In The Past 24 Hours…

In the past 24 hours I have been told that a friend was diagnosed with cancer that requires at least 8 weeks of chemotherapy and that a client/friend has a heart problem requiring immediate medical attention. Some who believe that attorneys are only looking out for the almighty dollar may think that I immediately went into the sales pitch about “getting your affairs in order” but nothing could be further from the truth. The first thing we did was offer emotional and physical support which was followed up with a hand-written personal note letting them know we are thinking about them and offered to crochet a chemo cap if they wanted one. When our law firm hears that a friend or client has health issues, our priority is to be there for them in ANY way they need us to be.

What sets us apart from other law firms is that the client truly does come first. When shopping for a lawyer for your estate planning, trust, probate or business needs, be sure to ask, “what would this attorney do if you told them you were just diagnosed with stage 4 cancer.”

Our consultations are always free, and we always offer a welcoming and comforting environment.

MEDI-CAL RECOVERY IS SEVERELY LIMITED BY SB-833 EFFECTIVE JANUARY 1, 2017

A very large concern for many people in California is the ability of Medi-Cal to lien and/or collect their assets. Currently, there are very complicated and expensive estate planning techniques that can prevent Medi-Cal from recovering estate assets. However, with California’s recent passage of SB-833, Medi-Cal’s ability to pursue the estate of a deceased Medi-Cal recipient in order to recover costs of treatment will be severely limited for individuals that pass away on or after January 1, 2017.

Under the new law, recovery will only be permitted against the “probate estate.” Therefore, as of January 1, 2017, Medi-Cal can no longer recover from assets held in a revocable trust or from bank accounts that have a Transfer on Death designation.  These types of assets are not considered part of the probate estate in California. This is a major change in the law and a huge benefit for individuals with properly funded revocable trusts.

Looking into the future, we anticipate issues concerning property that was originally in a revocable trust but removed from the trust for purposes of refinancing the mortgage. In this common scenario, estate planning attorneys commonly file what is known as a Heggstad petition with the court, which basically asks the court to order that the property be transferred back into the trust.  However, with the new law, Medi-Cal is likely to vigorously argue that because the property was not in the trust at the time of death, it should be considered part of the probate estate and therefore subject to recovery. Rather than risk Medi-Cal recovery on your largest asset, if you have a revocable trust and have recently refinanced your mortgage, verify that your home is titled in your revocable trust.

With the passage of SB-833, now is the time to implement a comprehensive estate plan, including a revocable trust, so that you can protect your legacy for your loved ones and prevent Medi-Cal from taking your assets.

If you would like more information on how to protect your legacy, please submit your information below.

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Doctors’ Discussions with Patients About Their End-Of-Life Health Care Wishes Are Now Paid for by Medicare

As of January 1, 2016, Medicare will pay doctors in half-hour increments if they have advance care planning conversations with their patients. However, physicians are not required to raise this topic with a patient. The discussions are completely voluntary. If a patient is not comfortable having these conversations with their doctor, Medicare also covers the costs of a nurse practitioner or physician assistant to have these conversations with patients.

Advanced Care Planning includes discussions about what the patient’s goals are for their care, whether they have existing Advanced Health Care Directives or Health Care Powers of Attorney, and the person the patient chooses as their agent to make health care decisions if the patient should become incapacitated.

Health Care goals can range from a patient’s desire to prolong their life as much as possible in every medical situation or their wish to be kept as comfortable as possible even if that shortens their life. There are so many variations and options available that a discussion with a medical professional could prove invaluable to the patient.

By now, most of you are wondering whether there is a cost to the patient for these services. You will be happy to know that if the patient has this discussion during their Medicare Annual Wellness Visit, there is no co-pay.

This program not only benefits the patient, but when patients follow through and execute advanced health care directives, the caregiver/agent for medical decisions experience less emotional stress. If you would like more information on advanced health care directives, please consult with an experienced estate planning attorney.

THREE NEW LAWS FOR CALIFORNIA BUSINESSES IN 2016

With every new year, there comes changes in the law, many of which affect California businesses and their owners. This year, there are three laws that are going to heavily impact companies in California.

Minimum Wage Increase

As of January 1, 2016, the minimum wage in California increased to $10 per hour, which is the highest state-wide minimum wage in America. There are some employees who are exempt from the minimum wage law, such as outside salespersons and individuals who are the parent, spouse, or child of the employer. There are also exceptions for employees who are mentally and/or physically disabled.

In some cities such as San Francisco, the minimum wage is scheduled to increase to $13.50 per hour on July 1, 2016. In Los Angeles, the minimum wage will increase to $10.50 per hour in July 2016 and eventually increase to $15 per hour in 2020. A person may not agree to accept less than the California minimum wage.

Employee Protected Time-Off

As of January 1, 2016, SB 579 expanded the ability of employees of business of 25 or one employees to take protected time off from work to find a school or licensed child care provider and to enroll or re-enroll a child and time off to address school emergencies.

Additionally, pursuant to SB 579, employees may use up to one half of their paid time off or sick leave for the care of a parent, child, spouse, domestic partner, parent-in-law, grandchild, grandparent, or sibling of the employee.

California Fair Pay Act

SB 358, also known as the California Fair Pay Act, revises and expands the prohibition provided for in Labor Code 1197.50. Prior to January 1, 2016, an employee had to prove that other workers “within the same establishment” were being paid an unequal amount for the same work. Under the new law, employees can compare wages of employees that work at different locations of the same employer that perform “substantially similar” work.

Additionally, employers cannot prohibit employees from discussing or disclosing their wages to other employees.

If you would like to know more about the new laws affecting California businesses, please contact an experienced business law attorney.

What’s the latest on health care reform?

Image courtesy of Stuart Miles / freedigitalphotos.net

by Penny Fox, CPA

Taxes and government spending are on the agenda in Washington this year, and a major component of both taxes and spending are the changes mandated by the 2010 health care reform law. This law, known as the Affordable Care Act, will have far-reaching effects as its provisions are gradually implemented.

Here’s a quick update reviewing provisions that have already gone into effect and those that, absent any changes made in the coming months, will go into effect in future years.

The following provisions took effect prior to 2013:

• A 10% tax is assessed on indoor tanning services.
• Small businesses with fewer than 25 full-time employees may qualify for a tax credit for the cost of purchasing health insurance for their employees.
• Children can remain on their parents’ insurance policies up to age 26. Private lending for student loans is replaced with loans directly from the federal government, cutting loan fees.
• A 50% discount on brand-name drugs for those with Medicare drug coverage helps to offset costs in the “donut hole.”
• Over-the-counter medications can no longer be paid for with funds in health savings accounts (HSAs), flexible spending accounts (FSAs), and health reimbursement accounts (HRAs).
• The additional tax on nonqualified distributions from health savings accounts (HSAs) increases from 10% to 20%.

The provisions that became effective in 2013 include the following:

FSA limits
• The amount that can be contributed to a health flexible spending account (FSA) is limited to $2,500 per year, indexed annually for inflation.
Medical expense deduction
• The 7.5% income threshold for deducting unreimbursed medical expenses increases to 10% for those under age 65. Those 65 and older may continue to take an itemized deduction for medical expenses exceeding 7.5% of adjusted gross income through the year 2016.
Executive pay limit
• The compensation deduction for certain health insurance companies is limited to $500,000 per year for high-level executives.
Medicare tax increase
• The payroll Medicare tax will increase from 1.45% of wages to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. The income threshold levels are not indexed for inflation.
• A new 3.8% Medicare tax will be imposed on unearned income for single taxpayers with income over $200,000 and married couples with income over $250,000. Examples of unearned income: interest, dividends, royalties, rental income.
Medical device tax
• A 2.3% excise tax is imposed on the sale of certain medical devices such as pacemakers and hip implants.

Provisions scheduled to take effect in years after 2013 include the following:

Coverage required starting in 2014
• Individuals who are not covered by Medicare, Medicaid, or other government health insurance are generally required to maintain health insurance coverage or pay a penalty. Penalties are calculated using a percentage of the taxpayer’s income or a flat dollar amount. Subsidies and tax credits are available to help lower-income taxpayers pay for coverage.
• Health insurance exchanges are established by states to enable people to comparison shop for coverage.
• Large employers generally must provide coverage for employees or face penalties by 2015.
• Tax credits increase from 35% to a maximum 50% of premiums paid by qualifying small businesses that provide coverage for their workers. The credit available to nonprofit employers increases from 25% to 35%.
Health industry fee in 2014
• An annual fee is assessed on the health insurance industry, starting at $8 billion in 2014 and increasing over the following years.
Tax on “Cadillac plans” in 2018
• Insurance companies will be assessed a 40% excise tax on health insurance plans with annual premiums exceeding $10,200 for individual coverage and $27,500 for family coverage. An increase in the threshold amount is allowed for retired persons who are age 55 or older (an additional $1,650 for single coverage and $3,450 for family coverage). These increased thresholds also apply for plans that cover those engaged in high-risk occupations.
Certain provisions in the original health reform legislation have already been changed or repealed. For example, the law originally required Form 1099 reporting for payments over $600 made to corporations. That requirement has been repealed, and reporting is again generally required only for payments over $600 made to unincorporated businesses.

Congress may amend or repeal provisions in the health care reform law, either before their scheduled effective date or retroactively. Or the law may survive largely intact. Clearly, the massive law will affect every taxpayer. For guidance in your individual and business tax planning under the often-complicated health reform legislation, contact Penny Fox, CPA.

DON’T BE FOOLED BY THE PROPOSED CALIFORNIA HOMES AND JOBS ACT OF 2013 (SB-391)

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The California State Legislature is getting ready to greatly increase the cost of filing/recording any real estate document with the county recorder’s office. Senate Bill 391, ironically called the California Homes and Jobs Act of 2013, proposes to add a $75 tax onto the cost of any real estate filing with your local county recorder’s office including deeds, refinance documents, trust transfer deeds, liens, etc.  Currently, it costs $12 to record a two page Trust Transfer Deed in Orange County. If SB-391 is passed, it would cost $87 to record this same document, which is more than a 700% increase. You can read the full text of SB-391 here: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140SB391.

As an estate planning attorney, I do not agree with this proposed bill because it only increases the cost associated with implementing a revocable trust. The California Association of Realtors also opposes this bill because it unfairly burdens homeowners. Additionally, the legislature is attempting to trick California taxpayers by calling this bill the Homes and Jobs Act thereby misleading people into believing this act will improve both homes and jobs in our state.

How do we ensure SB-391 does not pass? Using the link below, contact your elected representative and let them know what you think.

www.legislature.ca.gov/legislators_and_districts/legislators/your_legislator.html

TOP 6 REASONS AN ESTATE PLAN IS SO IMPORTANT FOR FAMILIES WITH CHILDREN

1. Naming a Permanent Guardian for your Children. With an estate plan, parents can nominate their choice of family member(s) and/or friend(s) to act as permanent guardian(s) to care for their children. If there is no estate plan in place, a court will be the one appointing a person of its choosing to act as your child’s guardian.
2. Naming a Temporary Guardian for your Children. An estate plan lets parents nominate a temporary guardian to care for their children should the person they selected as permanent guardian not be immediately available to act as guardian. This is especially useful when the permanent guardian is not a resident of the parents’ home state.
3. Parental Guidance Continues. An estate plan allows parents to provide guidance to the guardians of their minor children on how they would like their children to be raised. For example, some parents want their children raised with an emphasis on religion or on extracurricular activities. Parents are free to provide all types of guidance in their estate plan to direct how they want their children raised after they have passed away.
4. Power of Attorney. With an estate plan, parents can select a person or persons to manage their affairs should they become incapacitated. For example, if both parents are in a car accident causing them both to be in a coma, their selected power of attorney can step in and pay their mortgage/bills and handle other important matters so that the children are continued to be taken care of while the parents are incapacitated.
5. Appoint Trustee of Minor’s Estate. Parents can nominate a trusted individual or financial company to handle all money and property that becomes part of the minor children’s estate. It is recommended that this person not be the same as the guardian of the children because there is an inherent conflict of interest when that happens. Parents can also name a trustee to hold the parents’ assets for the benefit of the children.
6. Specify How Money Should be Utilized. With an estate plan, parents have control over how the funds are to be used while the children are minors and how they will be disbursed once the child becomes 18 or older. Parents can even require that funds not be distributed to their children until certain ages or at certain milestones in their life (i.e. college degree, full-time job, etc).

There are many more key reasons why families with children should have an estate plan in place as soon as possible. A trusted estate planning attorney can explain the advantages of comprehensive estate planning.

CORPORATE FORMALITIES…THEY ARE REALLY FAIRLY SIMPLE

Image courtesy of Stuart Miles / freedigitalphotos.net

There are many advantages to forming a corporation for your business such as limiting liability for the owners, potential tax savings, and the ability to raise capital for your business. In order to receive the advantages of a corporation, you must follow the “corporate formalities” required by law. This may seem like a daunting task, but it is quite simple. Below is a list of the corporate formalities that must be adhered to by California corporations.

1. Bylaws. Every corporation must have bylaws which are a set of rules designated by the corporation which govern how the corporation will be run. There are many templates that can be used as a starting point, but a word of warning, read the template and decide whether you want to make any changes to the template. Remember, these are the rules that will govern how your corporation will be run.

2. Stock ledger and stock certificates. You must issue stock certificates to all shareholders, even if that is just you. Stock certificates can be purchased online and in many office supply stores. Additionally, you must have a completed stock ledger for your corporation. This is merely a list of the names, addresses, and ownership interest of each shareholder that has been issued stock or that has purchased stock from a prior shareholder.

3. Corporate Bank Account. The corporation must have a bank account in its own name that is separate from the accounts of its owners/shareholders. Do not commingle personal money and expenses with that of the corporation. The corporation will need to apply for a tax id number (EIN) from the IRS in order to open the account. This can be done online at http://www.irs.gov.

4. Shareholder meetings. The shareholders must meet at least once a year to elect/re-elect the directors and officers of the corporation. A person designated by the corporation (usually the secretary of the corporation) should record the minutes of the meeting in writing. The minutes should be signed by the secretary and placed into the corporate records book.

5. Board of Director meetings. The board of directors must meet on a regular basis. A person designated by the corporation (usually the secretary of the corporation) should record the minutes of each meeting in writing, including resolutions and discussions of the board. The minutes should be signed by the secretary and placed into the corporate records book. Note that the director, officers and shareholders can all be one person in the event the corporation was formed and is owned by one person.

In some cases, all of these requirements can be done by the person or persons starting the corporation to save money but should at least be reviewed by an experienced business attorney.

6 THINGS TO CONSIDER WHEN NAMING YOUR BUSINESS

Image courtesy of Stuart Miles/freedigitalphotos.net

Just like with a newborn child, one of the first decisions new business owners make is the name of their business. Practically speaking, an entrepreneur’s decision for a business name is primarily based on marketing, business values, products/services provided, and goals for each business. However, when selecting a business name, new business owners should also take into consideration legal aspects such as trademarks and other applicable laws.

Here are 6 legal and practical things to consider when selecting a name for your business:

1. Trade Names and Trademarks. A trade name is the name by which a business is known to the public. For example, Kodak is the trade name, but the legal name of the company is Eastman Kodak Company. Alternatively, a trademark is any word, phrase, design, or symbol that a business uses to distinguish its goods and services from someone else’s. In short, a trademark is a brand name. A business has a legal right to use a name as a trademark only to the extent that it does not infringe upon existing trademarks. Always check to make sure your desired business name is not already trademarked. Start with some free resources such as http://www.trademarkia.com or http://www.uspto.gov to do an initial search. Then a hire a local business attorney to do a more thorough screening.

2. Business Type. If you are a sole proprietorship engaging in business locally, make sure that your desired business name is available by doing a search in your county clerk’s office fictitious business name database. In Los Angeles County, this can be done online at http://lavote.net/Clerk/FBN_Search.cfm. In Orange County, this can be done online at https://efbn.ocgov.com/eFBNweb/. Alternatively, if your business is going to be a corporation or limited liability company, conduct a search with the Secretary of State to ensure the availability of your desired business name. In California, you can search online at http://kepler.sos.ca.gov/. Additionally, if you plan on conducting business worldwide, you name decision will require a multi-jurisdictional analysis of applicable laws to obtain legal protection in each location you intend to do business.

3. Explain your product of service. For most companies, it is best to have a name that provides some information about the products or services they offer.

4. Does your business name communicate your mission statement? A business name can exemplify your company’s image. Therefore, you should clearly define your brand positioning before choosing a name. Try writing down your business’ values and mission statement to get the ideas flowing. Stay away from business names that only mean something to you because that hidden meaning evokes nothing about your brand.

5. Easy to Remember, Easy to Pronounce and Spelled Correctly. Simple and straightforward names are easier to remember and cost less to brand. Skip acronyms because to most people, these acronyms mean nothing. Additionally, a business name that is not spelled correctly will have to be spelled out for people on a continuous basis.

6. Domain Name Availability. Always check whether your desired business name is available as a domain name. If your business name is not available as a domain name, are you willing to use a slightly different domain name or would it be better to change your desired business name in order to have your domain name and business name match. If the domain name you want is already registered, consider hiring a broker to negotiate a domain name acquisition.

WHEN PARENTS CANNOT AGREE ON A LEGAL GUARDIAN FOR THEIR CHILDREN

Image courtesy of David Castillo Dominici / Freedigitalphotos.net

As an Orange County Estate Planning attorney, I can’t stress enough how important it is for all parents to create a comprehensive plan that will protect their children in the event something happens to the parents.

But what happens if you can’t come to an agreement with the other parent of your children as to who should raise your kids if something happens to you?  In most cases, if your child’s biological parent is still living at the time of your death and you share custody, your children will be raised by the surviving parent, unless there is some clear reason why that should not happen such as severe drug addiction, a history of abuse, or a violent criminal past.

If there is no clear reason that the parent of your children is an unfit parent, the court will grant custody to the surviving parent even if you name someone else in your will or other guardianship documents. However, if the other parent of your children also passes away when you do or before your kids turn 18 years old and you executed guardianship documents, your wishes for the care of your children will be known and taken into consideration. This is especially important in the event the other parent of your children did not legally document his or her guardianship wishes upon passing, as your wishes would then be given priority over an unwilling step-parent.

Finally, when you do name a guardian for your children, it is recommended to name a separate person as the guardian of the assets you would leave to your kids if you passed away. By naming separate individuals, you eliminate the possibility of a conflict of interest and protect your children and their inheritance. If you have any questions about naming a guardian for your children, contact a local trusted estate planning attorney.