How can seniors get quality long-term care?

posted by Michael Gray, CPA @ 8:11 AM
August 26, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Friday, August 28, is with attorney Janis A. Carney of Carney Elder Law. Our interview subject is “The challenge of getting quality care for seniors.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What are estate planning concerns for seniors?

posted by Michael Gray, CPA @ 8:34 AM
August 19, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Friday, August 21, is with attorney Janis A. Carney of Carney Elder Law. Our interview subject is “Senior estate planning.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

Can collaboration make divorce easier?

posted by Michael Gray, CPA @ 8:21 AM
August 4, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Fridays, August 7 and 14, is with Nancy Ross of Bauer Shepherd & Ross & Associates. Our interview subject is “How a collaborative approach can make divorce a less painful process.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What are different ways to invest in real estate?

posted by Michael Gray, CPA @ 8:40 AM
July 22, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Fridays, July 21 and 31, is with Lori Greymont, president of Summit Assets Group. Our interview subject is “Real estate investment alternatives.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

Section 83(b) election simplified

posted by Michael Gray, CPA @ 9:27 AM
July 21, 2015

The IRS has issued proposed regulations that can be relied upon by taxpayers to eliminate the requirement that a copy of a Section 83(b) election must be attached to a taxpayer’s income tax return in order for it to be effective, applying for transfers on or after January 1, 2015. The IRS eliminated the requirement because tax return preparation software doesn’t consistently allow taxpayers to submit the election with electronically filed income tax returns.

The general rule when unvested property is received as compensation for services is taxable income is measured at the time the property becomes vested.

For example, XYZ Co. grants a nonqualified stock option to Jane Employee. Jane is granted the right to exercise the option before it is vested. (Vesting means Jane has all rights to the stock, including the right to sell it.) Jane exercises the option on June 1, 20X1 and the stock isn’t vested on that date.. The fair market value on that date is $1 per share, and the option price is also $1 per share. No income is taxable for 20X1. The stock vests on June 1, 20X2, when the fair market value is $11 per share. Jane has taxable wages income for 20X2 of $10 per share. The holding period for the stock starts on the vesting date.

Jane could have avoided having the increase in value after exercise taxed as wages by making a Section 83(b) election. When you make a Section 83(b) election, you are electing to disregard restrictions such as vesting at the date the property is received, which is the date of exercise for a nonqualified stock option. The election must be made within 30 days after the property is received, and it is irrevocable without the consent of the IRS once it is made. If Jane made a Section 83(b) election in the above example, there would be no taxable income when the option was exercised in 20X1 because the fair market value was the same as the option price. Any future appreciation for the stock would be taxed as a capital gain. The holding period for the stock would start on the date of exercise.

In the past, there were three requirements to make a valid election. (1) A written election must be filed at the IRS service center where tax returns are filed for the taxpayer within 30 days after the date the property is transferred; (2) a copy of the election must be given to the employer or entity for which services are performed; and (3) a copy of the election must be attached to the taxpayer’s income tax return for the year of the election.

Under the new proposed regulations, the last requirement has been eliminated.

Should a bypass trust be modified?

posted by Michael Gray, CPA @ 10:09 AM
July 17, 2015

With recent changes in the Federal estate tax laws, including a current exemption amount of $5,430,000 and portability of the unused exemption of the most recently deceased spouse, many families have bypass trusts that aren’t tax efficient.

A big concern is the tax basis (cost for computing gain or loss for income tax reporting) is adjusted to the date of death value for inherited property. If property is in a bypass trust and not included in the taxable estate of the surviving spouse, the tax basis for that property won’t be adjusted at the death of the surviving spouse.

Some families have decided to simply terminate their bypass trusts. When you do this, the remainder beneficiaries of the bypass trust (usually the children or grandchildren of the couple) lose the assurance that they will receive their inheritance. The surviving spouse could remarry or otherwise leave the assets to someone else. In addition, assets held in a bypass trust usually enjoy creditor protection.

An alternative is to modify the bypass trust to include a general power of appointment in favor of the creditors of the surviving spouse. The property would then be included in the taxable estate of the surviving spouse. The inheritance of the remainder beneficiaries can be unchanged. If the surviving spouse has sufficient assets to pay his or her liabilities, there will actually be no effect on the ultimate distribution of the assets of the bypass trust.

The general power should only be exercisable at the death of the surviving spouse (usually by an exercise in the will or trust.)

The modification can only be made by agreement of the current beneficiaries, including remainder beneficiaries, of the trust with court approval. If the family members aren’t getting along, it probably won’t work. The family members should each have their own legal counsel.

What if Congress later changes the tax laws to reduce the federal estate tax exemption?

What if the property in the bypass trust dramatically increases in value?

What if some or all the property in the bypass trust decreases in value? (A formula can be created in the trust to deal with this issue.)

What if the surviving spouse receives an inheritance, wins the lottery, or otherwise acquires an estate exceeding the estate tax exemption?

What about the generation skipping tax?

This may not be as simple a decision as it first appears. It should only be made with good tax and legal counsel.

Settling legal disputes out of court

posted by Michael Gray, CPA @ 8:28 AM
July 8, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Fridays, July 10 and 17, is with attorney Jeffrey Hare, APC. Our interview subject is “Settling legal disputes out of court.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What are your rights as a beneficiary of an estate or trust?

posted by Michael Gray, CPA @ 7:36 AM
July 1, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Friday, July 3, is with attorney Michael Desmarais. Our interview subject is “Your rights as a beneficiary of an estate or trust.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What is different about estate planning for a second marriage?

posted by Michael Gray, CPA @ 7:57 AM
June 24, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Friday, June 26, is with attorney Michael Desmarais. Our interview subject is “Estate planning for a second marriage.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.

What health care developments should small business owners know?

posted by Michael Gray, CPA @ 10:42 AM
June 9, 2015

This week’s interview on Financial Insider Weekly to be broadcast in San Jose and Campbell on Fridays, June 12 and 19, is with Don Pollard, CLU, ChFC of Advanced Professionals. Our interview subject is “Health care plans for small business update.” The interview will be broadcast at 9:30 p.m. Pacific Time on CreaTV, Comcast Channel 15 in San Jose and Campbell, and will be broadcast as streaming video at the same time at www.creatvsj.org. You can find broadcast times for other San Francisco Bay Area cities and past episodes at www.financialinsiderweekly.com.