October 2014 NEWSLETTER 501 WEST BROADWAY, SUITE 700 SAN DIEGO, CALIFORNIA TELEPHONE: (619) FAX NUMBER: (619)

Transcription

1 MILLER, MONSON, PESHEL, POLACEK & HOSHAW A PARTNERSHIP OF PROFESSIONAL LAW CORPORATIONS October 2014 NEWSLETTER 501 WEST BROADWAY, SUITE 700 SAN DIEGO, CALIFORNIA TELEPHONE: (619) FAX NUMBER: (619) Tom Monson Celebrates 40 Years DeEtte Loeffler Becomes a Civilian Senior Partner Tom Monson celebrates his 40 th anniversary with the firm this October! In 1974, Tom was hired as a law student at what was then Miller & Kearny to temporarily fill in for an ill law clerk. Tom has been with the firm ever since. After finishing law school, Tom was hired by the firm as an attorney. Tom s practice developed primarily in the field of ERISA law, which was passed in Tom, along with his partner Susan Horner, has handled numerous ERISA litigation cases, many of which are published. His practice has since grown to include trust, probate, and estate litigation. Tom is also very active in his community. He has served on various fundraising committees which benefit organizations such as the Ronald McDonald House, the Boys and Girls Club of Greater San Diego, the Boy Scouts of America and the Palomar College Foundation. In 2012, Tom served as the President of the Century Club of San Diego, a non-profit corporation, organized for the main purpose of administering and promoting San Diego s annual PGA Tour event, the Farmers Insurance Open. The net earnings of the Century Club are used solely for charitable and philanthropic purposes To learn more about Tom s forty years as an attorney, please read the cover-page feature of Tom in San Diego s Attorney Journal, Volume This month, MMPPH honors and celebrates our very own DeEtte Loeffler s retirement from the US Army Reserve. DeEtte received her commission through ROTC in 1987, joined the Army JAG Corps in 1990 and has served as a lawyer for the Army until October During her years in service she served with the Reserve in California, Washington, New Jersey and Virginia, the National Guard in Hawaii, and the Active Army in Alaska. Her jobs included being a legal assistance attorney, a trial attorney, a criminal defense attorney, an ethics officer, an administrative attorney, and she spent six years as the senior managing partner of two legal offices (fifteen and seven soldiers). Her final job was as the Deputy Commander of the 78th Legal Operations Detachment where she supervised a staff of forty attorneys and paralegals. For her service, she was awarded two Meritorious Service Medals, three Army Commendations, one Army Achievement Medal, two Armed Forces Reserve medals, seven Army Reserve Component Achievement Medals, and assorted other ribbons. In DeEtte s spare time she is a devoted wife and mother of two, a scout leader, and holds down a full time position with MMPPH. Let us all celebrate DeEtte's accomplishments, her service and her retirement.

2 IN THIS ISSUE: IF YOU WANT PRIVACY, MAKE A TRUST by DeEtte L. Loeffler LOST YOUR LICENSE TO DRIVE? by Mary J. Peshel STATE TAX NEWS by DeEtte L. Loeffler FEDERAL TAX NEWS by DeEtte L. Loeffler IF YOU WANT PRIVACY, MAKE A TRUST Several recent celebrity deaths have demonstrated a significant difference in privacy between holding assets in a trust as opposed to making just a Will for the disposition of property upon death. While trusts offer privacy regarding the nature, extent and disposition of property, Wills do not. Wills must be probated, which is a public process that invites public scrutiny, sometimes by those with other than the best interests of the heirs at heart. Probate is also a long, expensive and somewhat complicated process. Actress Lauren Bacall used a Will (not a trust) to transfer her assets, so we know a lot about her estate and her heirs. Her Will shows she was also the beneficiary of a trust left to her by her late husband, Humphrey Bogart, so she probably knew enough about trusts to have made one. Because her Will had to be probated, we now know she owned a dog named Sam and that her son received $10,000 to care for the dog. We know she left cash gifts of $20,000 to one friend and $10,000 to another, and that she left $250,000 in a trust to each of her grandchildren. We also know she left the bulk of her assets outright to her children, including her interests in Bacall, LLC and in the rights to her name and image. Although her Will includes a plea to her heirs to keep her personal papers private, she never thought to keep information about her assets and beneficiaries out of the public domain. 2 Joan Rivers also had a Will but not a trust. Because of this, we know she left her 4 dogs to a friend. We know she owned an apartment in Manhattan and a $4.4 million home in Connecticut. We also know she left her $150 million estate to her only daughter and grandson, who live in Los Angeles. Creditors, ex-spouses, and con men also know who inherited what, and how. In contrast, actor Robin Williams held the bulk of his assets in a revocable trust. He presumably had a pour-over Will, but such a Will simply transfers overlooked assets into the trust, usually through a non-public process. Thus, the ultimate beneficiary of such assets remains private. We do not know much about his assets or the chosen beneficiaries, which has forced the press to simply speculate (did he have $25 million, $600 million?). The best the press can determine, he probably established at least two trusts during his lifetime - one to hold his real property and another to benefit his children, but very little is known about these trusts. In short, despite his extreme celebrity and very public passing, his privacy regarding his assets (and the privacy of his heirs) has been maintained. You may not be a celebrity, but you probably still want privacy. As demonstrated above, having a trust allows you to maintain privacy about what you own, whom you name (or don t name) as beneficiaries, and how they will received those gifts. A trust keeps the general public from learning through your own estate planning documents that a family member has special needs or is estranged, or that your children cannot get along with each other. Whether you have a family pet, or who will care for it after your passing, can also be

3 kept private. Thus, it is important to review the benefits of having a trust and decide whether making a trust is the right decision for you. If you came from another state, or have not yet established a trust, now may be a great time to set one up. We would be happy to speak with you about your needs, options and what plan may prove best for you. LOST YOUR LICENSE TO DRIVE? Mary J. Peshel, J.D. It is easier than you think to lose the right to drive in California, especially if you are a senior. California requires drivers over the age of 70 years to renew their licenses in person at the DMV, and to take a vision test and a written test. In addition, a driver may be required to take a driving test if the driver fails the vision test or if his or her mental or physical condition comes into question. Family and friends, doctors and police officers are some of the people who may inform the DMV that a driver should be retested due to a mental or physical condition. For example, California requires doctors to report diseases or conditions that result in lapse of consciousness, as well as Alzheimer s disease and related disorders that are severe enough to be likely to impair a person's ability to operate a motor vehicle (Health and Safety Code Section ). A driver s license can be suspended for many different reasons. The most common reasons a senior may lose the right to drive is because the senior has acquired too many moving violations (or accidents) in a 12 month period (known as negligent operation ), because of failing a vision and/or driving test, or because of cognitive impairment. Operating a vehicle after taking certain medications can also sometimes result in a DUI conviction and automatic license suspension (for example, when a senior takes a medication that impairs his or her ability to safely operate a vehicle). While many seniors fear the loss of their right to drive, it is not unusual for a senior to have a temporary loss of this privilege. Not all suspensions are permanent, and they can usually be appealed. During the appeals process, however, the driver should not drive. Not only is driving illegal, the driver risks incurring great personal and financial loss. Driving on a suspended or revoked license is a misdemeanor that can result in fines of up to $1,000 and up to a year of jail time for a first offense (California Vehicle Code Section 14601). In addition, if the driver gets into an accident, the driver s automobile insurance will not pay for any related losses to the driver or the other party. An injured party, or his or her insurance company, would have to sue the driver to recover for losses. A senior who has carefully saved for a lifetime could suddenly lose everything in a lawsuit because he or she did not want to lose the independence that comes with driving. If you have lost your license, and you think you are still a safe driver, we recommend you appeal that loss. Under no circumstances should you drive on a suspended or revoked license, and if a loved one continues to drive after losing a license, we encourage you to speak to him or her about the risks inherent in doing so. STATE TAX NEWS In a bill signed by Governor Brown in September, California more than tripled the state tax credit for companies making movies and television shows produced in California. Tax credits of $330 million a year will be available starting in Awards will consider merit, such as local job creation. The legislation is intended to stem the loss of such productions to other states (such as Louisiana) and 3

4 countries (such as Canada) which offer significant tax breaks to production companies. FEDERAL TAX NEWS FATCA Compliance Update: The number of countries which have reached agreements with the United States to exchange financial information relating to US taxpayers continues to grow. One hundred (100) countries (including Canada and Mexico) have now entered into such agreements (or agreements in substance), forty (40) of which did so this summer. Under these agreements, foreign financial institutions (FFIs) must report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest. Accounts must be reported even if the investment is small or the income from them is minimal. The term US taxpayers includes not only US citizens, but also persons who live in the United States and/or have green cards. Those who selfreport such foreign accounts and investments may be entitled to pay reduced penalties. Lame Duck Tax Bills: Congress was unable to pass a budget for the current fiscal year, but did pass a continuing resolution to keep the federal government operating until December 11, Three significant issues to be addressed after the November elections (i.e., during the Lame Duck session) are (1) tax extenders; (2) expiration of the law prohibiting states from taxing sales over the internet (which does not apply to all states), and (3) the House s effort to reduce the IRS budget. Tax Extenders Bill: Each year, the federal legislature reviews proposals to extend billions in credits and tax breaks for individuals and businesses. Consideration of more than 50 tax breaks which expired at the end of 2013 (representing $85 billion in tax spending) has been stalled since June. In November (after the elections), the legislature is expected to review and approve these credits, including the sales tax deduction (allowing individuals to deduct state and local sales taxes paid in lieu of state income taxes) and the popular teacher credit for supplies. For businesses, locally popular credits include the Research and Development Tax Credit (which may be expanded), small business depreciation, business expensing and credits for companies designing energy-efficient buildings. Proposed changes to the R&D Tax Credit including allowing it to be taken against the Alternative Minimum Tax, and allowing startup companies to take up to $250,000 per year in R&D Tax Credits against business/payroll taxes during their first five years of operations. Tax Credits for Education: For those in higher education, eyes remain on Congress this fall. Federal law currently allows $5,500 or more in various credits, including the American Opportunity Tax Credit, the Lifetime Learning Credit, the Hope credit, and the Tuition and Fees Credit. The Tuition and Fees Credit was allowed to expire at the end of Credits are more valuable than deductions because they directly offset taxes. The House of Representatives is looking at combining several education related tax credits into a new and improved American Opportunity Tax Credit. These proposed changes will also be considered after the November election. Disclaimer: This newsletter is provided to share knowledge and expertise with our colleagues with the goal that all may benefit. The content of this newsletter is for general informational purposes only. The information contained within this newsletter is not intended to serve as legal advice or as a guarantee, warranty or prediction regarding the out-come of any particular legal or tax matter. Nothing contained within this newsletter should be used as a substitute for legal advice and does not create an attorney-client relationship between the reader and Miller, Monson, Peshel, Polacek & Hoshaw. Legal advice depends on the specific facts and circumstances of each individual s situation. You should not rely on this newsletter without first consulting with a qualified, licensed attorney. 4

5 MILLER, MONSON, PESHEL, POLACEK & HOSHAW A Partnership of Professional Law Corporations Providing quality legal services since 1959 RALPH GANO MILLER, RETIRED THOMAS M. MONSON MARY J. PESHEL TIMOTHY C. POLACEK WILLIAM D. HOSHAW SUSAN L. HORNER BRADFORD N. DEWAN PHILIP R. FREDRICKSEN DeETTE L. LOEFFLER JUDY S. BAE OF COUNSEL Miller Monson Peshel Polacek & Hoshaw,