Tuesday, July 23, 2019

Notarization Steps Into the 21st Century in Florida

In early June 2019, Florida Gov. Ron DeSantis signed into law HB 409, the Electronic Legal Document bill (also known as the e-will bill). With this new law, the use of video technology and remote notarization for the online execution of wills, powers of attorney and other legal documents is now approved. Under the provisions of this law, an electronic will is validly executed if it is in compliance with the provisions applicable to written wills.
In a nutshell, the e-will law allows notaries to affix their seals and signatures to legal documents that are not signed in their physical presence if they witness the signature via live, two-way video links.
According to the law, “A notary public may not notarize a signature on a document if the person whose signature is being notarized does not appear before the notary public either by means of physical presence or by means of audio-video communication technology as authorized under part II of this chapter is not in the presence of the notary public at the time the signature is notarized.” Witnesses needed for wills and other documents also can appear remotely as long as they can answer certain questions probed by the notary pertaining to the document holder’s identity.
Supporters of the law, including the Elder Law Section of the Florida Bar, say it will increase access to legal services, such as wills or estate plans, for all Floridians. The new law allows the signing of documents to be conducted entirely electronically in accordance with the strict notary standards that remain in existence.
Critics of the law contend that it puts certain older Floridians at risk by making it too easy for adult children to sell an incapacitated parent’s home without permission or for others to take advantage of elders in nursing homes or long-term care facilities. The law addresses these concerns by excluding those seniors and others who are considered to be “vulnerable adults” from electronic notarization.
A previous attempt by congressional democrats to add an amendment that would have removed wills and powers of attorney from the e-will bill failed. However, the law’s sponsors agreed to prohibit the use of video technology to execute super powers of attorney, preventing the amending of wills, trusts, estates and other documents electronically, at the request of the Real Property, Probate and Trust Law Section of the Florida Bar.
This e-will bill is not without controversy. In fact, two years ago, Gov. Rick Scott vetoed the similar Electronic Wills Act, saying it failed to strike the proper balance between convenience and safety. At the time, Gov. Scott claimed the bill didn’t “adequately ensure authentication of the identity of parties to the transaction.”
The latest version of the law contains several safeguards, such as requiring notaries to question witnesses directly and to demand standard forms of identification that can be confirmed through various online platforms.
Contact us if you have questions about the new e-will law. To update your will or estate plan, request a consultation today with Morris Law Group’s experienced attorneys.

SECURE Act Would Affect Retirement Planning

By: Joe D. Lieberman, J.D., LL.M., Law Clerk, Morris Law Group - June 27, 2019

On May 23, 2019, the U.S. House of Representatives passed The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). H.R. 1994.The SECURE Act would make significant changes to the U.S. retirement system. The SECURE Act passed with nearly unanimous support across party lines, in a vote of 417-3. The legislation now goes to the U.S. Senate for consideration in
that chamber.

The SECURE Act would make a number of changes to employer-sponsored retirement plans and individual retirement accounts (IRAs), including, among others:

  • Raising the minimum age for required minimum distributions from retirement savings plans from 70½ to 72;
  • Increasing the cap on the default contribution rate for employers with automatic enrollment plans from 10 percent to 15 percent after the first year of an employee’s enrollment;
  • Eliminating a requirement for employers to share a common industry in order to form a multiple employer plan (MEP);
  • Eliminating a provision in current law disqualifying MEPs in which one employer fails to meet requirements;
  • Providing for the distribution of assets from terminated 403(b) plans;
  • Allowing part-time workers to become eligible for enrollment in 401(k) plans following one year of service with at least 1,000 hours worked or at least 3 years of service with at least 500 hours;
  • Allowing participants to withdraw up to $5,000 without penalty from any employer-sponsored plan or IRA, and exempting repayment of the withdrawn funds from taxation;
  • Providing pension funding relief to qualified family-owned, independent newspapers;
  • Allowing home health care workers with tax-exempt "difficulty of care" compensation to contribute to employer-sponsored plans or IRAs; and
  • Requiring designated beneficiaries of IRAs to withdraw all plan assets within 10 years of the death of the account holder (within five years for nondesignated beneficiaries).
  • For purposes of this article, only modifications of required distribution rules for designated beneficiaries under Title IV-Revenue Provisions, Section 401, of the SECURE Act, will be addressed.

The SECURE Act would significantly modify the required distribution rules for designated beneficiaries. In the case of a defined contribution plan, if an employee dies before the distribution of the employee’s entire interest, nonspouse designated beneficiaries of IRAs would be required to withdraw all plan assets within 10 years of the death of the account holder (within five years for nondesignated beneficiaries). This limitation does not apply to: (i) the surviving spouse of the employee; (ii) a child of the employee who has not reached majority (a child will cease to be an eligible designated beneficiary as of the date the child reaches majority and any remainder of the portion of the individual’s interest shall be distributed within 10 years after such date); (iii) disabled (within the meaning of section 72(m)(7)); (iv) a chronically ill individual (within the meaning of section 7702B(c)(2)); or (v) an individual not described in any of the preceding subclauses who is not more than 10 years younger than the employee.

The determination of whether a designated beneficiary is an eligible designated beneficiary will be made as of the date of death of the employee. If an eligible designated beneficiary dies before the portion of the employee’s interest is entirely distributed, the remainder of such portion will be distributed within 10 years after the death of such eligible designated beneficiary.

In general, except as provided below, the above amendments apply to distributions with respect to employees who die after Dec. 31, 2019. In the case of a governmental plan, the above amendments apply to employees who die after Dec. 31, 2021.

The above amendments will not apply to a qualified annuity, which is a binding annuity contract in effect on the date of enactment of the SECURE Act and at all times thereafter.

This rule would essentially eliminate stretch IRAs for certain nonspouse beneficiaries whereby, under prior rules, nonspouse beneficiaries were permitted to grow their inherited IRAs tax deferred for an extended period after the death of the employee. A significant consequence of this new rule would require income tax to be immediately paid by a nonspouse beneficiary upon the 10th withdrawal year.

If you have a retirement account and would like to discuss it with us, or, if you believe that your beneficiaries may be subject to income tax upon your death and are interested in learning more about retirement planning, please do not hesitate to contact the Morris Law Group to discuss how our attorneys may be helpful to achieve such estate planning goals.

** Disclaimer Required by IRS Circular 230** Unless otherwise expressly approved in advance by the undersigned, any discussion of federal tax matters herein is not intended and cannot be used 1) to avoid penalties under the Federal tax laws, or 2) to promote, market or recommend to another party any transaction or tax-related matter addressed.

Tuesday, May 14, 2019

Domestic Asset Protection Trusts

            Asset protection during a grantor’s lifetime is often accomplished through complex entity structures (multi-member LLC’s or LLLPs) or through irrevocable trusts. However, clients are often apprehensive to transfer too much wealth to an irrevocable trust since they lose all benefit to the transferred assets, and the transfer will most likely require a gift tax return and result in a reduction the grantor’s estate tax exemption amount.  
However, there is a type of irrevocable trust that 1) protects the assets during the lifetime of the grantor; 2) provides for the efficient transfer of wealth; and 3) permits the grantor to be an active beneficiary. This specific estate planning technique is through the use of a Domestic Asset Protection Trust (DAPT).
A DAPT is an irrevocable trust established under the laws of one of the limited number of jurisdictions that permit a grantor of a trust to be a discretionary beneficiary and still protect the trust assets from the grantor’s creditors. We generally recommend the formation of a DAPT pursuant to Nevada law since it offers enhanced privacy and it is the only state that does not have any special classes of creditors that can pierce through a DAPT.
            Domestic Asset Protection Trusts offer many of the same benefits that offshore trusts provide but without subjecting the assets to the risks associated with offshore trusts.  According to the Steve Leimburg’s Asset Protection Planning Newsletter “after 22 years, there still hasn’t been even one non-bankruptcy, non-fraudulent transfer case where a creditor got a judgement or settlement, and then successfully accessed assets owned by a DAPT.”  Interested in learning more about DAPT’s? Contact the experienced attorneys of Morris Law Group.

Tuesday, April 30, 2019

Prize Winnings

Similar to lottery winnings, winning a prize subjects the recipient to income tax.  Section 74 of the tax code states that prizes and awards are included in gross income unless these items qualify as excluded as noted in this section or are considered scholarships and fellowship grants under Section 117.  Gregory R. Hampton, who recently won 100 years of season tickets for his beloved New York Giants as part of the NFL’s Tickets for 100 years contest, is therefore responsible for the taxes on his winnings.  Luckily for Mr. Hampton, the NFL announced that they will be paying the estimated taxes on the winnings.

Upon winning any sort of gambling, raffle, lottery or other similar prize, one must report the full amount of the winnings for the year on their form 1040.  One may itemize deductions on Form 1040 to take advantage of any gambling losses but may not net their winnings and losses.  Interested in learning more? Contact the experienced attorneys of Morris Law Group. 

Tuesday, April 16, 2019

Inherited IRA's

In Private Letter Ruling 201909003, the Internal Revenue Service ruled that an IRA payable to an estate could be transferred to an inherited IRA for the benefit of the estate’s beneficiaries.  In the IRS ruling, the decedent received RMD’s from the IRA during the year of  their death and named  the estate as the sole beneficiary.  In the decedent’s will, the decedent named their entire estate to certain beneficiaries.
            The division of the IRA (of the decedent) into inherited IRA’s for the beneficiaries was not considered a taxable event.  Per the ruling, the beneficiaries can take RMD’s for each of the inherited IRA’s for the remaining years of the life expectancy of the decedent and each beneficiary is then responsible for any tax liability related to the RMD’s from their inherited IRA’s.
 Please note that this ruling applied to the facts of a certain case that was submitted and could have been avoided with proper planning on the front end.  Interested in learning more? Contact the experienced attorneys of Morris Law Group. 

Monday, April 1, 2019

Annual Report Reminder

Annual Report Reminder

Every business entity organized in Florida must file an annual report with the Florida Department of State by May 1st each year. This filing is mandatory for all business entities that wish to maintain an active status, even if no changes were made to the entity. The purpose of the annual report is to update and/or confirm the records of Florida’s Division of Corporations. Additionally, the responsibility to file falls solely upon the entity’s representative since Florida’s Division of Corporations is not required to send a reminder regarding the deadline. 

If you are a member of Morris Law Group’s Generational Planning Solutions (“GPS”) program then please disregard this notice as the filing of the annual report has already been addressed. If you are not a member of our GPS program and would like to find out more information, please contact our office today! http://www.law-morris.com/gps

The annual report can only be filed through Sunbiz, Florida’s Department of State, Division of Corporations (Sunbiz.Org). The option to file the annual report is prominently listed on the website’s homepage. In order to file the report, all you need is the Document ID Number (which can be found on Sunbiz), a valid email address and payment of the fee.

The fees for the annual report vary based on entity classification, and are as follows for 2019:
        For a Profit Corporation: $150.00
    For a Non-Profit Corporation: $61.25
    For an LLC: $138.75
    For an LP or LLLP: $500.00      

Florida’s Division of Corporations will impose a penalty of $400 for an annual report that is filed after the May 1st deadline; however, the penalty does not apply to non-profit corporations. Furthermore, this $400 late fee cannot be waived or abated.

The failure to file an annual report by the third Friday of September will result in the administrative dissolution or revocation of the business entity. Such administratively dissolved or revoked entities must then apply for restatement and pay additional fees in order to regain active status in Florida. Therefore, if you are an individual who has formed, or maintains a business entity in Florida, it is crucial that you file the annual report in order to avoid the disruption of business.

Friday, March 29, 2019

Charitable Deductions

With April 15th fast approaching, now is a time to review your charitable gifting for 2018. 
           One main tax benefit of charitable gifting is that a qualified donation entitles the donor to a charitable  deduction . Please be aware that there are certain limits on taking charitable contribution deductions.  One can also make a qualified donation of a non cash item as long as the fair market value of the item can be substantiated.  If a donor makes a qualified charitable donation from their IRA, they can also take advantage of that income not being counted as taxable income (with certain restrictions).  There are many tools that donors can utilize to fund their charitable endeavors such as donor-advised funds, private foundations and charitable remainder trusts and these are to be considered when reviewing their charitable goals.  Interested in learning more? Contact the experiences attorneys of Morris Law Group for an immediate consultation.