So You’re Going on a Trip…

As Dr. Seuss put it, “From there to here, and here to there, funny things are everywhere.” Or maybe not so funny. So here are a few legal things to consider before you head into the Wild Blue Yonder. Read more

The Lesson of the Three Girls.

What do these three girls have in common?

It was the summer of 1975, and the first girl, 21 years old, was on her own.

She had graduated high school, found a job, and moved out of her parents’ house to live with two friends in an apartment. Life was good.

Her biggest problem at the moment was this dress she had bought. She was going to have to diet if she wanted to wear it.

Which she started to do, drastically. Read more

Introducing: the Trust Protector.

Trust Protectors can clean up substance abuse situations. Changes in families. Unexpected health care issues. Anything else which was impossible to anticipate when the words hit the paper and the trust was created.

You can provide for Trust Protectors in virtually any kind of trust: revocable trusts, living trusts, irrevocable trusts, insurance trusts, credit shelter trusts, marital trusts, QTIP trusts, elder care trusts, special needs trusts, et al.

And having the Trust Protector solution has nothing whatsoever to do with estate taxes. Read more

ABLE Is Ready; Are you Willing?

Closeup of hands on clock face

Know a “disabled beneficiary?” A new Federal program has been adopted in Georgia for their benefit. It’s like a 529 Plan for disabled individuals.
And we call this to your attention now because contributions to such a plan are limited to $14,000 a year . . . and the end of this year is fast approaching.

The new program –ABLE stands for “Achieving a Better Life Experience” – is designed to help individuals and families save money that can be used to support individuals with disabilities. Read more

Corporate Titles Carry Risks.

Businessman contestCorporate titles of your key people can really hurt you or help you. Two real cases show why.

The first case: Brady and two friends were officers and employees of a company which flew small planes to ferry people from little city airports to a major airport.

One day, they learned that an opportunity was coming up: a chance to do the same thing to a new city. They figured this was a great chance to do their own thing. So they quit the company they’d been working for, formed a new company for themselves, and bought the new route.

The only problem: the new route was the kind of business their old employer did, and would have done.

The second case: Bellomo was hired to be “Director of Wireless Sales” for a company which did wireless networks. Two years later, while still employed by that company, he and a partner secretly formed a new company to do the same thing. Read more

George Speaks at Big Canoe

George will be speaking at Squires and Stags on Friday, September 9, 2016 at the Clubhouse at Lake Sconti (in Big Canoe). Please see the article below for details.

http://www.bigcanoenews.com/news/news-col1/big-canoe/7932-attorney-george-fox-to-speak-at-squires-stags-sept-9-meeting?highlight=WyJnZW9yZ2UiXQ

Marriage, Assets, and Chocolate Milk.

Hear ye, all marrieds, to-be-marrieds, those facing first marriages, subsequent marriages, adult children with remarried parents, et al.

Separating “marital assets” into “separate assets” can be like trying to undo chocolate milk. Pour chocolate syrup into milk to get chocolate milk; that’s easy. But afterward, try to separate them back to syrup and milk? Good luck.

The happy couple should never, ever change the names on assets (investments, real estate, etc.) naively, casually, or offhandedly. Thoughtfully, yes; deliberately, yes.  But casually, no.

Here’s the deal.  Sometimes marriages go sour.  When that happens, the law knows there’s (a) separate property and (b) marital property. (Obviously, we’re not talking about Wii consoles and Bundt pans.)

The difference: separate property stays with its owner. Separate property can be controlled when a marriage ends at death. Separate property can stay separate in a divorce.

But marital property is treated differently. It gets divided up “equitably.” This means someone decides the who-gets-what percentage each owner gets.  In an unhappy marriage, it can take a judge and jury to decide.  Same for the dissolution of other relationships.

So the first threshold: is the disputed property separate or marital? If the latter, how is it to be divided up fairly, including whatever growth is in the assets, improvements, etc. etc. etc.

It’s not an easy question to answer. Consider a seemingly-harmless home ownership (and this is a real case). Husband owned the house. Got married.  Wife moved in. Five years later, the husband signed a deed making him and his wife “tenants in common” but with a “right of survivorship.”  (That combination is a little bizarre, but it’s basically ok.)

A few years later, the marriage soured. And the house, which had been the husband’s separate property despite their both living there, became marital property by his signing that deed.

It gets worse. What’s “separate vs. marital” is not always that clear-cut. How about the husband and wife who met on a dating website, and got married. They did a nice pre-marriage job dividing up who would keep what.  And each had a house which they were going to keep, even though they would live together in his.

The marriage ended after 19 months.

The wife then claimed that the husband’s house should be treated as marital property, and not as his separate property, as previously agreed upon.

Why? After moving in, she had spent over $15,000 fixing up his house.  She used her own money to make payments on the husband’s mortgage. At one point, he deeded the house into her name and then they undid that, when he heard that doing so wouldn’t help him protect the house from his creditors.

Long story short: the trial court and the Supreme Court both held that the house stayed his separate property, and was not marital property.

If you’re looking for consistency in deciding between marital property and separate property, it’s a case-by-case issue.  So we recommend: confront the issue. Discuss the issue.  Get legal counsel.

Especially if there are children from an earlier marriage. What a parent owns and which should go to his/her children after remarriage and subsequent death could easily become marital property . . . gutting what the children will get.

Choices? If you get an inheritance, keep it separate. That hurts nothing.  If you die, your Will can deal with it. If you’re incapacitated, your financial power of attorney can preserve it.

If you’re getting married, think through – and get advice on — what things should be titled in whose name. You can light a unity candle. You can plant a unity tree.  But don’t heave your combined assets into a financial unity dumpster without getting counsel on the consequences.

You can even consider a hybrid: a limited liability company.  In a particular structure, it enables you to keep things combined for some purposes, and separate for others.

But that’s topic for a different day. Go get some chocolate milk.

Marriage, Assets, and Chocolate Milk.

Hear ye, all marrieds, to-be-marrieds, those facing first marriages, subsequent marriages, adult children with remarried parents, et al.

Separating “marital assets” into “separate assets” can be like trying to undo chocolate milk. Pour chocolate syrup into milk to get chocolate milk; that’s easy. But afterward, try to separate them back to syrup and milk? Good luck.

The happy couple should never, ever change the names on assets (investments, real estate, etc.) naively, casually, or offhandedly. Thoughtfully, yes; deliberately, yes.  But casually, no.

Here’s the deal.  Sometimes marriages go sour.  When that happens, the law knows there’s (a) separate property and (b) marital property. (Obviously, we’re not talking about Wii consoles and Bundt pans.)

The difference: separate property stays with its owner. Separate property can be controlled when a marriage ends at death. Separate property can stay separate in a divorce. Read more

Uncle Sam Wants You to Have a Simple Will.

You don’t pay the max income tax each April 15th. So why pay unnecessary taxes to IRS when you’re dead?
That’s effectively what happens with: “simple” wills, revocable or living trusts, and computer-generated legal papers or copied forms, which omit the tax tools available for your particular assets. And that’s why IRS loves simple estate planning. Or none at all.

What’s the price of “I don’t care”?

Try these examples from people who should have known better:

  • The lawyers wrote in The Wall Street Journal that they just sent a $1.3 million check to the U.S. Treasury for a parent’s estate. They didn’t like it one bit and blamed the government. Only a passing nod of blame went to the parent, who had refused to do any estate tax planning at all.
  • The retired CPA never put the most basic tax paperwork in place while her husband was alive. She didn’t do anything when he became ill. The CPA still didn’t do anything when her husband died. After she passed away, too, their children wrote a five-figure check for estate taxes.
  • The couple with everything in IRAs filled in “form” beneficiary designations. When they died, the amount which could have been tax-sheltered was fully taxed. (Worse, their heirs could have cured that tax problem in the nine months after death, but their “financial planners” never told them how.)

Is a simple Will ever worth it?
Maybe, if your assets are below $5.45 million. And strategically, that’s for you if you’re single, or for each of you if married.

 “This can’t happen to me; I’ve got a Living Trust.”
Forget the articles, “free” seminars, and ads: no form Living Trust automatically contains tax-saving, probate-avoiding, and asset-moving benefits tailored to what you have.
At best, you have a starting point; at worst, a placebo.
Reality: Living Trusts don’t eliminate needing a Will unless every asset is titled in the trust. A simple “pour-over” Will can clean up what’s left out of a trust, but it is a Will.
Reality: A Living Trust doesn’t affect any tax — estate, gift or income — unless the Living Trust has the same tax-saving devices you’d put in a Will.
Reality: A Living Trust doesn’t eliminate filing an Estate Tax Return. The same appraisals IRS requires are needed. And a final Income Tax Return still must be filed.

“Forget it. Everything’s in joint accounts with my kids.”
You don’t want to be the child who “inherits” a parent’s joint account to divide among your siblings. You could get tax problems of your very own:

  • The “$14,000 per person” gift tax rules apply to what Mom left you to give to your brothers and sisters. When you start giving more than this amount, you’re using up your own estate tax credit.
  • If you’re dividing up stock that’s gone up since the date of death, sister and brother get your basis, not the stepped-up one. You also could get your own capital gain. It’s not a nice day.

The quick answers.

List the assets by whose names they’re in.
Then find out the latest tools and strategies which can be used with those assets.
Remember: sophisticated assets require more than simple answers.
Want help? That’s why we’re here.

George practices in Sandy Springs and Big Canoe, and is also Adjunct Professor in Emory Law School’s Center for Transactional Law. Questions are welcome; reach him at Fox@GaLaw.com or on Facebook. He also cautions that what’s above is not legal advice, and you should seek professional advice before doing or not doing something based on this material.

A Joint Will Is Not A Bargain BOGO

Sales, discount, savings, coupons, percentage signs and similar.

Two for the price of one is irresistible. The proverbial “Buy One, Get One Free” (compressed these days into the acronym “BOGO”) is a pretty good deal: buy the 2-liter bottle, get a second one at no cost.

Some people figure that idea applies to legal documents, too: “If I don’t have to get two wills, but can get a Joint Will which we share, well, that’s a pretty good deal, right?” Wrong. Read more