The Three Estate Planning Documents You Need

In previous posts, we have discussed various estate planning documents and how they differ, but many times there is confusion as to what takes effect and when. Or, you may wonder why you can’t just appoint an agent (power of attorney) in your Will.  I have provided a simple review of each document, its purpose, and when it takes effect in hope that I can quickly dispel the confusion.

Generally, when clients meet with me for estate planning, three documents are prepared and executed: the Financial Power of Attorney, the Durable Health Care Power of Attorney/Advanced Health Care Directive, and the Will. 

The Financial Power of Attorney allows your agent to access your financial accounts, pay bills and make transfers on your behalf immediately upon signing.  It is important to select someone you trust as they have access to all of your financial accounts.  There are ways to protect yourself and ensure that the agent you have appointed is acting in your best interests.  One way is to appoint co-agents so they act as a check on each other.  However, this can lead to disagreements between the agents and defeat the purpose of the document itself.  Another way is to request an accounting of your agent’s activity if you suspect something is amiss.  The agent is bound to follow certain fiduciary duties while acting as your agent.  If your agent fails to act in your best interest, they can be brought before the court and made to remedy their actions.  However, the best way to be proactive is to appoint someone that you trust implicitly from the beginning. 

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Follow up to Death in the Digital Age

As a follow up to Death in the Digital Age, a story about the online afterlife of a woman in Pontiac Michigan caught my attention.   Her body was discovered in her vehicle parked in her garage by an individual entering the property on behalf of the mortgage company which had foreclosed upon the property for non-payment.  The unusual thing?  It was five years after her death in 2009.

She had arranged for automatic online payment of her utilities and mortgage, and the balance in her account was large enough to last for four years.  As her body decomposed in the garage, the funds went out regularly.  It wasn’t until the account was depleted that her death was discovered.  The neighbors assumed she was traveling for business, she had quit her job so was not missed at work, or apparently anywhere else.

My favorite comment to this online story was:  “What ‘lived on’ was the money.  When that ran out, the culture pronounced her dead.”

Christina Hausner is an attorney at Russell, Krafft & Gruber, LLP in Lancaster, PA. She received her law degree from Duquesne University School of Law.

 

Accessing Email After Death

Recently we posted an article about Death in the Digital Age.  But, what happens if a loved one fails to make these arrangements and you must have access to their digital accounts? 

Google has recently developed a method that allows people to gain access to a deceased person’s accounts.  Google has taken steps to ensure its users' privacies are protected while understanding that the need for someone to access a decedent’s account post mortem may occasionally arise. 

In order to gain access, you must first be an authorized representative of the deceased user and complete the two-stage process.  Part I includes providing Google with personal information about yourself, information about the account, and the decedent’s death certificate.  The second part occurs only after you have passed the minimal threshold of the first stage.  Google will then communicate directly with the authorized representative to give them further instructions.  For complete information on this, you can view Google’s instructions here. It is likely that more and more websites and social media sites will take Google's lead and develop similar policies to address the importance of our digital assets.

Lindsay Schoeneberger is an attorney at Russell, Krafft and Gruber, LLP in Lancaster, Pennsylvania. She received her law degree from Widener University School of Law and practices in a variety of areas, including Estate Planning.

Death in the Digital Age

As you update your Facebook page, have you ever wondered how your beneficiaries could obtain access to your “digital assets” upon your death?  Indeed, could they access your digital assets if you were incapacitated during your lifetime?  Prudent people plan through financial powers of attorney for incapacity during lifetime, or for the disposition of their financial assets and real estate upon their deaths under their wills.  Not enough attention has been paid to digital assets.  “So attention must be paid,” as Willy Loman said.

Does the persons (or institution) that would act as your agent during life, or as your executor upon death, know the location of your passwords and usernames?  Do they know whether you have an Amazon account or are active with social media sites?  As part of your estate planning, you should prepare an inventory of such information.  You may even consider expressly providing for access by your agent during life or by your executor upon death.

Google, for example, has available an “inactive account” option that allows notices to be sent to specified persons if there is no activity on your account for a predetermined period of time.  For example, if your Gmail/Google account were to be dormant for several months, 30 days prior to your predetermined deadline, you would receive a warning email or text alert.  After the deadline has passed, the action you set for your account will occur. This action could include deletion of the account.

You may consider giving some attention to the disposition of these “assets”.  After all, your digital assets may be every bit as valuable as the china, silver or fishing rods used to be, and may provide access to financial assets.

Jon Gruber is an attorney at Russell, Krafft and Gruber, LLP in Lancaster, Pennsylvania. He received his law degree from the University of Virginia and practices in a variety of areas, including Estate Planning and Estate and Trust Administration.  

Think Before You Post - Employment Discrimination and Confidentiality

Settlements are the grease that makes the wheels of justice run. Without plea bargains, the criminal court system would grind to a halt.  The civil justice system depends on reliable monetary settlements as well.  Lawyers are used to working within this framework, but every so often, some sand gets thrown in the machinery, and it grinds to a halt. 

With most civil settlements, particularly those involving employment law, confidentiality is key.  Employers don’t want others knowing the payout made to buy peace.  Exceptions may be specified for counsel and tax advisors, but generally litigants cannot discuss the facts or terms of a settlement even with a spouse unless the spouse agrees to maintain confidentiality as well. 

In the old days when oral rumors were the rule, it might be tough to prove a breach of confidentiality.  But in the 21st century, we have social media to establish beyond a reasonable doubt who spilled the beans.

In the age discrimination claim of Patrick Snay v. Gulliver Preparatory School, it was the daughter of the plaintiff who posted to her 1,200 Facebook friends:  “Mama and Papa Snay won the case against Gulliver. . . . Gulliver is now officially paying for my vacation to Europe this summer.  SUCK IT.”  The daughter was a student at the school her father had sued, so her post broadcast to current and former students that Gulliver had lost its case with its former headmaster.

Four days after signing an $80,000 settlement agreement, the school cried foul and refused to pay.  Now over two years later and after two court appeals, Florida’s Third District Court of Appeal sided with the school and refused to enforce the settlement agreement.  “Snay violated the agreement by doing exactly what he promised not to do. . . . His daughter then did precisely what the confidentiality agreement was designed to prevent,” said Judge Linda Ann Wells in her ruling on February 26, 2014.

Maybe this case will go back to court, and how much impetus will there be for the school to offer a voluntary settlement?  Lots of work for everyone involved just because of a slip of the mouse. 

Always take a confidentiality clause seriously and never document any breach on social media.

Christina Hausner is an attorney at Russell, Krafft & Gruber, LLP in Lancaster, PA. She received her law degree from Duquesne University School of Law and has practiced in the area of employment law for over 25 years

IRS Announces 2014 Mileage Reimbursement Rates

The IRS issues its Standard Mileage Reimbursement Rate each year. The rate determines the amount that can be used as a deduction for business travel and serves as a guideline for employers who reimburse their employees for the same. It reflects not only fuel costs, but also factors in average wear and tear on a vehicle.

Beginning on January 1, 2014, the rate will change to 56 cents per business mile driven, a half cent lower than the 2013 rate. The rate for medical or moving expenses will also be reduced a half cent to 23.5 cents per mile. The rate for charitable purposes remains at 14 cents per mile.

While there are generally no Pennsylvania laws requiring employers to use the IRS rate, there are tax advantages for doing so. The IRS will deem employers who make qualifying reimbursements up to 56 cents per mile as meeting their accounting requirements, thus no income reporting or withholding is required for those reimbursements. However, employers need to make sure that their employees have provided adequate proof that the mileage was strictly for business use. Qualifying employees who are not reimbursed for their business mileage will be able to deduct 56 cents per mile on their individual tax returns.

As an interesting side note, AAA's website offers a gas price tracker ("AAA Daily Fuel Gauge Report") that can be used to monitor gas price averages and compare averages in different geographical areas. This tool can be helpful in analyzing fuel expenses against reimbursement rates and keeping track of the fluctuation of gas prices.

According to the tracker, as of the date of this post, the national average for regular gas is $3.259 per gallon. Pennsylvania's average is higher at $3.407 per gallon. At $3.395, the average in Lancaster County is also higher than the national average, but a fraction lower than the state average.

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Want to Bet? Expansion of Small Games of Chance

The Pennsylvania Legislature this week passed a bill that, for the first time in Pennsylvania, allows bars, restaurants and other similar establishments to conduct small games of chance, daily drawings and raffles. The bill will now go to the Governor for final approval. It is expected that the Governor will sign the bill into law.

The Bill allows hotels, restaurants, golf courses, brew pubs and microbreweries holding a valid liquor license to obtain a separate license allowing them to conduct "tavern games." Tavern games consist of pull tabs, daily drawings and raffles. The distinctions between the types of games are important because there are different rules that apply to how the proceeds of those games can be used and what taxes may be owed. In order to obtain a license to conduct these games, an applicant must provide information to the Pennsylvania Liquor Control Board relating to the applicant's business, finances and personal background, in addition to paying an application fee of over $2,000.00. There is also an annual renewal fee of $1,000.00 each year for the gaming license. Potential applicants should also make sure that their municipalities in which permit such gambling or gaming.

The good news for bars and restaurants is that they are now able to compete with some of the private clubs and organizations which have historically been permitted to offer small games of chance to their members. However, there are very specific requirements and regulations regarding the use of the proceeds from these gaming activities. Specifically, for bars and restaurants, 60% of the revenue obtained from these games must be paid to the State, and 35% can be retained by the establishment. An additional 5% tax is paid to the local municipality where the gaming occurs. There are also further restrictions on raffles which require at least half the proceeds to be donated to charity and significant penalties to any establishment that fails to adhere to these revenue allocations and taxes.

This change in the gaming regulations for bars and restaurants is another significant step forward by the Commonwealth of Pennsylvania to modernize it laws and regulations pertaining to sales of alcohol and activities conducted by those selling alcohol. These advances, however, don't come free.  Owners and operators need to be aware of the restrictions and requirements placed upon them if they choose to conduct these games in their establishment.

Aaron Zeamer is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Business Law and Liquor License matters.

From 'Philadelphia' to 'Modern Family'

Matt Grosh recently talked about Cam and Mitchell from Modern Family as a backdrop to the IRS's recent revenue ruling. That ruling recognized same-sex marriages for federal tax purposes even when a couple resides in a state that does not permit same-sex marriages.  The couple must only have been validly married in a state that recognizes same-sex marriage.

After last summer's Supreme Court decision analyzing the Defense of Marriage Act, numerous questions arose regarding legal treatment of same sex couples.  Employers were confused about their obligations regarding benefits such as health insurance and retirement plans.  After consultation with the Department of Justice and the Department of Treasury (Internal Revenue Service), the United States Department of Labor (DOL) issued Guidance to Employee Benefits Plans on the definition of spouse and marriage.

The DOL advised that employers are to recognize "spouses" and "marriages" based on the validity of the marriage in the state where the couple was married rather than the state where they reside.  The DOL concluded that such an interpretation would make it easier for employers to uniformly administer benefits to all employees, in addition to offering more protection to same-sex couples.  In effect, the Department of Labor Regulations, Rulings, Opinions and Exemptions will assume that the term "spouse" refers to any individual who is legally married under any state law. Consistent with the IRS ruling, the terms "spouse" and "marriage" will not include individuals in domestic partnerships or civil unions.  

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IRS Treatment of Same Sex Marriage For The Modern Family

One of the more popular shows on televisions is Modern Family.  For those of you who have not seen it, the comedy revolves around three interrelated households facing the trials and tribulations of "modern" life.  One of the households belong to Cam and Mitchell, two same-sex partners who have adopted an adorable little girl from Vietnam.  Now, while plotlines featuring them tend to be quite amusing, I can understand that how Cam and Mitchell file their taxes is probably not at the forefront of most viewers' minds.  However, a recent decision by the Internal Revenue Service regarding its treatment of same-sex couples actually made me consider the notion.

The IRS has recently decided that, for federal tax purposes, it will recognize a same-sex marriage if it is valid where the marriage was entered into, regardless of where the couple actually resides.  This means that even though same-sex unions are not recognized in Pennsylvania, a same-sex couple living in Pennsylvania can be deemed married by the IRS as long as they obtain their marriage in another state where same-sex unions are legally recognized.

This means that legally married same-sex couples will be able to file their 2013 federal income tax returns using either the married filing jointly or married filing separately designations. In addition, they will also be able to file amended returns for prior tax years choosing to be treated as married during those years, as long as those years follow the date of the legal marriage. This treatment will be applied to all federal taxes, including estate, gift and generation skipping taxes. 

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Liquor Privatization Debate Sparks Changes

The Pennsylvania General Assembly recently returned from its summer break and with that return comes a renewed discussion of the Governor's plan to privatize the Pennsylvania State Liquor Store System. The Morning Call, a Lehigh Valley newspaper  recently reported that the liquor privatization debate is starting to once again heat up and sides are starting to polarize. Whether or not this issue ultimately moves forward this year or not, Pennsylvania consumers can cite some benefit just from the discussion thus far. Specifically, the PLCB has recently announced expanded hours in more than 100 of its Wine and Spirit stores, the opening of more "premium" or super stores which offer wider selections and Sunday hours, and this past spring, amidst all the discussion of liquor privatization, the legislature was pushing hard to permit direct shipment of wine to consumers. The direct shipment bill appeared to have much more support, notably bipartisan support, than the overall privatization plans.

It appears that as long as the liquor privatization discussion remains in the forefront, both of our legislators' and the public's mind, the PLCB seems determined to expand its offerings and the legislature appears to have a desire to permit more flexibility, all of which is conceivably to the benefit of consumers.

So even if the privatization plans can not garner enough support to implement wholesale changes to the system, it appears that consumers may benefit just from the discussion. It will be interesting to see how this unfolds through the fall legislative session.

 

Aaron Zeamer is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Business Law and Liquor License matters.