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2012 Qualified Plan Limits – YAY!

October 25, 2011

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Last week, the IRS issued a press release announcing its 2012 cost-of-living adjustments for retirement plans. The chart below reflects the qualified plan limits for calendar years 2009-2012.

Type of Limitation

2012

2011 

2010

2009

Elective Deferrals (401(k) and 403(b); not including adjustments and catch-ups)

$17,000

$16,500

$16,500

$16,500

457(b)(2) and 457(c)(1) Limits (not including catch-ups)

$17,000

$16,500

$16,500

$16,500

Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans (1)

$5,500

$5,500

$5,500

$5,500

SIMPLE 401(k) or regular SIMPLE plans, Catch-Up Deferrals

$2,500

$2,500

$2,500

$2,500

415 limit for Defined Benefit Plans

$200,000

Common Law Marriages, Dead or Alive? Both.

October 25, 2011

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A client recently asked me about the status of Georgia common law marriage, and in answering him, I thought it might be a good time for a reminder for all of us (including those in other states) that even if a state no longer recognizes common law marriage, usually such marriages remain valid if formed prior to the date of a statutory enactment prohibiting them. In addition, most states also recognize common law marriages formed in other states.

For example, the State of Georgia recognizes common law marriages formed prior to January 1, 1997 as well as valid common law marriages formed in other states.   Under Georgia law, a valid common law marriage may be formed between a man and a woman if they have (1) the capacity to make a marriage contract, (2) actually entered into a nuptial contract (usually proven by evidence of the couple holding themselves

Are Inherited IRAs Protected from Creditors in Bankruptcy?

During a participant’s lifetime, his or her IRA is considered “retirement funds” that are protected from the participant’s creditors, even if the participant files bankruptcy.   But, what happens to the creditor protection after the participant’s death?  Is the IRA now protected from the beneficiary’s creditors?  Whether post-death creditor protection is available to inherited IRAs under the 2005 Bankruptcy Act has been the subject of a number of cases decided in the last year.

The argument made by bankruptcy trustees is that, on the death of the initial IRA owner, the IRA ceases to be “retirement funds”, as it is not the retirement funds of the beneficiary, and therefore loses the protection afforded to the IRAs under the Bankruptcy Code.

List of Things To Do Before Initial Meeting with Estate Administration Attorney

For those of you who are named as Executor or Personal Representative under the Last Will and Testament of a friend or loved one who recently passed away, below is a simple “to do” list that lays out steps you should take in preparation for your initial meeting with an estate planning attorney. Please realize that this list is not exhaustive! Rather, it is intended to help you gather necessary materials and take actions that may enable you and the estate administration attorney to streamline the estate administration process.

  • Cancel any club memberships in the decedent’s name.
  • Prepare a list of all assets owned by the decedent and indicate whether those assets were held in the decedent’s sole name, in the name of the decedent’s revocable trust (if applicable), or held jointly with another person.
  • Determine whether the decedent had any safe deposit boxes and, if so, prepare an

Who Can You Trust?

Who Can You Trust?

October 11, 2011

Authored by: Stephanie Moll and Mary McMath

As Luke Lantta recently wrote in our sister-blog, bryancavefiduciarylitigation.com, “A power of attorney in the wrong hands can be a dangerous thing, undoing years of asset protection and estate planning.  The rise in estate litigation concerning powers of attorney and increased media attention on elder abuse and exploitation have revealed powers of attorney to be potential ‘vehicles for fraud.’  The danger lies in the sweeping power afforded to the agent under a power of attorney.”

A Power of Attorney for financial purposes designates an attorney-in-fact to act on your behalf in all financial, tax, legal, investment, and insurance matters (these powers can be limited as you feel appropriate).  In most states, powers of attorney can become effective (1) upon a certain date; (2) only  if you are declared incapacitated and no longer able to make decisions for yourself relating to your financial matters; or (3) immediately upon execution of the power of attorney.  As the principal under

Tax Patents Banned

Tax Patents Banned

October 7, 2011

Authored by: Kathy Sherby and Stephanie Moll

Under the American Invents Act passed by Congress on September 8 of this year and signed into law by President Obama, among the many patent reforms is a ban on patenting any strategy for reducing, avoiding, or deferring tax liability, whether known or unknown at the time of the alleged invention or patent application (with certain limited exclusions related to software technology).  This type of patent application will no longer be able to be filed or prosecuted with the U.S. Patent and Trademark Office.

In essence, this legislation stated that tax strategies are indistinguishable from prior strategies and therefore cannot be patented as a novel or non-obvious invention.

It is important to note that this legislation does not invalidate any patents that have already been issued by the U.S. Patent and Trademark Office, which continued to issue such patents as late as the week immediately prior to the passage of

IRS Releases Form 8939

October 6, 2011

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IRS Releases Form 8939

October 6, 2011

Authored by: Stephanie Moll

The IRS has released Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent.  Instructions for completing the Form have not been released.

This Form is to be used by the estates of decedents who died in 2010 and have elected not to be subject to the federal estate tax.  While the estate will not be subject to the federal estate tax, the estate’s executors will only be able to allocate up to $1.3 million in basis increase to the decedent’s assets, plus an additional $3 million in basis increase for certain gifts to a surviving spouse (outright gifts and qualified terminable interest property “QTIP”) .

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