Upcoming Tax Changes: A Brief Overview

Posted by on Feb 19, 2021 in Legal News |

Well, we’re almost at April 15th again. “Tax Day” has been an unavoidable
“holiday” on the American calendar since 1861, when the Revenue Act of
1861 instituted federal income tax to help fund the Civil War. Though that Act was struck down, it got the ball rolling for what would become Tax Day. Though the date has changed over time, the purpose hasn’t. 

If you’ve filed your taxes already, good for you. If you haven’t, consider this your wake-up call to get going. As you can see, tax law has been changing since the Civil War. Though some years don’t bring new changes, others do, and 2020-2021 is absolutely a “new change” year, mainly thanks to the Coronavirus pandemic. 

Changes to Deductions


There have been a lot of changes to the standard deductions. For 2020, single, married filing jointly, married filing separately, and head of householder filers are all going to see their standard deductions increase. Single filers can take a $12,400 deduction, MFJ a $24,800 deduction, MFS a $12,400 deduction, and HOH an $18,650 deduction. These are all increases of $200-$400 dollars. 


Thanks to the CARES Act, which was legislation instituted to help mitigate the effects of the coronavirus, you can deduct up to 100% of your AGI in charitable donations if you itemize deductions. If you take the standard deduction, you can write off $300 cash in charitable giving.


You can deduct medical expenses that are above 7.5% of your AGI if you are taking the itemized deduction. 


Self-employed individuals can take a bunch of deductions, including one for home office and travel expenses. But, note: if you were working remotely, like millions of workers, you won’t be able to claim a home office deduction because you don’t count as self-employed.


This Earned Income Tax Credit applies to workers who earned up to $56,844 during 2020. Depending on your filing status, income, and if you have kids, you’ll be able to save a few hundred or a few thousand dollars. Only 20% of taxpayers actually claim this credit, which is crazy, because it really can save you money.


Families can claim up to $2,000 in tax credits per qualifying kid. This refundable credit means you can get up to $1,400 per kid as a tax credit. Depending on your situation, there might be other, small-print deductions you can (legally) squeeze in as well. 

Stimulus Checks, PPP, and Unemployment Benefits

Stimulus Checks

Did you get a stimulus check? Congrats! That is not taxable income. It is considered the same as a tax credit, for IRS purposes. 


Payment Protection Program loans helped small businesses stay afloat. With the PPP, as long as these loans were used for business expenses, they were forgiven. Expenses paid with PPP loans can, in fact, be deducted from your income, but you have to apply for loan forgiveness to the SBA. If you don’t apply, you won’t be off the hook.


The good news ends here, as you will need to pay income taxes on your unemployment benefits. If you chose to not have taxes withheld from the benefits, you’ll have to pay quarterly estimated tax. Or, you’ll have to pay it all on Tax Day. 

529 Plans and ESAs

Education was up in the air the past year, and money you took out of an education savings account of 529 plan might have been refunded by your college. If you got a refund, you have to put the money back in the account or use it to pay educational expenses. Otherwise, you’ll have to pay income tax on it and a penalty for withdrawal.

However, there are some new ways to use the ESA/529 for educational expenses. You can use your 529 to pay off fees, books, supplies, and even student loan debt.

Changes to Retirement Plans 

What the CARES Act Did

The CARES Act permitted people to tak
e up to $100K out of their IRAs and 401(k)s until the end of 2020, with no early withdrawal penalty. Though this is a bad idea—penalty or no penalty—a lot of people did it. Though there was no penalty, you still have to pay income tax on whatever you withdrew.

Traditional IRA Holders

Traditional IRA holders know that they have to take money out of their account when they reach a certain age, and these withdrawals are known as RMDs. The SECURE Act pushed back that “certain age” from 70 ½ to 72. The CARES Act went further and permitted seniors to skip RMDs with no penalty.

The SECURE Act’s Effects

Another thing the SECURE Act did for Traditional IRA holders was allow them to continue putting money in their account past 70 ½ years old. Note that you still have to pay taxes on the money when you withdraw it.

April 15, 2021. That is the date that you have to have your information in. If you make a mistake, don’t panic, as the IRS will try to work with you to correct the error. However, don’t be afraid to hire a tax professional or tax lawyer to help you get your taxes done properly the first time. 

Visit our website and learn about all of our services and how we can help you secure your assets. 

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Valentine’s Day: Love Can Be Blinding

Posted by on Feb 12, 2021 in Legal News |

valentine's dayValentine’s Day is a day of romance, chocolate, and roses. Named after Saint
Valentine, Valentine’s Day has been around since the year 496 A.D, but it wasn’t until the 1300s and 1400s that the holiday became associated with courtly love. In the 1700s, the trend of greeting cards, flowers, and confectionery as gifts began. Though it’s not a public holiday in America, Valentine’s Day is still one of the most-celebrated, grossing more than $20 billion in spending a year. 

Though love is beautiful, it is also blinding. And don’t feel bad about it either, because you can’t help it. Medical Daily reported on research studies that took brain scans of people “in love,” and researchers found that, though being in love activated some regions of the brain that had been dormant, there was another effect. When researchers showed test subjects pictures of their significant other and recorded their brain activity on an MRI, the MRI showed that the frontal cortex shut down upon seeing their beloved. The frontal cortex is the part of the brain that is essential for judgment. 

Concerning news aside, you can take steps, right now, to ensure that you’re not blinded by love. We’ll talk about these legal tools, which will pick up the slack when your frontal cortex takes a vacation. 

To Whom Does This Article Apply?

This article will serve as a guide for people who are in the process of getting a divorce (or thinking about a divorce). Your frontal cortex took a vacation, but it has hopefully woken up again, and, now, you need to know how to protect your assets from your ex-beloved.

Hire a Lawyer 

Step one, get a lawyer. Every state’s laws differ on what is and isn’t marital property, and every state’s laws differ on the deadlines and processes required to get a divorce. You want to know what you’re walking into, and you can’t do that if you don’t know the law, which is complex, confusing, and ever-changing. Get a lawyer, and don’t try to go it alone. 

Identify What’s Yours

Something the lawyer can help you with is identifying what is and isn’t yours. Before you proceed with anything, you must know how much money you have and where it is. What’s in your name? Your property can include assets, mortgages, bank accounts, and more. A judge will care a lot more about a detailed financial record than he or she will about a picture of your spouse having dinner with someone else. 

Get Everything in Writing 

Courts might not be as shocked and awed at proof of your spouse cheating, but, again, what they really want to see is proof of assets. Be careful to have everything in writing, especially financial statements, documents relating to your home and business, and pretty much anything that could come up in the asset division. 

Don’t rely solely on electronic copies, either. Senior V.P. of Investments at Raymond James, Shelly Church, warns that it’s not unheard of for a vindictive spouse to change passwords on joint accounts, locking you out. Fire up the printer and get moving. 

Secure Liquid Assets

According to Church, the aforementioned financial guru, it’s also not unheard of for a spouse to take out all the money from your account and leave you penniless. If the two of you have a joint account, set up an account in your name and move your portion of the assets to it. Do not wipe out the account. 

In addition to being a not nice thing to do, wiping out the account will make you look really bad in the eyes of the court. It will backfire on you down the road. Just move enough assets to cover your bills and living expenses until lawyers and the court get involved.

Possibly a Financial Adviser

If you can afford it, it will help to have a financial adviser in your corner, especially if you’re not good with money. Jacqueline Newman, a NYC divorce lawyer at one of the top firms in the city, said that “non-financially-savvy” spouses need to go to a financial adviser who will “understand” and “connect” with you. That way, you’re not getting taken advantage of because of your lack of knowledge.

What You Want vs. What You Need 

At the end of the day, lawyers try to reach the best settlement they can for their client. You’ll hear a lot of, “Can you live with this?” and “Can you deal with this?” from your lawyer. Settlements will not be perfect, but if you have what you need, you should accept that you won’t get everything you want. Your lawyer will get as close as he or she can, but there will have to be compromises on your end, no matter how much you hate your ex-spouse.

This guide isn’t the be-all, end-all. Divorce is a tough time, but you’re going to feel even worse if you don’t get your financial situation squared away. The emotional process will take time, but the clock is ticking when it comes to defending your finances and future.

Care for your assets? Get more details from our website

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Super Bowl: Keep the Shocks in the Arena

Posted by on Feb 7, 2021 in Legal News |

super bowlWho doesn’t love the Super Bowl? Millions and millions of viewers watch
the Super Bowl every year, and it has been a national pastime in America since 1967. While the ups and downs of the famous game draw us in, you probably want to keep your real life shock-free. 

One of the most unpleasant surprises in life is being faced with a lawsuit. Hopefully, you have never been sued, but those who have know that it is an extremely stressful event. In this article, we’ll talk about ways you can “lawsuit-proof” your estate plan. 

Note that none of these tips is 100% foolproof. Like with what we might see at the Super Bowl, someone could get past your defense. But, as they say, the best offense is a good defense.

Wait…You’re Saying Someone Might Sue Me?

People fight. That’s the hard truth. It’s not unheard of for heirs to fight over an estate plan. And, in the legal world, a “fight” almost always means a “lawsuit.” Whether driven by grief or a misguided belief that they’re being swindled, heirs slap each other with lawsuits all the time.

This could have disastrous consequences. Your estate could be tied up in court battles for years, and litigators’ fees aren’t cheap. Not to mention, depending on the court where you live, your “dirty laundry” could be made public record. All this is added on to the toll that family drama takes on your loved ones. 

To lower the risk of lawsuits, there are some simple precautions you can take. This might not lower the risk of someone being unhappy, of course, but it could stop that unhappiness from turning into a lawsuit. 

Trusts Instead of Wills 

This first tip is more a case of problem prevention than problem-solving. A trust doesn’t need to go through probate court after you die, but a last will and testament does. 

The probate process can give rise to all types of thorny issues regarding the executor’s duties, asset division, splitting the expenses, and more. Basically, probate gives an already fragile family dynamic a stick of dynamite. Trusts bypass this process, which is unpleasant even for the most cordial of families. 

Estate Planning Letter(s) of Instruction 

An heir might contest on the grounds that your estate plan isn’t “what [you] would have wanted.” There’s an easy way to avoid such a contest, and it is to create a detailed “estate planning letter of instruction.” This letter will give your executors all the information they need to administer your estate. 

Topics covered in the letter can include passwords to accounts, subscriptions you need canceled, keys to safe deposit boxes, people to contact in the event of your death, and how your personal effects should be divided. 

If you feel it’s necessary, you can even explain why you want your family to end life support if you’re in a coma. Some letters of intent even go so far as to explain unevenness or “favoritism” in the will. A letter of intent will clear up confusion that could lead to a lawsuit.

Provide for Disinheritance

Essentially, disinheritance is when you leave a family member—who would have expected to get something in a will—absolutely nothing. There are some limits. First, in Florida, you cannot disinherit a minor child. Florida doesn’t want kids left homeless and penniless, and family disputes with minors aren’t usually serious enough to warrant as drastic a step as disinheritance.

Secondly, you can’t automatically disinherit your spouse. Your spouse must agree to get nothing from your estate, either in a Pre- or Postnuptial agreement. This probably won’t surprise you, but spouses usually don’t agree to that. 

Any legal disinheritance should be provided for in your estate plan, but be careful giving a “why” for the disinheritance. A court could find the reason you give is contrary to public policy and re-inherit the person.

Check Ownership of Assets

This is a simple one. You can’t give away something you don’t own. Make sure to check and re-check that you own the assets you’re giving away in your will or trust. Checking ownership will avoid a lot of legal tangles. 

Establish Mental Competency

In Florida, you must have “testamentary capacity” to create a will (among other requirements). Heirs will sometimes challenge testamentary capacity, claiming that the writer didn’t know what he or she was doing at the time. 

If this sounds like something your family might do, consider agreeing to an examination by a geriatric psychiatrist. That way, there will be no doubt of your competency.

Don’t “DIY” It

We might sound biased, but attempting to create a legal document without the help of an attorney is a bad idea. Don’t do it yourself, as there are a lot of minor technical aspects of the law that are easy to miss. Any little error could provide basis to challenge the will, depending on the situation. Contact an attorney to make sure it’s done properly the first time. 

Talk to Your Family 

A lot of knock-down, drag-em’-out lawsuits happen because the family is shocked at the results of the will. The shock and disappointment, compounded with feelings of grief, is a powerful combination. It’s best to make sure your family is not surprised by the terms of your will or trust. Talk to them beforehand so that they know what to expect. They don’t have to like it, but they should at least be prepared.

While this list is by no means exhaustive, they provide a few ways to soften the blow, especially if your estate plan contains news that your family might find unwelcome. Note that there is no “No Contest” clause in Florida (§732.517), and such a clause is unenforceable. Talk to an attorney to learn more. 

Visit our website to learn more about estate planning, trusts, wills and everything you need to know to keep your assets secure. 

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