This is the exact situation Mr. Michael Crossman and his wife faced. In this case, The Crossmans contracted to purchase a home from Mr. and Mrs. Peter Yacubovich, the Crossmans chose the home because of its large backyard. “They envisioned extending the deck, adding a pool, planting a garden, building a batting cage for their children, and fencing the yard for their dogs.

The Crossmans obtained a commitment and title insurance policy from Lawyers Title. This policy excepted from coverage “easements according to the plat.” 

Unfortunately for the Crossmans, upon moving in, they discovered that a petroleum pipeline ran across their backyard via a recorded easement that restricted the Crossmans’ use. The Crossmans tried to recover under the title insurance policy, but Lawyers Title received summary judgment based on the title policy exception for easements according to the plat. The Crossmans appealed, and the appellant court held that while a title insurer can list exceptions and exclusions, these exceptions and exclusions must be clear, precise, unambiguous. The title insurer bears the burden of proving that the exceptions and exclusions are clear, precise, and unambiguous. Because the petroleum pipeline easements in this case pre-dated the plat and were not shown in an “unambiguous” way on the plat, the appellant court held that Lawyers Title was not entitled to summary judgment. In order to recover, Lawyers Title will now have to show at the trial level that the easements were clear, precise, and unambiguous; but they cannot solely rely upon the exception in the title insurance policy.

An experienced Kansas or Missouri real estate attorney can help you interpret title insurance policy exceptions and exclusions.

– The State Line Lawyer

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Let me explain by way of illustration. If I decide that I want burnt ends (a Kansas City favorite) for dinner, I can either make them myself or go out. If I decide to make them myself, I would do what everyone faced with this situation would do. I would go to Google and type in “Burnt End Recipes.” I’m sure this would yield me many useful results. After perusing the many links, I would probably find one that sounded good and easy. I would then print it out and head to the store for ingredients. After getting the ingredients, I would come home,  fire up the smoker, follow the recipe, and soon after, I would have my burnt ends. Now if I went to any of the fine BBQ restaurants in Kansas City, I could probably get better burnt ends, a variety of side dishes, and not be faced with the messy cleanup.  Would they be significantly better? I would hope not! Could I not figure out the side dishes I like and just make those? Yes. Is the extra cost worth avoiding the cleanup? Maybe; my wife would say, “Yes!” So why don’t I cook every meal at home? Because, I like the variety the restaurant offers. I like the fact that the menu contains items I’ve never heard of but want to try. Most importantly, I’m only as good as the recipe. The restaurant, on the other hand, has the ability to explore and create new and unique items for me. I could try and do this, but I’m almost certain nothing I make would be edible. And yes, my wife likes the piece of mind of no cleanup.

The same goes for your tax return and your  tax preparer/tax attorney. You can go out and purchase some great products that will help you complete your tax return. TurboTax and TaxCut to name a few. These programs even offer support packages to make sure you get everything right (though you might have to pay a little extra for these services). If you use one of these tax programs to complete your return, you would most likely get pretty close to what your paid tax preparer achieves. And this is why I say the typical tax preparer is probably not worth it. These low-cost tax programs can do the same thing for a quarter of the price.  But with a true tax attorney, you aren’t just paying for the tax preparation. You are paying for the tax attorney’s expertise regarding planning opportunities, for the tax attorney’s knowledge of what is and is not possible, for the piece of mind that you are getting it done right, and for the piece of mind that if the IRS comes calling, your tax attorney will be by your side to help you through it. In short, after the return is complete, a qualified, experienced tax attorney should explain opportunities to reduce your tax bill and be available to answer your, or the IRS’s, questions. This is what you are paying for.

An example that I like to use involves medical expenses. Most employers offer what is called a flexible spending account. It is an account that allows employees to save money pre-tax to pay medical expenses. A lot of employees are scared to put money into these accounts because any money that isn’t used by year’s end is lost. But by failing to put money into these accounts, these individuals may be unnecessarily increasing their tax bill.

Medical expenses are are itemized deduction subject to deductibility limits. Thus, in order to deduct medical expenses, it must be advantageous for the taxpayer to itemize his deductions and the amount of medical expenses must be significant. For instance, let’s assume that we have a married couple with two children. The couple elects to contribute nothing to their flexible spending account and have no above-the-line tax deductions. If the couple’s gross income is $50,000, they may only deduct medical expenses in excess of $3,750 ($50,000 x 7.5%). If the family incurred $4,000 in medical expenses, only $250 is potentially deductible and the remainder is lost forever. This is only half the story. For 2009, the standard deduction for married couples filing jointly is $11,400.  In other words, married couples filing a joint return must have more than $11,400 in itemized deductions (e.g., home mortgage interest, state income tax, medical expenses, etc.) before it is appropriate for them to itemize. (There are a few situations where this might not be true, but these are not relevant to this discussion.)  Because the couple did not contribute to the flexible spending account, they forgo a $3,750 deduction, and potentially the remaining $250 if they did not itemize.

If, on the other hand, the couple had contributed $3,000 to the flexible spending account, the couple would have deducted this amount pre-tax. Thus, their taxable gross income would have only been $47,000. Assuming the family had the same $4,000 in medical expenses, the couple would have paid the first $3,000 from the flexible spending account leaving $1,000 in potentially deductible expenses. Because of the deductibility limits, the entire $1,000 would not be deductible as it does not exceed 7.5% of the couples adjusted gross income. But this $1,000 in non-deductible expenses is significantly less than the $3,750 that was not deductible in the previous scenario. Additionally, the couple does not have to itemize to take advantage of  all of this. All in all, by contributing the $3,000 to the flexible spending account, the couple saved around $350 in taxes.

A qualified and experienced tax attorney could and should walk them through a more proper tax strategy, including the proper amount to contribute to a flexible spending account. This is what you should expect from your tax planning attorney, and this is where the value is created. Obviously, this is just one simple example of the many tax planning opportunities that exist.

Now I’m off to get my burnt ends!

– The State Line Lawyer

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Determination of Tax Basis

Under current law, a recipient of a gift also receives the giver’s basis in the property (i.e., “carryover basis”). The recipient of property through a will or intestacy, on the other hand, gets a step-up in basis (not in 2010; see my early post on the subject) to the value as of the decedent’s date of death. Basis is used to determine the amount of gain or loss an individual recognizes, and is taxed on, when the property is sold. For instance, if your rich grandma gives you property during her life that is worth $12,000 but she paid $1,000 and you sell it, you would have a $11,000 taxable gain. If, on the other hand, you received the property upon grandma’s passing and you sold it, you would have no gain ($12,000 FMV – $12,000 Basis = 0 gain) (Absent legislative change, this is not the case in 2010).

A gift of property valued at less than $13,000 is not taxable and no filing is required. Similarly, when there was a federal estate tax, no estate tax filing is required unless certain exemption amounts are exceed and in 2010, no filing is required as a matter of law regardless of the estate’s size. In these scenarios, how is the IRS to know your actual basis in the property? It cannot. And this fact has led many individuals to abuse the system. Individuals were selling property and claiming a higher basis than they were entitled to. Obama’s budget proposal would require that the basis of the property be reported any time property passes as a gift or pursuant to a death.

Planning for these new reporting requirements, puts an increased emphasis on managing the distribution of property during your life and at death. An experienced Kansas or Missouri estate planning attorney can help you achieve not only the best tax result but also the best result for your family.

Valuation Discounts

Estate planning attorneys have utilized valuation discounts in order to reduce the tax burden on the recipients of gifts and inheritance. These discounts have been most prevalent in family controlled entities, in particular interests in family limited partnerships. These discounts include minority discounts and marketability discounts. Minority discounts are given to recognize the fact that the person does not have the authority to control the entity’s decisions. Marketability discounts recognize the fact that the interests might be hard to sell later.

Taxes due is a function of  the property values and marginal tax rates. Reducing the value of the property reduces taxes due by decreasing the property value and, in some cases, reducing the marginal tax rate. The Obama budget proposal would allow the IRS  to ignore these discounts in valuing family-controlled entities if the ownership interests involved are transferred by bequest or gift to family.

Grantor Retained Annuity Trusts (GRATs)

GRATs generally take the following structure. An individual (the grantor) gives assets to a trust for a very short period of time. In return, the grantor receives a very high annuity payment. The trust names who ever the grantor wants to receive the property at the end of the annuity period (the remainder beneficiaries). Because the annuity payments are so high, the value of the gift to the remainder beneficiaries is effectively zero. If the trust out performs a specific market interest rate, at the end of the annuity period, the remainder beneficiaries receive a windfall. If the trust does not, the property is returned to the grantor in the form of the annuity payments. Thus, it is a win-win, no gift tax and no risk of losing the property.

The Obama administration seeks to establish a minimum trust period of 10 years. Thus, there is a risk that the individual will die before the property is returned in the form of annuity payments making the gift tax value something greater than zero. An experienced estate planning attorney can help you analysis the mortality tables to determine if a GRAT is the right planning tool for your estate plan.

As the laws and regulations relating to estate planning continue to change, it becomes more and more important to consult with an experienced Kansas or Missouri estate planning attorney not only to set up your estate plan, will, and trust but also to update your documents accordingly. Your relationship with your estate planning attorney should not end once the documents are signed.  This relationship is ongoing and should be consistently monitored.

– The State Line Lawyer

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Pursuant to Section 473.398 RSMo, upon the death of a person, who has been a participant of aid, assistance, care, services, or who has had moneys expended on his behalf by a governmental agency, the total amount paid to the decedent or expended upon his behalf shall be a debt due the government from the estate of the decedent. The government may not recover, however, if it is shown, that that the cost of collection will exceed the amount of the claim or that  the collection will adversely affect the need of the surviving spouse or dependents of the decedent to reasonable care and support from the estate. Once the government shows that the decedent received benefits, the burden of proof shifts to the person opposing collection.

In In the Estate of Shirley Marie Smith, the decedent had received Medicaid benefits through MO HealthNet for the five months preceding her death. Upon her death, the MO HealthNet Division filed a claim to recover these benefits, $10,003.66. The decedent’s son, who was also the personal representative of the decedent’s estate, responded with a petition asking for a denial of the division’s claim on the basis that the son was unemployed, lacked the skills and capacity to obtain employment and was living in the decedent’s home. The petition stated that if the son had to sell the house to make the reimbursement, he would become homeless. The son did not testify, file a brief, or offer any other evidence in support of this petition.The court held that because the son did not offer any evidence in support of his claim of dependency the division is entitled to recover the full $10,003.66.

As I pointed out in my previous post, one reason you need an estate plan, even if there is no federal estate tax, is to provide for the care of your dependents. A qualified, experienced estate planning/elder law attorney will help you begin documenting the extent of support and relationship between you and your potential dependents. Additionally, after your passing, this estate planning attorney can help assist your personal representative in proving dependency relationships. While in In the Estate of Shirley Marie Smith the son was represented by legal counsel, I would not characterize it as effective legal counsel. Again building a strong relationship with your estate planning attorney can help ensure that your dependents will have a qualified and effective advocate in the future.

– The State Line Lawyer

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Minimum Community Spouse Resource Allowance (CSRA): $21,912

Maximum Community Spouse Resource Allowance: $109,560

Maximum Monthly Maintenance Needs Allowance: $2,739

Minimum Monthly Maintenance Needs Allowance: $1,821

Community Spouse Excess Shelter Standard: $547.38 (unitl July 2010)

Annual Gift Tax Exclusion: $13,000

Supplemental Security Income (SSI): $674

Medicare Premiums, Deductibles and Copayments:

Long-Term Care Premium Deductibility Limits:

– The State Line Lawyer

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decision

In this case, Clean The Uniform Company St. Louis (“Supplier”) and Magic Touch Cleaning, Inc. (“Customer”) entered into a three-year rental service agreement whereby the Supplier would supply certain cleaning supplies to the Customer. The agreement provided that if the Customer terminated the agreement early, the Supplier would be entitled to certain liquidated damages. The agreement also provided, however, that the Customer could suspend the agreement without penalty ”in the event of interruption of service due to strikes, lockouts, and causes beyond Customer’s or Supplier’s control that affect Customer’s or Supplier’s business.” (emphasis added).

At the time of the agreement, the Customer had a one-year janitorial services contract with the VA hospital in St. Louis, Missouri. This janitorial services contract contained four one-year renewal options. Unfortunately for the Customer, the janitorial services contract was not renewed. the Customer contacted the Supplier and sought to suspend its performance under the agreement in accordance with the “interruption of service” provision. the Supplier, however, sued the Customer to recover past-due charges, liquidated damages for early cancellation, and attorneys’ fees. The trial court ruled in the Supplier’s favor, and the Customer appealed.

The appellate court held that even though the Customer contends that the parties intended the non-renewal of the janitorial services contract to fall within the definition of a cause beyond the parties’ reasonable control, the non-renewal of the janitorial services contract was a “reasonably foreseeable risk at the time of contracting that did not excuse  the Customer’s performance under the [agreement] because [that risk] was not specifically set out as such.” Because the Customer knew that the janitorial services contract might not be renewed, it was “required to expressly list this contingency in the [agreement] to be excused from performance upon non-renewal if it did not intend to assume the risk of non-renewal.” (emphasis added).

This decision has significant ramifications for parties entering into agreements in Missouri. When entering into an agreement in Missouri, parties should consider not only if the agreement captures and accurately reflects their intent but also if the agreement makes any assumptions that should be expressly stated. Additionally, all known facts and circumstances at the time of contracting should be expressly listed in the agreement along with the affect these facts and circumstances will have on the agreement’s enforceability.

When you consider this case and the fact that evidence as to the parties’ intent is generally excluded pursuant to the parol evidence rule, paying an experienced Kansas or Missouri business attorney to review your contract offers you much more than piece of mind, it potentially offers you future savings of thousands of dollars. An experienced business attorney can walk you through the intricacies of contractual drafting and interpretation as well as protect your interest by crafting agreements that capture your specific intent.

– The State Line Lawyer

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Thank you,

– The State Line Lawyer

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An experienced business attorney can help you apply for start-up funds such as these.

– ksmolawyer

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Given the current economic conditions in Kansas City, Missouri, it may not be that uncommon to have had significant fluctuations between the January 1, 2009 valuation and the January 1, 2010 valuation. The time to appeal your property’s valuation is now. An experienced Kansas City real estate attorney can help you with this process.

– ksmolawyer

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– ksmolawyer

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Missouri trial courts follow a two-step procedure when dividing property in a divorce: (1) the court must set apart to each spouse their non-marital property, and (2) the court must divide the marital property and debts in such proportions as the court deems just after considering all relevant factors. The court must consider the following factors:

(1) The economic circumstances of each spouse at the time the division is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children; (2) The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker; (3) The value of the nonmarital property set apart to each spouse; (4) The conduct of the parties during the marriage; and (5) Custodial arrangements for minor children.

Mo. Rev. Stat. section 452.330.1.

The court may weigh these factors as the court deems appropriate. Moreover, these factors are not the only factors the court may consider. Thus, the court has great flexibility in dividing marital property. In fact, the division does not have to be equal, but it must be fair and equitable under the circumstances.

In the recent case, the wife had several significant assets at the time of the marriage, including: (a) $21,000 in cash; (b) $10,000 from a personal injury settlement; and (c) ownership of a bar. The husband, on the other hand, had very little at the time of the marriage. About three years before the divorce, the husband began working in Texas, while the wife remained in Missouri. During this three years, the wife became ill. At the time of divorce, the parties’ situations had completely reversed. The wife had very little property, and the husband now owned a business in Texas, a motorcycle valued at over $35,000, and two trucks. The trial court held that in order to effect an equitable division of the couple’s property and after considering each party’s separate funds at the beginning of the marriage, the wife should receive $17,000 from the husband. The husband appealed this decision.

The reviewing court held that the trial court’s award of $17,000 to the wife was not an abuse of discretion. Moreover, the reviewing court held that the trial court did not have to specify whether this award related to a specific piece of separate, non-marital property or represented a specific piece of marital property the wife was to receive. In fact, even if the husband had shown that the wife’s separate, non-marital property had been expended solely for her own benefit and not to acquirer martial assets or pay marital debts, the reviewing court would only reverse the trial court’s judgment only if that “erroneous characterization materially impacted the overall distribution of marital property.” As the reviewing court stated:

Because Husband has failed to demonstrate that any difference between the net value of the marital property he received and the net value of the marital property awarded to Wife disproportionately favors Wife, he has failed to overcome the presumption that the trial court’s property division was correct. As a result, we cannot say the trial court abused its discretion in awarding Wife a $17,000 money judgment as a portion of that overall property division. Husband’s point is denied, and the judgment is affirmed.

With the broad discretion given to a trial court, it is critical that you prove, at the earliest opportunity, what is an equitable division of marital property. Especially, when you consider that a 50/50 split of all marital property does not necessarily equate to an equitable division of property. An experienced Missouri divorce and family law attorney can help you make this offer of proof.

– ksmolawyer

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– ksmolawyer

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– The State Line Lawyer

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A recent article published by the New York Times highlights some of the concerns caused by the ever-moving target that is the estate tax regime. Here are some of the highlights as well as my commentary on the issue.

As many are aware, the federal estate tax is taking a one-year hiatus in 2010. While many predicted that the U.S. Congress would act to avoid this, it did not. Thus, for one-year, there is no federal estate tax, at least for now. In 2011, however, the federal estate tax comes back, and this time, the federal estate tax reverts back to the smaller $1 million estate tax exemption amount and the higher 55% marginal tax rate. While there are countless jokes about encouraging rich relatives to take advantage of this, this advice, while in jest, my be completely wrong.

First, under the old federal estate tax regime, an heir took the property at its current fair market value (i.e., got a step-up in basis). For instance, let’s say “mom” purchased a house in for $15,000 and under her will it goes to her son. If at the date of her death the house is worth $200,000, son would of had a $200,000 tax-basis in the house. Thus, if he decided to sell it the next day, he would have had no taxable gain on the house ($200,000 – $200,000). In 2010, however, there is no step-up in basis. Instead, son not only inherits the house but also mom’s basis in the house. So, if mom dies in 2010 and son sells the house, son would have to recognize a $185,000 capital gain ($200,000 - $15,000). Even at the current capital gain tax rates, this could be a significant tax. Congress has authorized a $1.3 million capital gain exclusion to curb some of this, but with the exploding real estate values over the last few decades and the similar appreciation of stocks, this $1.3 million exclusion might be quickly exhausted.

And this doesn’t even get into trying to calculate the deceased’s basis. Many individuals have held real estate and stocks for many years, sometimes even decades. How are the heirs suppose to recreate a transaction that may have occurred even before they were born? And who pays the administrative and legal fees of doing this? Additionally, the use of real estate may affect the deceased’s basis. Certain expenses and fees paid in relation to a person’s primary residence increase basis. So for real estate, one would have to go back to each year the property was owned and determine what expenses occurred in that year, what they were for, and how the real estate was being used in that year in order to determine the appropriate tax basis at the date of death.

Another issue is that sound tax planning advice in 2009 may now only work to frustrate a person’s true intent. Many estate planning attorneys advocate maximizing both spouses estate tax exemption. A simple way to do this is to draft a will that passes a portion of a person’s estate as to make it estate tax taxable. The will limits this amount, however, to whatever amount may be passed tax-free under the federal estate tax law. The attorney and the testator intend for this amount to equal the then current estate tax exemption. This provision usually works to pass the taxable portion of the estate to heirs other than the surviving spouse with the remainder of the estate going to the surviving spouse. Now with the nothing being subject to a federal estate tax, the testator’s property would pass in such a way as to exclude the surviving spouse. Thus, the surviving spouse would not be provided for. Short of utilizing a complex disclaimer regime or having the spouse take under the state’s elective share or dowry laws, the spouse may be left with nothing. And this only gets more complicated when there are children of a previous marriage who are unwilling to consent to any proposed division.

Finally, there are rumblings that the U.S. Congress may enact estate tax legislation that would retroactively apply to January 1, 2010. The legality of this is questionable. But if it happens, the estate planning documents you draft today may be obsolete tomorrow. How do you plan for something that may or may not exist, where the rules are undefined, and legal battles are sure to ensue?

Visiting an experienced Kansas or Missouri estate planning attorney is a must. And here are just a few of the thoughts and questions you should consider when talking with your estate planning attorney:

1. Regardless of the tax law, where do I want my property to go?
2. Are there any individuals that will need special care after I’m gone, and should I set up a trust to do this?
3. Who should be the guardian of my minor children? Children with special needs?
4. Who should manage any trusts I establish?
5. Do any of my potential heirs have creditor issues?
6. Does my spouse have sufficient assets to provide for herself after I’m gone?
7. Can I prove my tax-basis in my assets?
8. If the estate tax law changes tomorrow, how will my property pass? (An experienced estate planning attorney who is current on the recent estate law developments should be able to show how different assumptions affect your plan.)

– ksmolawyer

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A school bus driver in Wichita, Kansas was faced with this all too common issue. He wanted to make a left turn, but another car was blocking his path. He graciously waved the other party to proceed. Unfortunately, for him and the other driver, he did not see another car approaching.  The other driver collided with an oncoming car killing its driver. In the subsequent wrongful death lawsuit, the decedent’s family claimed the bus driver (and the school district) were negligent for not checking the road before making the hand gesture. The court of appeals, however, held that the bus driver held no duty to other drivers when making a hand gesture.

– ksmolawyer

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Choose the right credentials.

• Taxpayers should look to what the future requirements will be in determining who to choose this year. The requirements will require competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and certain enrolled agents as well as requiring ongoing continuing professional education for all paid tax return prepares except attorneys, CPAs,  enrolled agents and others who are already subject to continuing education requirements. Thus, taxpayers should choose a preparer from one of these three areas: attorneys, CPAs, and enrolled agents. H&R Block, a Kansas City based company, and Jackson Hewitt have expressed support for these measures, but currently there is no quality control on their services other than what they impose. 

 

• Taxpayers should also be aware that while any individual can preparer a return, only attorneys, CPAs and enrolled agents can represent them in front of the IRS.

 

• Taxpayers should use a reputable tax professional who signs the tax return and provides a copy.

 

• Taxpayers should find out if the return preparer is affiliated with a professional organization that provides its members with continuing education and other resources and holds them to a code of ethics.

 

• Taxpayers should evaluate whether the preparer is going to be around in the next three years (the relevant statute of limitations).

Someone that takes the time to explain your tax liability. Taxpayers should seek out a preparer that not only completes the form but also explains the reasoning behind the calculations and deductions. Especially considering that even though a taxpayer uses a paid tax preparer, the taxpayer remains legally responsible for what is on their tax returns.

Avoid preparers that over-promise. Taxpayers should be wary of tax preparers who claim they can obtain larger refunds than others.

Avoid preparers that charge excessive fees. Taxpayers should avoid tax preparers who base their fees on a percentage of the refund. I would lump into this category, preparers that give taxpayers an instant refund check  in exchange for a fee and the right to receive the taxpayer’s actual refund check from the government. With the speed direct deposit reaches the taxpayers account (sometimes within a week), it seems ridiculous to pay the fees for the instant refund.

The IRS has many free tax resources to help you complete your return, including the IRS Fee File program, which allows virtually everyone to file their taxes for free through the IRS’s website. Of particular note, is the IRS’s special section on the Recovery tax benefits and tax credits.

– The State Line Lawyer

Update: Here is a great article from MissouriFamilies.org explaining how the annual percentage rates on refund anticipation loans can range from 40% to 1,800% and how to choose a tax preparer. In case the embedded link doesn’t work: http://missourifamilies.org/features/financearticles/refundloan.htm.

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Recently, the Missouri Court of Appeals got a chance to further define what is continuous regarding vocational schools. In this case, the father was obligated to make child support payments to his ex-wife, the mother. The term of these child support payments were effectively extended by the child upon his enrollment in a local vo-tech. After completing a 60 week course for a HVAC diploma, the child did not enroll in the school’s next ten week session, which began December 4, 2006. The child did, however, enroll in the ten week session beginning February 12, 2007. Thus, the child was effectively not in school for 10 weeks. The father claimed that this failure to enroll terminated his child support obligations.

The court reasoned that because the vocational school did not adopt a typical semester format with corresponding summer and winter breaks, the court could imply from the legislature’s “obvious intent . . . to treat vocational and college education equally” that the child’s failure to enroll was the equivalent of such a summer or winter break.

– ksmolawyer

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Some notable provisions are:

• The extension of the above-the-line deduction for qualified tuition and related expenses.
• The extension of the above-the-line deduction for certain expenses of elementary and secondary school teachers.
• The extension of 15-year straight-line cost recovery for qualified leasehold, restaurant, and retail improvements.
• The extension of 5-year depreciation for farming business machinery and equipment.
• The extension of tax-free distribution from individual retirement plans for charitable purposes (see my earlier post on the subject).
• The extension of the alternative motor vehicle credit for certain hybrids.

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1. Special Charitable Contributions for Certain IRA Owners;
2. Rules for Clothing and Household Items;
3. Guidelines for Monetary Donations; and
4. Reminders.

Special Charitable Contributions for Certain IRA Owners. IRA owners over the age of 70.5 can transfer up-to $100,000 directly to an eligible charity. This option is available whether or not the taxpayer itemizes his deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible, however. Additionally, not all charities are eligible recipients. Your tax adviser can assist you in determining whether particular transfers and charities meet the necessary requirements.

Rules for Clothing and Household Items. To be deductible, clothing and household items donated to charity must be in good used condition or better. A clothing or household item valued at over $500 does not need to meet this standard, however, if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronic, appliances, and linens.

Guidelines for Monetary Donations. To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank statements, and credit card statements. All bank records should show the name of the charity, the date, and the amount paid or the transaction posting date, as applicable.

For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, and any pledge card showing the name of the charity.

These requirements are in addition to the other requirements relating to charitable donations, including the requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation of at least $250.

Reminders. The IRS published a few additional reminders:

• Contributions are deductible in the year made (or the year in which the credit card charge occurs).
• Verify that the organization is qualified.
• Individuals may only claim a charitable deduction if they itemize their deductions. Your tax adviser can help you determine if you should itemize your deductions or take the standard deduction.
• Where possible, get a receipt from the charity showing the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If the property is left at an unattended drop site or you do not receive a receipt, keep a detailed recorded that includes the items listed above.
• The deduction for a motor vehicle, boat, or airplane donated to charity is usually limited to the gross proceeds from its sale.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

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In this case, husband and wife divorced in October of 2003. The judgment included a provision requiring the husband to pay his former wife periodic, modifiable maintenance of $500 per month. This maintenance arrangement was later amended by the parties. As part of this stipulation, the parties stated that “The maintenance obligation herein should terminate upon [the wife's] death.” The lower court’s modified judgment setting forth the stipulation stated, “Said maintenance obligation shall only terminate upon the death of [the wife] or September 30, 2011, which occurs first.” (emphasis added).

The wife remarried thereafter, and husband filed a motion to terminate his maintenance obligation. The Court noted that Section 452.370.3 provides in relevant part, “Unless otherwise agreed in writing or expressly provided in the judgment, the obligation to pay future statutory maintenance is terminated upon the death or either party or the remarriage of the party receiving maintenance.” Based on its interpretation and judicial precedent, the Court held, “[I]n order to rebut the statutory presumption that maintenance terminates upon the receiving spouse’s remarriage, a dissolution decree must expressly refer to the receiving spouse’s possible future remarriage, and must expressly provide that maintenance payments shall continue beyond that contingency.”

Thus, at least in Missouri, parties to a divorce, working with their attorneys, must carefully draft separation and maintenance agreements to capture the parties’ wishes. In particular, if the parties wish that maintenance payments will continue indefinitely or for sometime after the recipient’s remarriage, the parties must state this fact by expressly referencing remarriage and describing its consequences.

– ksmolawyer

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-ksmolawyer

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          In the case, Harriet Eggeson petitioned the court to admit the last will and testament of John F. Leavey. Unfortunately, the will was not signed by two witnesses, only by one. The witness line left blank was for no one other than the attorney who drafted the will. Eggeson argued that the attorney’s initials, which were on every page of the document, should suffice, but the lower court held, and the Court of Appeals agreed, that “Kansas statutes relating to the execution of wills must be strictly construed even though, in some rare situations, the intent of a testator may be frustrated.” “A witness’s initials in the bottom corner of every page of a document does not meet the attestation and subscription requirement . . .  to be a valid will [under Kansas law].”

          With the advent of “do-it-yourself wills” in a box and companies such as LegalZoom, this opinion should resonate with even the most casual purchaser of legal services. This case makes clear that strict compliance is the only way a last will and testament will be admitted for probate in Kansas. As the Court of Appeals stated (quoting two previous cases):

While it is unfortunate in this case that the testator’s niece must suffer from the lack of legal ability and understanding of a scrivener who sought to perform a legal act of great importance and solemnity, that of drafting a will and purporting to supervise the execution thereof, it is better that she be denied her would-be beneficial interests in the will than to open the door and set a pattern, by those not versed in the law of wills and in utter disregard to the plain provisions of the statue, for the drafting of future wills so as to permit fraud, undue influence, overreaching and bad faith which might in some other instance be practiced upon the weak, aged or infirm testators in the disposition of their worldly goods.

It is undoubtedly true that from time to time an honest attempt to execute a last will and testament is defeated by failure to observe some one or more of the statutory requirements. It is better this should happen under a proper construction of the statute, than that the individual case should be permitted to weaken those provisions calculated to protect testators generally from fraudulent alterations of their wills.

(emphasis added).

          As an aside, I think many readers will be surprised to read what LegalZoom includes in its disclaimer:

Although LegalZoom takes every reasonable effort to ensure that the information on our website and documents are up-to-date and legally sufficient, the legal information on this site is not legal advice and is not guaranteed to be correct, complete or up-to-date. Because the law changes rapidly, is different from jurisdiction to jurisdiction, and is also subject to varying interpretations by different courts and certain government and administrative bodies, LegalZoom cannot guarantee that all the information on the site is completely current. The law is a personal matter, and no general information or legal tool like the kind LegalZoom provides can fit every circumstance.

(emphasis added). So what exactly are its customers paying for? It cannot be legal advice because that would be the unauthorized practice of law.

          All in all, individuals contemplating executing a last will and testament should consult with an experienced Kansas estate planning attorney. Failure to do so, may lead to a very unfortunate result. For further proof do-it-yourself does not always work, check out this example where after trying to kill his parents a man still inherited $500,000 despite his parents’ attempts to disinherit him.

– ksmolawyer

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          For the first time ever, Missouri companies must file a renewal registration for fictitious names. For names registered before August 29, 2004, the person or entity must file a renewal registration by August 28, 2009. If the person or entity fails to file this renewal, the registration will expire and the person or entity will not be able to legally conduct business in Missouri using the fictitious name. Original registrations filed after August 29, 2004 must be renewed within five years of the filing date. Renewal registration may be done online and costs seven dollars.

          Registering a fictitious name, however, does not give the person or entity exclusive rights to the name.

– ksmolawyer

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          Living right on the border of Kansas and Missouri, Kansas City residents should pay particular attention to this holding. It may be advantageous to file now or to wait, if a move is contemplated, depending on the debtor’s individual situation. Consulting with an experienced Kansas City bankruptcy attorney prior to filing might save the debtor unneeded stress and, more importantly, property.

– ksmolawyer

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          Property owners who feel that their property has been wrongly classified, valued, or both may appeal the county tax appraiser’s determinations. Property owners must start this appeal within 30 days of the date the notice was mailed. For Johnson County, Kansas residents, this deadline date is March 30, 2009. A Kansas real estate attorney can assist you in determining whether an appeal is advantageous.

– ksmolawyer

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