Atlanta Estate Planning Lawyer Blog

There are many tools that can be used to facilitate the transfer of assets in an estate plan. Holding property jointly (in two or more names) is one method that has advantages and disadvantages. Joint ownership of real estate, bank accounts, and other property is common because assets owned jointly with rights of survivorship do not become assets of the decedent’s estate. These assets do not pass through probate to be distributed but are transferred by operation of Georgia law and automatically pass outside of the decedent’s estate to the surviving owner(s). When joint owners are spouses, this set up can be ideal. Because there is no delay in the transfer of property under joint ownership, the surviving owner can immediately take control of the property. This is especially useful if access to the property is urgent, time-sensitive, or when financial issues need to be resolved immediately upon the death of the decedent joint owner.

Joint ownership does have its downsides and should be carefully considered before being implemented in any inter vivos circumstances or estate plan. For instance, one scenario where it can be unwise to set up property ownership jointly is when a parent and child are named as joint owners. Problems can arise if the parent has other children who are not included in the joint ownership of the property or the child involved in the joint ownership is financially unstable. With multiple siblings, even if the Georgia will specifies that the joint property should be divided evenly between all of the children, the joint ownership property is not part of the estate. Thus, the surviving owner is not obligated to split the property and distribute it per the Georgia will. This is because the joint property transfers to the surviving owner(s) by operation of law. Thus, the property never becomes part of the estate and therefore is not subject to the laws of intestacy or distribution per the terms of the Georgia will. Also, if the joint owner is a child with financial issues, the parent can lose the property if the child’s creditors endeavor to collect outstanding debts. The child’s joint ownership interest can also be threatened if the parent has financial issues, which cause the parent to declare bankruptcy. This can oftentimes be the case if the parent has significant medical expenses or other expenses associated with growing older and not having earned income.

A Georgia Estate Planning attorney can provide other alternatives to placing property in joint ownership. One good alternative is to draft an effective estate plan that specifies how the property will be divided under a number of possible scenarios. Without a crystal ball we cannot foresee which scenarios are most likely, but they can include illness, remarriage of a spouse, bankruptcy, etc. With such variability, it is prudent to draft a detailed estate plan that can factor in multiple circumstances. Such an estate plan is especially effective for larger estates or in situations where a dispute between heirs and/or beneficiaries may be inevitable. Estate planning under such scenarios often involves the use of revocable and irrevocable trusts and annual gifting. Implementing these types of estate planning vehicles can be complicated and it is necessary to have an experienced estate planning attorney assist you.

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A business owner pays approximately 16% of his or her salary in payroll tax. The payroll tax is in addition to federal and state income tax. For example, if you pay yourself a salary of $75,000, the payroll tax is approx. $12,000, plus federal and state tax.

Here’s a tip on how to save on payroll taxes. Suppose your business earns a profit of about $75,000 per year. So you pay yourself a salary of $75,000. Your payroll tax is approx. $12,000. If you were operating your business as an “S” corporation, which many small business owners do, then you need to know that distributions of profit from an “S” corporation are not subject to payroll tax.

Instead of paying yourself a salary of $75,000 (all of which is subject to payroll tax), pay yourself a smaller but reasonable salary of say $25,000. Thus, the payroll tax is approximately $4,000. The other $50,000 is distributed to you as an “S” corporation dividend. There is no payroll tax on the $50,000 distribution. That’s a tax savings of approx. $8,000!!!

The same technique can be used for a limited liability company ("LLC"), but it’s a little more complicated. You pay yourself a salary and pay payroll tax on that amount. But there is no payroll tax on an LLC distribution of profit as long as you are not the LLC’c member. Most people either interpose another LLC (owned by you) as the member of the operating LLC, or for example a spouse who does not work in the business is the member of the operating LLC.

Be smart. Sometimes less really is more. But also be reasonable when using this technique. The Adams Law Offices offers experienced business and tax experts to assist you with every aspect of owning and running a successful business.

A Notice of Deficiency (“90-day letter”) is sent by the Internal Revenue Service (“IRS”) to officially allege that a taxpayer owes additional taxes. If you receive a Notice of Deficiency, you need to contact an Atlanta tax law firm immediately. When choosing which Atlanta tax law firm to contact, you should consider choosing an Atlanta based law firm with an experienced Atlanta tax attorney, IRS tax lawyer, and/or Atlanta tax law expert.

Once you receive the Notice of Deficiency, you have 90 days from the date of the Notice (not 90 days from the date you receive the Notice) to consult an Atlanta tax attorney and/or Atlanta tax expert to assist you in considering your options and addressing the serious nature and implied allegations of this IRS Notice. The reason I suggest that your seek out counsel from an Atlanta tax attorney and/or Atlanta tax expert, is that the United States Southeastern Headquarters for the Internal Revenue Service (“IRS”) is located in Atlanta as are the Federal Tax Court and the Federal Court for the Northern District of Georgia. This has several advantages in that resolving your IRS tax matter may involve a meeting with an Atlanta Based Internal Revenue Service Agent (“IRS Agent”) in the City of Atlanta. Additionally, should you need to resolve any Internal Revenue Service (“IRS”) dispute through the administrative tax law process in Tax Court or through litigation in Federal Court; you will likely be doing so in Atlanta, GA.

Regardless of whether you believe the Internal Revenue Service (“IRS”) is correct, the amount alleged in the Notice of Deficiency is due and owing. As such, I strongly recommended you consult an Atlanta tax attorney, Atlanta IRS tax lawyer, and/or Atlanta tax expert. In my many years of practicing in an Atlanta tax law firm as an Atlanta tax attorney, I have seen all too many people misread or not understand these IRS letters and cast them aside only to find out later that this alleged IRS Notice of Deficiency has dire consequences because IRS Tax Notice went disregarded.

As general rule, when the IRS involved and it is not in the common course of your dealings with them, you should err on the side of caution and understand what exactly it is you have received from them and what your options are. Moreover, many people throw these IRS Notices aside only to have this action come back to haunt them with extraordinarily expensive and dire consequences. You should have an Atlanta tax lawyer, Internal Revenue Service (“IRS”) tax lawyer and/or Atlanta tax expert advise you on exactly what the Notice you received is, and exactly what it means for you. It is altogether true; most people do not understand the nature of these letters and what exactly this particular “Notice” is telling you. Furthermore, assuming you are correct in your evaluation of the alleged Notice of Deficiency, you should consider having an Atlanta tax attorney and/or Atlanta tax expert negotiate an installment payment agreement or formulate “Offer in Compromise” on your behalf. This of course, is assuming you qualify for these forms of payment plans. Nevertheless, it is better to work with the Internal Revenue Service (“IRS”) at the earliest time you can and before it is too late. Once the IRS has spent time, monies, and resources tracking you down and seeking and forcing payment from you, they are much less likely to negotiate, if they will negotiate at all.

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There is now tax relief for Georgia homeowners and an upper hand advantage for the Georgia Tax Attorneys and Georgia Real Estate Attorneys who represent and assist them. In a news brief issued by the IRS for the benefit of those with troubled loans, the government now says that if your mortgage debt is partly or entirely forgiven during 2007, 2008 or 2009 you may be able to claim special tax relief by filling out Form 982 and attaching it to your federal income tax return for that year. Usually, forgiveness of debt results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from tax up to $2 million of debt forgiven on your primary residence. The limit is $1 million for a married person filing a separate return.

Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. The debt must have been used to buy, build, or substantially improve your principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards, or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. The Adams Law Offices is conveniently located in the heart of Buckhead in Atlanta, Georgia, near the intersection of Piedmont and Roswell Roads. We would welcome the opportunity to be of assistance to you regarding any type of tax related matter concerning debt relief or other type loan restructuring or loan workout matters. Please call us at (404) 467-8611 or 1-877-412-3267, to discuss your options, or send us a message through our confidential Web Site form.

Foreign nationals may not fully understand the effect a green card has on his or her status for United States (“Federal”) tax purposes. The Federal Government taxes United States citizens and resident aliens on their worldwide income, regardless of their presence (or lack of presence) in the US. Nonresident aliens are only subject to Federal tax on their income connected to the United States.

For example, suppose you are a citizen of a foreign country and work full-time in a foreign country. While you may make no income in the United States and you only visit the United States a few weeks each year, the questions arises as to whether you owe Federal tax.

The answer may surprise you. It depends on whether you are deemed a resident alien or a nonresident alien. The test generally depends upon the number of days you are in the US. Most foreign nationals are aware of the “183 day” test, and keep careful track of their days of entry and leaving the US.

However, there is a second test. If you are a current green card holder, then you are deemed to be a resident alien. The number of days you are in the US does not determine your status for US tax purposes. Even if you have no presence in the US, you are still subject to Federal tax if you are a current green card holder.

This broad rule is justified by the US Congress because green card holders “have rights similar to those afforded US citizens (including the right to enter the US at will); equity demands that they contribute to the cost of running the government as much as citizens”.

Two exceptions likely mitigate Federal taxation. One is that a resident alien can claim a tax credit against his or her Federal tax for taxes paid in a foreign country. The other exception is that a tax treaty between the US and a resident alien’s home country may exempt US taxation of a resident’s income earned outside the US.

Federal taxation of foreign nationals is a complex subject. You should seek the legal representation of a tax lawyer and a tax expert. The Adams Law Offices offers representation from tax attorneys and tax experts who not only have worked in the private sector but have also worked with The United States Tax Court. We are ready to serve and assist you with your tax related matters and our Main Office is conveniently located in the heart of Buckhead. Please call us at 1-877-412-3267 or (404) 467-8611, to discuss your options, or send us a message through our confidential Web Site form.

Living trusts have become popular in Georgia in the last several years as an estate planning alternative to conventional wills. They are frequently touted as a way to avoid the Georgia probate courts, which are sometimes criticized as expensive and slow to resolve estates. While I believe the probate process doesn't have to be those things, I am also happy to set up living trusts when they make sense for my clients.

Unlike a will, a living trust isn't a legal document in which you simply write down your wishes. A trust is a legal structure like a corporation or a partnership. After you create it, you can transfer your assets -- your home, bank accounts and other property -- into the trust and then specify who is to receive them after you die. This legal trick allows you to take all of your assets out of your own name while keeping them under your control. Because probate only applies to property held in your own name, you can avoid a probate case in this way.

People who set up living trusts generally name themselves as the sole trustee in charge of the trust, or name their spouses as co-trustees, although they can name any adult. Trustees have the legal right to manage and control the trust's assets, so it's important to name trustworthy people. You can also name a person or institution as a successor trustee to manage the trust if you are incapacitated.

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Lifetime gifts in contemplation of death, or so-called “deathbed gifts” are usually made by a surviving parent to a child. The parent and/or the child think the gift is a good idea, probably to facilitate a transfer of legal title and/or to avoid probate. Sometimes a deathbed transfer might be made because the parent does not have a will, and thinks the lifetime gift is a good way to take the place of a will.

First, probate is not that much trouble, at least in Georgia. Also, a deathbed will is just as easy to prepare as a deed, for example. But the real problem for the beneficiary relates to the tax basis of the property.

For lifetime gifts, the grantor’s tax basis (generally the original cost of the property) becomes the tax basis of the grantee/beneficiary. For property received by a beneficiary thru the probate process (a so-called “testamentary gift”), the beneficiary’s tax basis is the fair market value of the property at the time of the decedent’s death.

For example: Assume a parent purchased a lake home years ago for $25,000. Now the lake property is worth $175,000. The parent makes a lifetime gift of the lake home to a child. The child’s tax basis is $25,000 (the original cost of the property). Upon a sale of the property for $175,000, the child’s tax gain is $150,000.

Instead assume the child received the lake home after the parent’s death thru the deceased parent’s will. The child then sells the property for $175,000. The child’s tax gain is zero, because the child’s tax basis is $175,000 (the fair market value at the time of the parent’s death). Assuming the above example, the difference between a lifetime gift and a testamentary gift could be a tax difference of as much as $60,000! So beware. A lifetime gift can result in a lot of needless tax.

Oftentimes, there are many factors involved making the best decisions about making lifetime gifts or setting up an estate plan which minimizes or diminishes any unwanted or unforeseen tax consequences. Needless to say, it is well worth the savings and peace of mind to find out before it’s too late.

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In my Atlanta estate law firm, our lawyers have a general rule in estate planning in Georgia is that every person should make a will. Unfortunately, it seems that the majority of the general public does not feel the same way and most people die without leaving a will expressing their last wishes. Many people think they don’t have anything to leave; but, more often than not, they are wrong. Some people think that you have to have children or be wealthy, suffering from a terminal disease, or elderly before it is time to make a will. There are even people who are afraid to sign a will and believe that it signifies a final act and others think that wills are written in stone and cannot be changed so they hold off making a will because they can’t decide how they would like to distribute their estate. It is a much better idea to have something in place and a will can be changed at any time. The execution of an individual’s will is a very emotional moment for some; but, if you keep in mind that it is a tool available to you to ensure that your assets are distributed in accordance with your wishes, then perhaps you can see it as a tool to ensure peace of mind.

Even if you do not have any assets, you should have a will in place in the event of your death; after all, none of us know the exact circumstances that will occur to cause our death. You might win the lottery and die from the excitement. In that event you may go from owning nothing to being very wealthy and leaving a large estate. Should you die in an accident, your estate can be greatly increased by the proceeds of a wrongful death law suit.

Your will is also a vehicle by which you can name the persons or financial institutions you wish to act as the guardians of your minor children and conservators of their estates. You can determine the terms of any trusts that may be established for their benefit.

Continue reading "ESTATE PLANNING IN ATLANTA, GEORGIA -- AM I A CANDIDATE TO MAKE A WILL?" »

In my practice as an estate attorney in Atlanta, Georgia, I am often asked about the benefits of having a will. A will is a tool used to distribute an individual’s assets after that person has deceased. As with everything in life, you need a different tool for different jobs. Therefore, if you have made a will and it has been sometime since it has been up-dated or reviewed by an estate planning attorney; perhaps it is time for you to have a lawyer review your plan.

As time passes, state and federal laws change and usually our situation in life changes along with it and we accumulate more assets than what we started with. Too many people make a will and then put it in their safety deposit box and forget about it.

A will can be changed at any time. If the change is minor, it can be done with a document called a codicil, which is an amendment to the will and is usually kept with the original will once it is signed. If the changes are significant, then a new will should be prepared and it will void any previous will dated before it.

Your will should be reviewed on a regular basis every few years to make sure that the estate plan that was utilized in making the will is still the correct plan for you. At The Adams Law Offices, LLC your estate plan will be reviewed by our experts to ensure that the distribution of your assets upon your death will go smoothly with as little expense as possible.

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As an experienced Georgia estate attorney, it is my duty to be up front about the driving force behind this article, which is your death. While nobody likes to think about their own passing, there is nothing more definite than the fact that this will occur. Some people are have heard the old saying that there are two things sure in life: “Death and Taxes” – After many years of practicing law, I have heard about many people who have altogether avoided taxes and been an integral part of assisting many clients in legally minimizing and/or diminishing significant taxes they would have paid without proper estate planning or having consulted our Firm.

Having said this, to date, I have yet to see anyone steer clear of death.

The fact of the matter is, it will happen to you, it’s just a matter of when and how. So, in knowing this, it is essential that you prepare for this inevitable moment; and, the sooner the better. Let’s discuss why.

First, there are many common misperceptions which surround estate planning. The fact is, whether your “rich”, “poor” or somewhere in the middle of these commonly referred to social terms for wealth, we all have some level of need for estate planning and the sooner you engage in estate planning, the more benefits you stand to gain. These range from potential tax benefits you are entitled to and may not be aware of to the peace of mind that your affairs are in order should you become incapacitated, disabled or your inevitable death should occur. Please also be aware that your estate planning is an ongoing process and once your estate plan is in place, it can be altered to keep up with your circumstances, should they change. The Adams Law Offices, LLC, with its client’s permission, memorializes all its client’s estate plans in an easily updateable, editable digital, electronic and physical form.

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