Partner Yvonne Cort Named to Top 50 Women in Business!
Congrats to our partner, Yvonne R. Cort on being a Top 50 Women in Business honoree! The award recognizes Long Island’s top women professionals for their business acumen, mentoring and community involvement. The program’s honorees are selected by a judging committee and represent the most influential women in business, government and the nonprofit fields. For a full listing of Long Island Business News 2020 award winners, click the link below.
https://libn.com/files/2020/09/T50W20-FP_Honorees-5.pdf
Beware: Payroll Tax Holiday is No Picnic!
There’s a new twist on an old problem: how to stay current with withholding tax obligations. Prudent employers know that the company’s cash flow must be able to manage full timely payment to the taxing authorities of all taxes due. An employer who does not pay the full balance due on a Form 941 could be personally liable to the Internal Revenue Service for the trust portion.
Recent presidential action has increased the potential exposure for employers, by allowing a “payroll tax holiday”. This holiday may be fun for the employee while it lasts, but could cause major problems for both the employee and the employer when the holiday is over.
The executive order, issued August 8, 2020, applies to workers whose biweekly pay is under $4000, pre-tax. The order defers payment of the employee share of Social Security, from Sept. 1, 2020, through Dec. 31, 2020. Last minute guidance issued by the IRS on August 28, 2020, only a few days before the order took effect, clarifies that the employer is responsible for deferring the tax, and later paying it to the IRS by April 30, 2021. If the deferred amounts are not paid in full by April 30, 2021, penalties and interest will begin to accrue. Note that implementing the payroll tax deferral is elective, not mandatory.
The IRS guidance provides that the employers who choose to defer the tax in 2020, must withhold and pay the deferred taxes ratably from compensation and wages paid to the employee between January 1, 2021 and April 30, 2021. If necessary, the employer may “make arrangements to otherwise collect the total [taxes] from the employee”. It is unclear how this will be handled if an employee is no longer working for the employer after December 31, 2020. Moreover, employees may not realize that their net paychecks in 2021 will be smaller than usual, potentially leading to serious hardship.
The employer remains on the hook for the deferred payroll taxes, regardless of whether the taxes are taken out of the employee’s wages in the spring. Failure to pay the deferred tax could result in personal liability of the owner, director, or shareholder of the employer, or other responsible individuals.
Pursuant to Internal Revenue Code Section 6672, the IRS can assert the trust fund recovery penalty against an individual who is under a duty to collect and pay over the withheld income or employment taxes, and fails to do so. There are numerous factors to be reviewed in determining who is responsible. Some of the factors considered by the IRS are the individual’s title and position in the company, authority or control over how funds are disbursed, signatory authority for checks, and ability to hire and fire employees. The person must also have acted willfully, with intent or intentional disregard, in failing to pay the taxes. The IRS will find intent or willfulness if the “responsible person” knowingly paid other expenses while the taxes remained unpaid.
Trust fund recovery penalties, also known as civil penalties, are particularly harsh in their effect. Multiple individuals could be assessed; personal assets can be seized including bank accounts, retirement accounts and real property; and liens are filed, which affect the ability to refinance or sell one’s home, among many other ripple effects. The trust fund recovery penalties are assessed even if the business closes – in fact, especially if the business closes, as the IRS seeks to recover the unpaid trust tax from a different, deeper pocket. Assessments against individuals for trust tax are not dischargeable in bankruptcy.
Tax professionals should be aware of the risks to their business clients, when advising whether the employer should take advantage of the payroll tax deferral for its employees. For the employer, rather than an enjoyable “holiday”, there could be serious consequences.
Yvonne R. Cort is a partner at the law firm of Capell, Barnett, Matalon & Schoenfeld, LLP. Her practice is focused on assisting businesses and individuals in resolving complex IRS and NYS tax issues including audits and collection matters. Yvonne is a frequent speaker for accounting and legal professional groups. She can be reached at ycort@cbmslaw.com
CBMS Partner Yvonne Cort Quoted in Bloomberg Law Article Regarding NYS Residency Issues
On July 22, 2020, Capell Barnett Matalon & Schoenfeld LLP partner Yvonne Cort was quoted in Bloomberg Law regarding NYS Residency Issues, in an article entitled “New York’s Taxes Will Stalk You Even If You Fled During the Pandemic”. Click here for full article
US Supreme Court Affirms Restrictions on In-Person Worship
Peace and good health to you all on this beautiful June afternoon, when trying to keep up with events swirling around us can certainly cause our heads to spin.
On the afternoon of May 29, 2020, the United States Supreme Court issued a decision (5-4, of course, with the Chief Justice joining “The Liberals”), which affirmed the lower court’s decision, and rejected a California church’s efforts to overturn its State’s restrictions on in-person religious services (South Bay United Pentecostal Church v. Gavin Newsom, Governor), stating “Although California’s guidelines place restrictions on places of worship, those restrictions appear consistent with the Free Exercise Clause of the First Amendment.” The Governor’s order limited congregations to the lesser of 25% capacity or 100 attendees; the church claimed their services typically consisted of between 200-300 congregants. The decision also noted that the Governor’s order was consistent in limiting not just religious services, but also various kinds of activities “where large groups of people gather in close proximity for extended periods of time.”
In a separate case (Elim Romanian Church v J.B. Pritzker, Governor), the Supreme Court also rejected a lawsuit by two Illinois churches seeking to block their Governor’s order limiting religious services to 10. Probably due to their decision in the California case, decided the same day, the decision in the Illinois case was without opinion or dissent.
The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If your religious corporation or nonprofit organization requires assistance, please contact Joseph Milano Esq., jmilano@cbmslaw.com, Peter Sanders Esq., psanders@cbmslaw.com, or Elizabeth Cate Esq., ecate@cbmslaw.com.
Rock-Climbing: Frustrated or Impossible After COVID-19?
CBMS wrote about common defenses to contract performance in the wake of COVID-19 on April 30, 2020. A new lawsuit in the Federal Court for the Eastern District of New York shows how two of these defenses can be used in practice. Brooklyn Boulders, a rock-climbing gym under construction in Williamsburg, Brooklyn, is suing its landlords to get out of a lease, claiming that the coronavirus (also known as “COVID-19”) pandemic and related Executive Orders frustrated the purpose of the lease and made performance impossible. The lawsuit, filed May 6, 2020, is an example of the type of contract litigation that is likely to fill courts’ dockets in the months to come. Its outcome will be instructive for commercial landlords and tenants alike.
Brooklyn Boulders leased 30,000 square feet in Williamsburg in November 2018. The owners of Brooklyn Boulders intended to build and operate a specialized climbing facility with a café and co-working space. Construction on the space was ongoing when the COVID-19 pandemic hit New York City and Governor Cuomo issued Executive Orders requiring gyms to close and non-essential construction to cease.
Brooklyn Boulders tried to negotiate a termination of the lease with the landlords. When the landlords rejected the gym’s termination, the gym filed suit in the Federal Court for the Eastern District of New York seeking a declaration that the termination of the lease was lawful under the doctrines of frustration of purpose and impossibility of performance. In other words, the gym claims that the COVID-19 pandemic, and Governor Cuomo’s subsequent Executive Orders, destroyed the reason for entering the lease and made performance of operating a group fitness facility impossible. The gym owners claim that even when gyms are permitted to reopen, they will be required to follow social distancing guidelines which will substantially reduce their expected capacity and their profits.
This lawsuit shows how a common-law doctrine can be used to try to avoid liability for contractual obligations that have become difficult or impossible to fulfill in the wake of COVID-19. Commercial tenants may increasingly resort to litigating similar doctrines as social distancing requirements persist and rent obligations continue to be owed.
The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If you or your organization require assistance, please contact Elizabeth Cate Esq., ecate@cbmslaw.com, Joseph Milano Esq., jmilano@cbmslaw.com, or Peter Sanders Esq., psanders@cbmslaw.com .
Two Houses, One Home: NYS Residency and Domicile in the Time of COVID-19
In these days of working from home, many New York State resident taxpayers fortunate enough to have a vacation place are spending more time than ever before in their second home. There are also anecdotal reports of snowbird New Yorkers remaining south longer this year due to travel concerns. For some taxpayers, the question arises: why pay New York taxes when I’m living out of state? However, under NYS tax law, a resident taxpayer does not relinquish NYS residency simply by staying in another state. The taxpayer must meet NYS standards for changing domicile – and have the documentation to prove it if audited by New York State.
Let’s start with the basics. There are two ways for an individual to be taxed as a resident of New York: (1) when domiciled in New York; or (2) as a statutory resident of New York. A statutory resident is defined as an individual who is not domiciled in NYS, has a permanent place of abode in NYS and spends more than 183 days of the taxable year in NYS. Note that similar rules apply for determining New York City residency.
Many taxpayers who are domiciled in New York and spend vacations or winter in a second home erroneously believe that if they are out of New York for 6 months of the year, and make a few minor changes, such as obtaining a driver’s license in the new state, they will no longer be subject to tax as a NYS resident. They don’t realize that they may not have changed their domicile, and therefore the statutory resident test cannot be applied.
While a taxpayer may have multiple residences, there can be only one domicile. To change domicile, the taxpayer must have the intent to abandon the old domicile, and make the new place “home”, with all the feeling and sentiment associated with that word. The taxpayer can continue to maintain a residence in New York after changing domicile – but it won’t be “home”.
In considering a change of domicile, the State evaluates five primary factors: size, nature and use of the residence; active business involvement; time spent in each place; location of items near and dear; and family connections. The taxpayer must show, by clear and convincing evidence, that the ties to the new domicile out of New York are stronger and the connections to New York have become much weaker or been severed. While the State will place some value on minor factors such as obtaining a driver’s license or registering to vote, these do not carry as much weight as the primary factors.
Due to today’s COVID19 restrictions, taxpayers may have a better chance of demonstrating more time spent in the proposed new domicile than in the old place. It’s important to recognize that this is only one factor in showing a change of domicile, and no one factor is determinative. And if NYS starts an audit, often a year or two after the tax return is filed, the location where time was spent during the pandemic will be viewed in the context of prior and subsequent years. If the COVID19 time in the out-of-state residence is an outlier, and there have been no other changes, it may be difficult to show that the taxpayer’s home is no longer in New York.
To effectively prove a change of domicile, taxpayers should be mindful of New York State’s requirements and take steps contemporaneously to document all the supporting factors as much as possible. When New Yorkers are considering a change of domicile, they need to know that there’s more to be done than spending more time in their second home.
The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If you or your business requires assistance, please contact Yvonne Cort, Esq. at ycort@cbmslaw.com
Net Operating Losses – New Opportunities
We hope you are all in good health and safely waiting for this period to subside. Many of us are thinking about our businesses and what the new normal will hold. Many businesses will face tremendous challenges to reopen their doors and the enhanced ability to obtain tax refunds will be helpful. This letter summarizes the CARES Act provisions regarding harvesting business losses. A brief history will help highlight the importance of the changes.
The Tax Cut and Jobs Act enacted at the end of 2017 (TCJA) imposed limitations on the use of business losses. Net losses from active trades or businesses were limited to an inflation – adjusted amount of $250,000 for single filers and $500,000 for joint returns. These limitations dramatically affected taxpayers who suffered business losses or reported losses from partnerships or subchapter S corporations. For example, an individual, with no other source of income, who experienced a business loss of $350,000 was permitted to deduct only $250,000 in 2018; and the remainder carried forward indefinitely until sufficient income was recognized.
The TCJA also limited the use of that net operating loss. It generally eliminated the ability to carry the loss back to earlier years and limited the utilization in future years to 80% of taxable income. As a result, the taxpayer in our example was unable to currently benefit from the business loss and was forced to wait until future years to use the loss.
The CARES Act allows the full amount of these business losses to be used for 2018, 2019 and 2020. It also provides that net operating losses from those years may be carried back five years. The ability to recognize and carryback business losses will result in substantial refunds for many taxpayers. The taxpayer in our example may carry the entire $350,000 loss back to 2013 (and succeeding years) until the entire loss has been absorbed.
Another important change in the CARES Act applies to commercial properties, retail stores and restaurants. Any such business that made qualified property improvements in 2018 (and later years) is now permitted an immediate deduction. The CARES Act allows an amended return to be filed claiming these deductions – which can be used in conjunction with the changes in the net operating loss provisions to provide an immediate source of funds.
Steps:
The above is an overview designed to inform you of these important opportunities. The Internal Revenue Service has just released new guidance describing how to amend returns and promptly apply for and receive these tax refunds. Consult your tax advisers as soon as possible because there are important time limitations for filing certain refund requests.
We again wish everyone good health for yourselves and for your family.
Sincerely,
The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If you or your business requires assistance, please contact Robert Barnett, Esq., rbarnett@cbmslaw.com
COVID-19’s Effect on Your New York Contracts
The novel coronavirus (“COVID-19”) pandemic has created economic hardships for businesses and individuals that have and will continue to affect contractual obligations. New York law provides several defenses to fulfilling your contractual obligations that may be available during this time. In some situations, invoking these defenses may temporarily suspend or eliminate performance obligations, while in others they may terminate the contract. CBMS can advise you on strategies to address potential breaches, either through renegotiating contracts or in litigation, if negotiation strategies fail.
Review Contracts
The place to start is to review your contracts for provisions that may excuse failure to perform or provide other alternatives to timely performance. These provisions may have notice requirements, which are important to be aware of early.
Force Majeure
Your contract may include a “force majeure” (or “Act of God”) provision that may protect parties if events beyond their control, such as wars, floods, earthquakes, or travel bans, make it impossible to perform contractual obligations. In New York, contracts must explicitly include a force majeure provision to be able to use this doctrine.
New York courts typically interpret force majeure provisions narrowly. If the provision lists specific events, courts will excuse performance only if one of these events occurred. If your contract includes a force majeure clause that lists “pandemics,” “epidemics,” “viral outbreaks,” “quarantines,” “travel bans,” or other similar terms, it may be possible to use it to excuse or delay performance of contractual obligations as a result of COVID-19.
If your contract includes a force majeure clause, you must also be prepared to show that COVID-19 made it impossible for you to perform and that you made reasonable efforts to avoid failure to perform but were unsuccessful. You may also have to show that COVID-19 was unforeseeable at the time you entered the contract. Therefore, if you entered the contract after COVID-19 had become a global pandemic, it may also be difficult for you to use this provision.
There are several other defenses that may excuse potential breaches in New York.
Termination: Some contracts include provisions that allow a party to terminate the contract under certain circumstances. These provisions may apply in the COVID-19 pandemic.
Extension of Time: Your contract may include provisions that permit extensions of time if unexpected events occur. Even if your contract does not, it may be worthwhile to try to negotiate in good faith an extension with the other party if performance will become possible when the effects of COVID-19 lessen. These negotiations may help you avoid litigation.
Explore Your Other Options
If your contracts do not include the clauses discussed above, or if the clauses are ambiguous or inapplicable, you may still have options. New York courts have created certain defenses that, while not contained within the four corners of the contract, may be used to try to avoid liability for breach of contract: Frustration of purpose, impossibility, or impracticability.
Frustration of purpose excuses failure to fulfill contractual obligations when an unforeseen event makes a contract virtually worthless.
Impossibility excuses breach of contract when an unanticipated event destroys the subject matter or the means of performance of the contract such that performance is objectively impossible.
Impracticability under the Uniform Commercial Code may be used if the contract is for the sale of goods and a contingency occurs that makes performance impracticable and the nonoccurrence of the contingency was a basic assumption of the contract.
The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If you or your organization require assistance, please contact Elizabeth Cate Esq., ecate@cbmslaw.com, Joseph Milano Esq., jmilano@cbmslaw.com, or Peter Sanders Esq., psanders@cbmslaw.com .
Reimbursement for Mandated Sick and Family Leave Pay
As a response to the COVID-19 pandemic, President Trump signed into law the Families First Coronavirus Response Act (the “FFCRA”) along with the Coronavirus Aid, Relief, and Economic Security Act (as detailed in our previous client alert and article). The FFCRA requires small and mid-sized employers (including nonprofit and religious organizations) with less than 500 employees to provide paid sick and family leave for employees who are unable to work due to the COVID-19 pandemic, while also reimbursing employers for such compensation. It is important to note that certain small businesses (including religious and nonprofit organizations) are exempt from the mandated paid leave requirements under FFCRA as discussed below.
QUALIFYING REASONS FOR LEAVE
An employee qualifies for paid sick leave under the FFCRA if the employee (excluding health care providers and emergency responders) (a) has worked for at least thirty (30) days prior to taking paid leave and (b) is unable to work (or unable to work remotely) because the employee:
i. is subject to a Federal, State, or local quarantigne or isolation order related to COVID-19;
ii. has been advised by a health care provider to self-quarantine related to COVID-19;
iii. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
iv. is caring for an individual subject to an order described in (i.) or self-quarantine as described in (ii.);
v. is caring for a child whose school or place of care is closed (or childcare provider is unavailable) for reasons related to COVID-19; or
vi. is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
In addition to paid sick leave, an employee can qualify for up to an additional 10 weeks of paid expanded family and medical leave if the employee is unable to work due to a bona fide need to care for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19.
DURATION OF LEAVE & MAXIMUM PAYMENT
The maximum paid leave time is 80 hours over a two-week period, so an employee cannot take 80 hours paid leave under one qualifying reason and then additional paid leave for a second qualifying reason. It is critical for employers to pay close attention to the limits for the duration of employee leave and the maximum payment permitted, as the employer will not be reimbursed for any wages paid beyond the limits.
RECOVERABLE COSTS
In order to be eligible for reimbursement, which comes in the form of tax credits, the employer must be withholding payroll taxes from its employees. Under the FFCRA, qualified employers can receive 100% reimbursement through tax credits for all “qualifying wages” paid to their employees for the period between April 1, 2020 and December 31, 2020. A “qualifying wage” is defined as compensation paid to an employee who takes leave under the FFCRA for a qualifying reason (as listed above), up to the appropriate per diem and aggregate payment caps. Employers may also receive additional reimbursement through tax credits for amounts paid or the cost incurred to maintain the employee’s health insurance coverage during the paid leave period.
EXEMPTION UNDER FFCRA
There is an exemption under FFCRA which provides that the Secretary of Labor has the authority to exempt small businesses (including religious and nonprofit organizations) from the mandated paid leave requirements, if (a) the employer has less than 50 employees, (b) the employee has requested sick or medical leave to care for a child because schools or childcare services are unavailable due to COVID-19, and (c) providing such compensation would critically impact the viability of the business/organization, such that compensation under FFCRA would (i) cause the business/organization to cease operation, and (ii) pose a substantial risk to the financial wellbeing of the business/organization or (iii) generate an inability to find enough able, willing, and qualified employees to provide the required services and labor. Employers falling under this exemption should maintain records evidencing employee requests for paid leave as well as the impact such compensation would have on the business.
Additionally, employers may be exempt from the requirements under FFCRA for paid sick, medical and family leave for clergy (including pastors) and thus employers would also not be entitled to any reimbursement for paid leave of their clergy. At this point it is unclear whether clergy are excluded from the term “employee” under the FFCRA – check back for an update when more information on the regulations and exemptions are published.
NEW YORK STATE PAID SICK TIME PLAN
Additionally, on March 18, 2020, Governor Andrew M. Cuomo passed a paid leave law for COVID19, the Paid Sick Time Plan, which provides additional reliefs for residents. Employee benefits depend on the size of the employer. If there are additional benefits not given under the federal program, then New York State will provide the incremental difference. See here for specific requirements and details provided by New York State.
ADDITIONAL RESOURCES
- The U.S. Department of Labor’s Wage and Hour Division (the “Department”) is responsible for administering and enforcing the new law’s paid leave requirements. The Department’s WHD posted a temporary rule issuing regulations pursuant to the law that can be found here.
- The U.S. Department of Labor Wage and Hour Division have released a webinar focusing on the FFCRA, which can be accessed here, along with corresponding PowerPoint slides here.
- You can access an expansive FAQ provided by the Department’s WHD to assist employees and employers here.
- A poster for your workplace can be accessed here, which will fulfill employer notice requirements. For an FAQ on these notice requirements, see here. This Field Assistance Bulletin explains the Department’s WHD’s 30-day non-enforcement policy.
- The Department’s WHD provides additional information on common issues employers and employees face when responding to COVID-19 and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act.
Disclaimer:
The information in this article is continuously changing and being updated. This article is for informational purposes only and does not constitute legal or business advice. In no way is Capell Barnett Matalon & Schoenfeld LLP advising that it is appropriate to only follow the information listed here. If your religious corporation or nonprofit organization requires assistance, please contact Jodi Warren, Esq., at Jwarren@cbmslaw.com or Renato Matos, Esq., at Rmatos@cbmslaw.com.
© 2020 Capell Barnett Matalon & Schoenfeld LLP. All rights reserved. Attorney advertising
Reviewing Your Estate Planning During COVID-19
By: Gregory L. Matalon Esq., and Erik M. Olson Esq.,
Over the past few weeks, our firm has received increased inquiries regarding estate planning options and considerations. While the needs of each family and individual differ, many of the questions focus on the basics: If I get sick, who will make health and financial decisions for me? Upon my death, who will handle my affairs, receive my assets, and take care of my young children (and pets)? How should I organize my important documents and where should I keep my documents?
If you are reviewing your estate planning documents, focus on the essentials. If you have not yet created estate planning documents, you may wish to use this bit of “downtime” to think about these issues. Below are some things to consider:
1) Health Care Proxy and Living Will
- A health care proxy allows you to appoint an agent to make health decisions for you if you are unable to do so. Your agent must be over the age of 18, and should be someone that understands and will abide by your wishes and instructions. You may also designate successor agents. The health care proxy should also provide a HIPAA release, so that your agent can receive your medical records and information.
- A living will allows you to state your wishes for medical treatment, so that the doctors, hospital staff, and your health care agent are guided accordingly. Review your living will to determine if your wishes are accurately stated.
2) Durable Power of Attorney
- A durable power of attorney allows you to designate an agent (or agents and/or successor agents) to act on your behalf in financial matters. These actions can include, among other things: real estate, banking, and business transactions, access to digital assets, and authority to handle personal and other tax matters. Review your power of attorney and the authority that you have provided to your agent.
- Your agent must be over the age of 18, and should be someone that you trust to make financial decisions in your best interest.
- When appropriate for tax and elder law planning, a statutory gift rider can be attached to the power of attorney to provide your agent with gifting powers and limitations.
3) Last Will and Testament – Your will is one of the central documents to provide for the distribution of your property.
- In your will, your executor (the person(s) or entity that manages your estate) will be responsible for collecting assets, paying expenses and taxes, and ultimately distributing your remaining assets as provided in your will.
• Choosing your executor is important. An individual executor must be over the age of 18, and not be a convicted felon (other legal requirements may also apply). Your Executor should have the proper balance of management ability and personal insight into your family and your wishes. Your executor will also be responsible for making various tax elections that will affect your beneficiaries.
• It is important to provide adequate discretion and powers for your executor depending on the nature of your assets. For example: If you have a business, does your will allow your executor to continue your business?
- Review your current assets and liabilities and how they are titled.
• Prepare a financial summary.
• Your will only controls assets which are held in your name alone, and without named beneficiaries; jointly held assets and assets with named beneficiaries pass outside the will.
• Review applicable current federal and state estate and income tax laws with your advisors.
- Have you addressed major life changes, such as marriages, divorces, births and deaths?
- Once you have determined who will receive your assets, it is important to decide how each beneficiary will receive his/her inheritance – outright or in a trust. There are various tax, management and asset protection reasons to create a trust. Your will can create one or more trusts that state how the assets will be invested, managed and distributed. Your selection of trustee(s) and successor trustees is important. Trustee discretion and powers are also important, and should be reviewed.
• Common types of trusts created in a Will include:
• Trusts for individuals under a certain age
• Supplemental Needs Trusts
• Credit Shelter/Renunciation/Disclaimer Trusts
• QTIP Trusts
• Generation-Skipping Trust
• Trusts for asset protection/management
• Qualified Subchapter S Trusts (consider if you own an interest in a Subchapter S corporation)
• Pet Trusts
4) You may have also created one or more lifetime trusts for estate tax planning, elder planning or other purposes. Confirm that your trusts still satisfy your goals. When reviewing the trust agreement, focus on (i) the assets titled to the trust, (ii) the appointed and successor Trustees, (iii) the current and ultimate beneficiaries of the trust, and (iv) the Trustees’ authority to manage, invest and distribute the assets.
5) Review all beneficiary designations to confirm they are consistent with your plan. Confirm that the individuals/charities you wish to benefit are properly and clearly described. It is important that certain assets, such as retirement accounts, have designated beneficiaries.
6) Clients often ask where to store their documents. Documents should be kept in a safe place that is accessible to the individuals appointed in your documents. If you have stored documents in your safe deposit box, please make sure that your agent(s) can access the box during your lifetime, and that your nominated executor can access the box after your death. If the documents cannot be accessed, additional steps will be required.
To aid your agents, executors and trustees, you may wish to create folders containing:
- Business, financial and personal statements/documents,
- A password list,
- Names and contact information of your family members and friends, medical professionals, legal and financial advisors, etc.,
- Recent business and individual income tax returns, and
- Funeral, burial, and other instructions.
If you wish to create, discuss or amend your plan, we are available to assist, and can do so online without an office visit. Most importantly, we hope that you are taking steps to stay safe, and we wish you and your family good health.
If you have any questions, please contact our estate planning and elder law attorneys:
Gregory L. Matalon, Esq., Partner, gmatalon@cbmslaw.com
Erik M. Olson, Esq., Associate, eolson@cbmslaw.com
Robert S. Barnett, Esq., Partner, rbarnett@cbmslaw.com
Stuart H. Schoenfeld, Esq., Partner, schoenfeld@cbmslaw.com
Jordan Kanzer, Esq., Associate, jkanzer@cbmslaw.com
Damianos Markou, Esq., Counsel, dmarkou@cbmslaw.com
Monica P. Ruela, Esq., Associate, mruela@cbmslaw.com
ATTORNEY ADVERTISING: This memorandum provides general information on legal issues and developments of interest to our clients and friends. It does not provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters we discuss here. Should you have any questions or wish to discuss any of the issues raised in this memorandum, please call your Capell Barnett Matalon & Schoenfeld LLP contact.