of the law.

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Treasury Assistant Secretary Mark Mazur said in a blog post. “We have listened to your feedback and we are taking action.”

 

If you are concerned about implementation of the ACA and would like assistance with planning for it, please contact us at (404) 255-7400 or email us.

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.

 

 

Musings from the CEO (Spring 2013)

Estate Planning has evolved significantly over the last several years.  In recent months, we have seen the estate tax exemption become “permanent” at $5,250,000 per person, and it will continue to adjust with inflation.  We have also seen the lifetime gift tax exemption and generation-skipping transfer tax exemption be permanently increased to keep pace with the “new” estate tax exemption.  An obvious effect of this development is that a significant number of estates will be able to pass to the next generation without transfer taxes.  A married couple can now pass at least $10,500,000 of wealth to their children before their estates are hit with the still significant 40% tax rate.

Congress has also made “portability” permanent, which means that any unused exemption when the first spouse dies is carried over to the estate of the surviving spouse.  Prudent planning generally does not rely on portability, since it is sabotaged by the subsequent marriage of the surviving spouse and does not apply to generation-skipping transfer tax.

The focus of seasoned estate planning techniques will continue for the more wealthy.  Estate planning should become less costly and complicated for most Americans, however, Hoffman & Associates will still focus on a significant use of dynasty trusts for a plethora of reasons.  These include not only potential estate tax savings, but also income tax flexibility, asset protection from creditors, preservation of family wealth in the bloodline, protection from divorce, and simplifying probate.  Dynasty trusts, however, are under scrutiny and threat as the Obama Administration pushes its agenda.  While most states are extending the period of time that trusts can hold property, there are proposals to limit that duration for transfer tax (and other?) purposes.

Joe Nagel’s article in this Newsletter is a good reminder to us of the many reasons for estate planning, most of which are not focused on taxes.  We want to be good stewards of our assets.

At Hoffman & Associates our practice will continue to focus on estate planning techniques and working with clients to accomplish their estate planning objectives, with significant focus on succession planning for family businesses and asset protection.

We are seeing an increased focus on elder law matters.  As our client base gets older and the imminent demographics of the country are affected by the baby boomers and their parents, medical technology and a focus on general health issues constantly increase our life expectancies.

As income tax rates continue increasing, we are witnessing a rekindling of our clients’ focus on income tax planning.  This is “back to the basics” for a tax planning firm like Hoffman & Associates.  We continue to focus on important decisions about retirement plans, social security, tax deductions, and the tax sensitive nature of investments on behalf of our clients.

Kim Hoipkemier’s article this month highlights a focus area of Hoffman & Associates, namely, Estate Planning for Women.  Again, demographics, the economy, education and corporate America recognizes that women continue to live longer, earn more, and prosper, with the ever increasing responsibility to juggle and manage family and wealth.

Finally, at Hoffman & Associates we have begun a new area of service for our clients, as their situations demand new and flexible assistance to help them manage their daily financial lives.  The Hoffman Family Office (HFO) services include record keeping, bill paying, bookkeeping, budgeting, investment analysis, insurance analysis/shopping, and family philanthropy matters.  Whether it is the overwhelmed widow, the busy corporate executive, or the family that wants to responsibly out-source some of their financial tedium to their trusted advisors, we want to fill the vacuum by providing such help from the Firm they have trusted with so many other important areas of their planning and financial well-being.  Carolina Gomez of our office has been busy defining the areas where HFO can make a difference, and is ready to talk to you about any area you think HFO may be of assistance.

These are interesting times, and I choose to believe we are at the beginning of good times.  While we are clawing out of a recession, and Washington, DC has us constantly on pins and needles, the economy is generally getting better, unemployment is generally not increasing, and our clients generally are in an upswing in their attitudes and well-beings.  We want to be here for those who need assistance, whether it is planning for them or an elderly family member, assisting with the growth and success of their business, or simply to put their mind at ease that they have satisfactorily addressed planning considerations within their realm of influence.  Let us hear from you!

 

 

For more information regarding estate planning, business law or tax controversy and compliance, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com or call us at 404-255-7400.

 

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose. The information contained herein is provided “as is” for general guidance on matters of interest only. Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. Before making any decision or taking any action, you should consult a competent professional advisor.

Procrastination: What Are The Consequences?

Currently, there are approximately 70% of Americans without a Will.  Without this basic estate planning document, your loved ones may pay the highest possible taxes upon your death, lose some of the assets you have earned during your lifetime, and will have to handle a much more complex administration of your estate.

By way of example, consider these famous deaths: Elvis Presley died suddenly at the age of 42 with an estate worth an estimated $10 million.  Of that amount, his daughter only received $3 million, as the other 70% was spent on estate taxes, administration costs and legal fees.  With a proper estate plan, Elvis’ daughter certainly would have received more than a mere third of her father’s wealth.

Famous for their chewing gum, the Wrigley family is another great example of a missed opportunity.  Both of William Wrigley’s parents died in 1977.  Their death gave Mr. Wrigley controlling interest in the Wrigley company, but it also left a significant estate tax burden due to the IRS.  The Wrigley’s had to sell their 80% stake in the Chicago Cubs for $20.5 million in 1981 to satisfy this debt.

Finally, Steve McNair, the famous NFL MVP, died in 2009 with an estate estimated to be worth $19 million but without even a simple will.  In attempts to settle his estate, his wife tried to sell his interest in a Nashville restaurant, his ranching and farming business as well as his Nashville home.  Not only did his murder shroud any hope of a amicable resolution of his estate, but the lack of any planning whatsoever left his wife and his children in a heated legal battle over the estate assets.

Although the most basic tenet of estate planning is a Will, the estate plan may and should encompass other aspects of your financial situation for when you pass.  Estate planning is thoughtful foresight that protects your family, provides for their future, and makes your wishes known.  If you pass without a Will in place, your assets will be distributed in accordance with State law in a process known as intestate succession.

Under the intestate succession laws in Georgia, a personal representative of the deceased is appointed by the Probate Court in order to marshal the assets, pay the debts and then distribute anything left over to the heirs.  Heirs are the closest relatives of the deceased, including the spouse, if living, and the children, including adopted and those born out of wedlock.  Stepchildren are not heirs.  Heirs of other degrees are determined if necessary.  A determination of the heirs is made by the Court, while your estate pays court fees, lawyer fees and other costs associated with probate handled by the Court and state law, rather than pursuant to your directions set forth in a Will. The Court and personal representative (which may or may not be a family member) may charge hefty fees (sometimes 5-15% of the value of the estate) to administer your estate.  Above all, this process takes time.  The probate of an estate handled by the court may take months longer than if you had clear, specific instructions regarding the distribution of your estate in a Will.

Having a Will does not avoid the probate process; rather, a Will is followed by the Court to determine who receives what property, who is appointed guardian of any minor children and who will be responsible for carrying out the wishes contained in the Will.

In order to ease the administrative burden on your family at your death and to save time and money on court costs and fees, you should plan accordingly now by contacting professionals who can help, such as an estate planning attorney, a financial planner, a CPA, and an insurance agent.  All can work together to help you prepare a plan that fits your family’s needs.  An exhaustive plan put in place by each of these professionals can also ensure you are taking advantage of any and all tax savings’ tools available to you.

Consider the following goals when thinking about your estate plan:

  • Determining who receives what share of your assets.
  • Deciding who will manage your estate and be responsible for distribution of the assets.
  • Selecting a guardian for your children.
  • If you own or control a business, providing for a smooth transition of management into the hands of persons who will effectively manage the business.
  • Arranging your affairs so that the chance for disputes among your heirs is minimized.
  • Making sure that your heirs can live with the estate plan. A plan that cannot respond to changes in the economy, or to unanticipated events, can burden the family.
  • For individuals with charitable wishes, making sure that your vision will be fulfilled.

With these overall goals in mind, it is important to move forward in developing an estate plan that fits your family’s needs.  At Hoffman & Associates, we define a basic estate plan as having the following essential components:

For individuals and families who are of higher net-worth, additional planning techniques may be introduced in order to reduce the estate taxes due upon death and take advantage of other tax savings strategies during your life.  Some of these techniques include:

 

For more information regarding estate planning, business law or tax controversy and  compliance, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com or call us at 404-255-7400.

 

In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.  The information contained herein is provided “as is” for general guidance on matters of interest only.  Hoffman & Associates, Attorneys-at-Law, LLC is not herein engaged in rendering legal, accounting, tax, or other professional advice and services.  Before making any decision or taking any action, you should consult a competent professional advisor.