Retirement Plan Participant May Elect Loan Repayment Deferrals

The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 does more than aid small businesses. In addition to the PPP loans that received the bulk of the media attention, the CARES Act authorizes qualified retirement plan sponsors to amend retirement plans (401(a), 401(k), 403(b) and government plans) to help participants (qualified employees) who have been adversely economically impacted by the Coronavirus by allowing the deferral of loan payments. Once such an amendment is implemented by a plan sponsor, participants who have outstanding loan amounts from the qualified retirement plan may elect to defer loan payments for up to one year (with interest accruing) between now and December 31, 2020.

The retirement plan participant may elect loan repayment deferrals if they meet one of the following criteria:

  1. They are diagnosed with the Virus by a test approved by the CDC;
  2. Their spouse or dependent is diagnosed with the Virus by a test approved by the CDC; or
  3. They experienced adverse financial consequences as a result of being quarantined, being furloughed or laid off or having work hours reduced due to such virus or disease, being unable to work due to lack of child care due to such virus or disease, closing or reducing hours of a business owned or operated by the individual due to such virus or disease, or other factors as determined by the Secretary of the Treasury.

During any deferral period, interest would continue to accrue. Once loan payments recommence, the accrued interest is included in loan calculations to determine the new payment amounts.  The date of the final payment is adjusted by the length of time deferred. The Plan Sponsor may rely on an employee’s certification that the employee satisfies the condition.

Eric Wieland puts his mastery of tax law and sharp attention to detail to work in his practice. He focuses on the areas of Estate Planning, Business Planning, Taxation, Qualified Retirement Plans, ERISA Compliance, and Trust and Estate Administration. The belief that no two clients are alike and no set of legal circumstances or objectives are the same ­ is at the heart of his specialized, individual approach.

Robot Lawyer – Does That Compute?

An ingenious teen inventor is making news with his robot lawyer that seeks to walk people through the relatively simple legal world of parking tickets.

Are my days as a Trust and Estate Attorney numbered? Will my clients no longer need assistance in wading through the often complicated world of tax and estate planning?  Will a robot be able to advise my clients on the pros and cons of picking certain trustees or guardians for their children?  When families are dealing with the death of a loved one and a daunting list of tasks necessary to work through probate and trust administration, will technology trump my legal experience?  I hope the answers are pretty clear – – because the answers are “No!!!”  The article acknowledges, “They (Robots) will, however continue to streamline processes for handling simple tasks that arguably people should be able to handle without the need for – and expense of – formal legal assistance… Bots can’t provide full and genuine legal counsel, and it will likely take them several decades to become as sophisticated as humans.” So it’s good to know that I’m still needed and not headed toward being obsolete, at least for the foreseeable future.

Now if I could only convince my kids of that fact…..

For legal questions, contact SYK attorney Eric Wieland. He is not a robot lawyer. He believes that unlike robots, no two clients are alike, just as no legal circumstance ever is. His mastery of tax law, and attention to detail are put to work in business, taxation, and estate planning and litigation matters.

Changing Your Estate Plan: Don’t Cut Up Your Money For The Last Laugh

Thinking about changing your estate plan? Have you ever thought about disinheriting your children? It’s one thing to think about it, but to actually attempt it is another thing entirely. An Australian granny presumably attempted to disinherit her children, but with no avail. Before passing away, the 85-year old cut up nearly a million euros ($1.1 million). Her family discovered the money on her bed. At first, the state prosecutor believed that they money would not able to be recovered by her heirs. Unfortunately for her, this attempt at disinheriting her heirs, by destroying her property did not work. If the fragments are present, and banks are able to validate the origins of the money as legitimate, the monetary value can be collected. The money was secured by the bank and all of it replaced. You may not be thinking about disinheriting your children but changing your estate plan without first talking to your attorney is risky business. In this case, the woman could have just as easily gifted her property to a charity or given it to someone else instead of cutting it up. If you are considering making any changes to your estate plan, contact the attorneys at SYK so you don’t make the same mistake the Australian granny did.

Our estate planning services include traditional wills and revocable living trusts. In appropriate situations our firm also provides more tax sensitive and sophisticated planning services, necessary in effectively transfer special assets, such as interests in businesses and real property. Our firm has a long tradition of assisting clients in optimizing gifts to charities, whether it be through the use of direct gifts, charitable trusts or other planning opportunities.

Contact Samuels Yoelin Kantor LLP to learn more about your options when you consider making revisions to your estate.

How United States v. Windsor Impacts Oregon Domestic Partners

United States v. Windsor struck down Section 3 of the Defense of Marriage Act and recognized the same sex marriage of Ms. Windsor and Ms. Spyer for the marital deduction for federal estate tax purposes. However, the still leaves wealthy families and estate planners with some questions.  It is clear from the decision that couples who are married in states that recognize same-sex marriage, among them Washington and California (based on Prop 8 decision), will now have access to the marital deduction under the federal estate tax, as well as a bevy of other federal benefits.  What is less clear is what happens if those couples move to a state like Oregon, which does not recognize same-sex marriage. 

Though same-sex Oregonians cannot legally marry in the state, they can chose to register as domestic partners, which gives them the tax and legal benefits of being married for Oregon purposes, but is not recognized by the federal government or Oregon as a marriage. It does not appear that the precedent set with Windsor applies to domestic partners, meaning that Oregonians in this position will receive the same benefits as if they were married for purposes of the Oregon estate tax, but not the federal estate tax.  The question remains how the federal government will treat same sex couples who are legally married in one state, say Washington, and move to a state that does not recognize same sex marriage. Are they still married for federal purposes but not for the state they now domiciled, or does the new state’s position on same sex marriage invalidate the marriage for federal purposes? 

In Oregon, if a same sex couple is married in Washington and moves to Oregon, the Washington marriage is not recognized by Oregon, but the couple can register as Domestic Partners. Does this registration and the fact that Oregon does not recognize same sex marriage terminate the marriage for federal purposes or does the couple receive the federal benefits because the marriage is valid in Washington and the couple received Oregon benefits because they are registered Domestic Partners? Hopefully this will be decided soon so our clients are not left wondering. 

How the Estate Tax Brought Down the Defense of Marriage Act

Today the U.S. Supreme Court ruled that Section 3 of the Defense of Marriage Act (“DOMA”) violates the Equal Protection clause of the 5th Amendment to the U.S. Constitution.  The opinion of the court in United States v. Windsor, written by Justice Kennedy, states that “DOMA seeks to injure the very class New York seeks to protect. By doing so it violates basic due process and equal protection principles applicable to the Federal Government.”  The decision marks a historic moment in the national debate over same-sex marriage and will likely be the focus of much discourse.  But there is one important issue that may otherwise fall through the cracks: this was a case about the federal estate tax.

Edith Windsor met her wife Thea Spyer in 1963 and the two became engaged four years later, never knowing whether they would legally be able to wed.  They registered as domestic partners in 1993 in their home state of New York and were finally married in Toronto, Canada in 2007.  Ms. Spyer passed away in 2009 and left her entire estate to Ms. Windsor.  If Ms. Spyer had been a man, the entire bequest to Ms. Windsor would have passed tax free, under the marital deduction to the federal estate tax.  However, when Ms. Windsor filed for the marital deduction, the Internal Revenue Service disallowed it, saying that under DOMA Ms. Windsor and Ms. Spyer were not in a recognized marriage and could not have the benefit of the marital deduction.  The IRS assessed a $363,053 tax on Ms. Spyer’s estate, she paid the tax, and sued the government for a refund.  Today, Edith Windsor not only gets the satisfaction of having her 44 year relationship finally recognized by the federal government, but she also gets a refund of the estate tax paid in 2009, plus interest. 

Many questions remain that will be sorted out in the coming days, months (and probably years) – by the courts, Congress, and the Executive Branch. For couples in same-sex marriages (currently recognized by 12 states, and the District of Columbia) however, in addition to federal tax consequences, today’s ruling provides access to a significant number of federal law benefits. These benefits include Social Security survivor benefits, benefits under federal employee health plans, and veteran’s benefits.