Six Reasons To Review Your Estate Plan

We know that life holds many challenges today. For many of us, we do not know what the next year will look like, let alone the next month. We do not know how to best protect our families from the Coronavirus, or when things can return to “normal”. How can we plan forward when we do not know what the future holds? How can we be proactive and take steps now, even during a quarantine, to ensure that our wishes for ourselves and our loved ones can be honored?

Let us help you create some peace of mind now, during this time of uncertainty, and in the future.

Did you know an California estate plan can legally solidify your end-of-life decisions regarding your property, your investments, your legacy, and even your health care? You can decide now what you want to happen should the time come when you can no longer be in control.

An estate plan is one of the best steps forward you can take, at any time, to ensure you and your loved ones will always be protected. Remember, though, even the best-laid plans may need to be revisited and updated to reflect your wishes. When is the best time to make these revisions? This will depend on your own circumstances, or when there is a change in the law that could impact your planning.

When it comes to your circumstances, what are the changes that could necessitate you revisiting your estate planning? Let us share six of the most common events that we see in our firm that indicate a change may be needed.

1. Marriage. Did you, your children or another family member named in your estate plan get married since your plan was created or last updated? Re-evaluating your estate plan can help to include new family members. When you discuss this with your estate planning attorney, together you may both determine how your will, trust, beneficiary designations, insurance policies, powers of attorney, or other important estate planning documents should or should not be amended.
2. Divorce. For most married couples, a divorce also means a separation on everything and this includes estate planning. Failing to re-evaluate your estate plan after a divorce, especially after senior or “gray divorces,” could result in an ex-spouse receiving an undue inheritance or leaving you unprotected as your former spouse may no longer be recognized as a decision maker under state law.
3. Taxes. Taxes are a major consideration when creating any estate plan, and tax laws are subject to change. Every state has its own laws governing estate planning and inheritance taxes. In addition, federal tax reforms, like the SECURE Act of 2019, can have a significant impact on individual estates and the markets in which estate assets are invested.
4. Retirement. Retirement is a life change that often requires an estate plan re-evaluation, and it is particularly important if you have a 401(k) or an IRA. Not only were they likely established many years ago and potentially need updated beneficiary designations, but new federal legislation such as the SECURE Actof 2019, mentioned above, could greatly impact these retirement plans.
5. Birth. The birth of a child or grandchild is a wonderful life event. Adding children or grandchildren to an estate plan is a great way to both protect them and provide for their future. This could include providing for their future education or creating a special needs trust, if necessary.
6. Death. A death in the family may also require a re-evaluation if the deceased person was named in your estate plan. If a deceased spouse was your main beneficiary, then you will need to designate someone else as soon as possible. You may also need to update other estate planning tools such as health care documents and your durable power of attorney.

We know this article may raise more questions than it answers. If you or someone you know would like more information about re-evaluating an estate plan or creating one for the first time, do not wait to contact our law firm to meet with one of our estate planning attorneys today.

Gross Receipts/Business License Taxes Planning Opportunity: COVID-19 ‘Shelter in Place’ Orders

The recent weeks have brought about a series of “shelter in place” orders.  San Francisco, Los Angeles, New York, and many other local jurisdictions have ordered workers to stay home.  This has required an unprecedented change in work habits, with millions of employees and contractors working from home.  The location of where work is performed or “out of jurisdiction payroll,” is a primary determinant of where gross receipts/business license taxes are due.  As a result, certain businesses may owe less in gross receipts taxes in 2020 and future years and should consider how to account for and report out-of-jurisdiction payroll.

Gross receipts taxes are often based upon, and are required to be apportioned based upon, where the work is performed.  See, e.g., L.A. Mun. Code § 21.49(c)(4); S.F. Mun. Code § 956.2; Seattle Mun. Code § 5.45.081; N.Y. Tax Law § 801; The Phila. Code § 19-2601 (definition of “Taxable Receipts”).  A jurisdiction may not tax more activity than takes place within its boundaries.  Container Corp. of America v. Franchise Tax Bd., 463 U. S. 159, 164 (1983); see also Allied-Signal, Inc. v. Director, Div. of Taxation, 504 U. S. 768, 777 (1992); Mobil Oil Corp. v. Commissioner of Taxes of Vt., 445 U. S. 425, 441-442 (1980).  Historically, by way of example, a company with a headquarters in a metropolitan jurisdiction may typically see 85% of its work performed in that jurisdiction.  As a result, 85% of the receipts of the company would be apportioned there.  But often these metropolitan jurisdictions are not the same jurisdictions where the employees reside.

Companies with employees living outside the taxing jurisdiction where their offices are located should consider planning now for the impact the COVID-19 pandemic may have on their gross receipts/business license tax filings for 2020 and future years.  Where there is a decline in activities occurring within the taxing jurisdiction, impacted companies will be required to apportion less revenue to the taxing jurisdiction, potentially resulting in a lower tax liability.  However, some companies may experience the opposite effect (e.g., if a company is located in a jurisdiction that does not impose a business license tax but its employees are required to perform work in a jurisdiction that does impose a tax).  Professional services companies, such as accounting firms, marketing companies, software developers, engineering and design firms, financial services companies, and other similar businesses may be impacted the most, among others.

Impacted companies should consider planning now for upcoming gross receipts/business license tax filings.  This may include, among other things, properly documenting COVID-19’s impact on the business and tracking the location of the company’s activities throughout the year.  Taking these measures now may facilitate proper tax reporting and help mitigate assessments resulting from any future audits.