Changes in Overtime Pay Regulations

IAN M. FISHERSmall business owners may be in for a shock later this year when new Department of Labor Regulations governing overtime go into effect. On December 1, 2016, a Final Rule by the Wage and Hour Division will go into effect, causing approximately 4.2 million currently exempt workers to have a right to time and a half pay from their employers.

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Hoffman & Associates Announces its Newest Partner, Kim Hoipkemier

hoffmankimcolorHoffman & Associates is proud to announce that Kim Hoipkemier has become a partner of the firm effective January 1, 2015.  Kim joined H&A in 2011 bringing with her extensive experience in estate planning and representation of high end clients.  She currently specializes in the areas of wills, trusts, estate administration and probate.

“Kim has become engaged in our practice in a relatively short period of time and helps define our compelling brand to clients, vendors and other professionals”, commented Mike Hoffman, founding and managing partner.  “Kim has built a solid foundation in estate planning and her contributions make us a better firm.”

Mrs. Hoipkemier is a magna cum laude undergrad from the University of Georgia and a cum laude graduate from the University of Georgia School of  Law.  She is a member of the Fiduciary Law Section of the State Bar of Georgia and a member of the Wills Clinic through the State Bar of Georgia Young Lawyers Division.

About Hoffman & Associates

Hoffman & Associates is a boutique law firm established in 1991 specializing in estate planning and probate and tax and business law. Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound financial guidance.   Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

Russ Thornton Interviews Kim Hoipkemier

Kim New

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The New Tax Law: Does Your Estate Plan Need to be Updated?

Congress passed the American Taxpayer Relief Act of 2012 (the 2012 Tax Act) in the final hours of 2012.  The 2012 Tax Act means big changes for gifts, trusts and estates tax laws from what was scheduled to occur without any congressional action – something better known as the Fiscal Cliff.

We now have a permanent estate and gift tax exemption amount of $5,000,000, adjusted for inflation annually beginning in 2010.  We also have permanent portability, or the availability of a surviving spouse to use the deceased spouse’s estate tax exemption in certain circumstances.  The estate tax rate is set at 40%, and our annual gift tax exemption amount was raised to $14,000.  In addition, there were a number of changes to the taxation of trusts.

With the new changes in the tax law in place, and some of them “permanent,” does your estate plan need to be revisited?

The most popular estate plan for decades for married couples has been the bypass trust/marital trust or A/B trust combination to ensure the most advantageous tax situation.  With more than $10 million in assets exempt from estate tax, the concern over estate taxes has been all but taken off the table.  These trusts are still fantastic vehicles in an estate plan for reasons other than just tax savings, but it may be a good time to revisit your documents and make sure the trusts or other planning techniques fit your situation.

Dig out the copies of your current estate plan, and review these questions below.  If anything is of concern or may just need a second glance, give us a call.

  1. Is your estate large enough to trigger federal estate taxes?
  2. Does your plan distribute your property outright or in trust?  Do you know why?
  3. Does the plan name the appropriate individuals or entities to make distribution, investment or other important decisions?
  4. Is there a relationship among your beneficiaries that could cause a conflict with the decision maker you appoint?
  5. Are you recently married or divorced?
  6. Is either spouse a non-U.S. citizen?
  7. Are your charitable intentions, if any, properly reflected?
  8. Are your assets properly protected in the case of creditors, judgments or divorce?
  9. Do you have the proper powers of attorney in place in the event of disability or incapacity?  Does the document name your desired agent?
  10. Is your plan just out of date?

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.

Grantor Retained Annuity Trust (GRAT)

Another advanced estate planning technique is known as a grantor retained annuity trust (a “GRAT”). GRATs  are created by transferring one or more high yield assets into an irrevocable trust and retaining the right to an annuity interest for a fixed term of years or for the shorter of a fixed term or life.  When the retention period ends, assets in the trust (including all appreciation) go to the named “remainder” beneficiary.  In some cases other interests, such as the right to have the assets revert back to the transferor’s estate in the event of the transferor’s premature death, may also be included.

GRATs provide a fixed annuity payment, usually based on a fixed percentage of the original value of the assets transferred in trust.  For example, if $500,000 is placed in trust and the initial annuity payout rate is 6%, the trust would pay $30,000 per year, regardless of the value of the trust assets in subsequent years.   If income earned on trust assets is insufficient to cover the annuity amount, the payments will be made from principal.  Therefore, the transferor is assured of steady consistent payments throughout the term of the GRAT.    At the same time, all income and appreciation in excess of that required to pay the income beneficiary is accumulated for the benefit of the remainder beneficiary free of gift tax and without using the transferor’s lifetime gift tax exemption.

 The gift tax value of the transferred assets is determined at the time the trust is created and funded by subtracting the value of the annuity interest from the fair market value of the assets transferred to the trust.   The annuity interest is generally valued based on the 7520 rate published by the IRS.    Therefore, if the return on the GRAT assets over the term of the GRAT is greater than the 7520 rate, it may be possible to transfer assets to the remainder beneficiary when the trust terminates that far exceed the gift tax value of the transferred assets.

The one drawback of a GRAT is that GRAT assets will be included in the transferor’s estate if he/she passes away during the term of the GRAT.  Therefore, the GRAT is a bet to live strategy – the transferor is betting that he/she will survive the term of the GRAT to reap its estate and gift tax benefits.

There may be other non-tax reasons to form a GRAT as well.   A GRAT can help you ensure succession. For example, if a client wants specific assets, such as stock in a closely held corporation, other business interest, land, or family compound to go to one child rather than another, or the client does not want a former spouse, creditor, or someone who contests his/her Will to be able to obtain that asset, a GRAT can be used to implement such a contingency.

 

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.

General Power of Attorney

A General Power of Attorney is a written document that grants a broad range of specific powers over your financial and personal affairs to someone you trust (referred to as your “agent” or “attorney-in-fact”).  Specific provisions can establish when and how the appointment of the Power of Attorney takes effect, the duration and the manner in which it can be terminated, and may describe or limit the powers granted to such agent.

A General Power of Attorney is “durable” since it remains in force at all times, even during periods of disability or incapacity.  One could elect for it to be “springing”, which means the General Power of Attorney does not come into effect until the maker is disabled or incapacitated. This is popular as a means of avoiding “blank check” issues.   All Powers of Attorney terminate upon the death of the maker.  A Power of Attorney is an extremely important document that can be used to avoid the appointment of a conservator by a court when a person becomes incapacitated.

 

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.

Annual and Lifetime Gifts

Gifting can play an important role in reducing estate tax exposure.  A gift is the transfer of real and personal property such as real estate, stocks, bonds, mutual funds, certificates of deposit, equipment, livestock, or cash, to beneficiaries before your death.  Gifting  removes all future appreciation on the gifted property from the taxable estate.   It can also accomplish income tax savings during life by shifting income producing property from one family member to another who is in a lower tax bracket.

The lifetime gift exemption for 2012 is set at $5.12 million dollars. However, it is scheduled to be reduced to $1 million dollars in 2013 unless Congress acts.  If you don’t use the current gift tax exemption, you could lose it.

In addition to your lifetime exemption, each donor may give $13,000 this year ($14,000 beginning in 2013)  per person, without any gift tax consequences.   To qualify for the annual exclusion, the gift must be a present interest gift (rather than a future interest).   Annual exclusion gifts can be outright or in trust.

Assume that a husband and wife have two children, each of whom is married, and each of whom has two unmarried children. This couple could give away a total of $208,000 this year without using up any part of their lifetime exemption. (Each parent could give $13,000 to each child, each child-in-law, and each grandchild, for a total of eight individual recipients, or $104,000 of gifts for the husband and $104,000 of gifts for the wife.  In 2013, each parent may gift an additional $1,000 per recipient.)

A gift will qualify for the $13,000 annual exclusion only if it is a gift of a “present interest.” Generally, this means that the (current year) gift must be made outright to the recipient, or (in the case of a person under age 21) to a Custodianship under the Uniform Transfers to Minors Act, or to certain kinds of trusts (typically, a “Crummey Trust”.)   The “present interest” limitation may require that the asset given away be income-producing or currently salable by the recipient.

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.

Advance Directive for Healthcare

An Advance Directive for Healthcare is a written document authorizing someone you name (an “agent” or “attorney-in-fact”) to make healthcare-related decisions for you in the event you are unable to make those decisions for yourself.  It places medical decisions in the hands of a person you name to act as your agent.  It also includes authorization for autopsy, organ/body donation and choice for disposition of remains.  It applies to all medical decisions unless specifically limited.

The document also contains a Living Will section.  This is a written directive instructing a physician or health care facility to withhold or withdraw “life-sustaining” procedures in the event you are diagnosed with a terminal illness, coma or persistent vegetative state.  The definitions of terminal illness, coma and persistent vegetative state are specific, and the Living Will becomes effective only when there is no hope of recovery and you are unable to make decisions for yourself.  The opinion of two physicians is required to effectuate these provisions.

In Georgia, Advance Directives for Healthcare are recognized by statute and should be written to substantially conform to the statutory guidelines.

 

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.