Frederick Focke Mischler, Attorney

Fundamentals of Estate Planning

As a quick introduction to estate planning, many of you may be aware of the basic documents that comprise an estate plan.  They are 1) the last will and testament, 2) durable power of attorney for finances, 3) living will, and 4) health care power of attorney.  Ohio also has adopted another document as legal in the state, the power of attorney for mental health care.  This document is not usually included in the basic set, but I presume this is because it is a relatively new concept in the field.

The last will and testament, probably the most well known of the documents, directs your personal representative or executor to pay your debts out of your estate and distribute the remaining estate assets to your listed beneficiaries.

The durable power of attorney for finances allows the appointed person to have access to your property as listed in the power of attorney document, in order to manage your financial affairs in your absence.  The durable aspect of the document allows the appointed person to act even if you have lost the ability to act, such as being comatose or disabled with some mental disorder.  The appointed person cannot do anything that is not listed in the document, so be careful what you put in the document.

The living will is a declaration to the world that you have considered the issues surrounding disabling illness and end of life, and have made the decisions as indicated in the document.  This is usually referred to in discussions about "pulling the plug".  But in fact, the document can also be tailored to direct other actions, such as maintaining nutrition and hydration.

The health care power of attorney is very similar to the living will, in that it relates to issues surrounding disabling illness and end of life.  However, it also appoints a specific person who will make health care decisions for you when you are unable.

One type of document I did not mention above is the Trust.  This is a document which creates a separate entity that is able to own property and pay its own debts (among other characteristics).  It is not something that everyone needs, so it is not, in my view, part of the basic set of estate planning documents.  But, there are many different trusts and they each have different functions.  Many people without a trust now might find a valuable reason to have a trust.  It is an issue to explore when you consider your own estate plan.

All of these documents require a careful consideration of the issues before finally writing the words.  Estate planning is not simply a production of paper, it is a review of your life and of your goals and aspirations.  For many it can result in a fairly simple set of directives to your heirs, but it is impossible to determine that without first looking at the landscape.  I recommend to all that before you set the idea of an estate plan on the shelf or back burner, take a look at your life and ask yourself if you are confident that everything is arranged the way that is best for you and your family.  If you are not sure, then you need to spend time learning about it, and perhaps talking to a lawyer to craft a plan that is right for you.

Do you owe the IRS?

There are plenty of people who have gotten behind in paying taxes to the IRS.  Don't let yourself feel alone if this has happened to you.  In today's economic climate, there are many who are right there with you between this "rock and a hard place," especially in my area of Dayton, Ohio, which has had in 2005 one of the highest rates of foreclosure in the country.  There are a lot of reasons people find themselves in tax trouble: health care costs, lost jobs, mismanagement of money, victims of crimes and fraud, the list goes on.

There are options available to pay the IRS.  But in the end, no matter what, it is going to cost you.  Not more than your fair share, but the IRS is firm in one respect at least: that if someone properly owes tax under the law, then they should be ready to pay them or as much as can be paid under reasonable circumstances.  In fact, this is not much more than we as individuals might expect from someone who owes us money.  And in fact, most people are willing to pay what they believe to be their fair debts.

A taxpayer who owes more than can be paid at one time has 2 main options.  The first is the Installment Agreement.  This results from the disclosure to the IRS of all the taxpayer's financial information, workplace, monthly income, monthly expenses, and assets owned, like cars, houses, investments, boats, real estate, etc.  If current income and assets available for sale can't pay the taxes due, a forumla calculates what can be afforded by the taxpayer to make a montly payment.

The second option is an Offer In Compromise (OIC).  This is an offer by the taxpayer to pay a percentage of the total taxes due in exchange for the IRS commitment to not press for collection of the total amount due.  This is a harder agreement to obtain since the IRS is agreeing to never seek collection on a portion of valid taxes due.

One last point: those ads you see on the TV and elsewhere in which a service provider says they can get the IRS to accept "pennies on the dollar" for your taxes due are little more than the unreal "free lunch."  They can't get the IRS to write off anything unless you already have nothing.  So, if you are reading this and have some tax problems, or know someone who does, chances are you are not going to get any "pennies on the dollar" deal.  I can get you started on a real tax plan that will keep the IRS from breathing down your neck and give you a chance to get your life back in order.

Ohio's new CAT

Any one who follows the news in Ohio, and others interested in tax matters of the nation, will know something of the new Commercial Activity Tax (CAT) regime set in motion in Ohio in June 2005.  This is an effort to encourage more business growth in Ohio by lowering a number of taxes (franchise, property, income) for a signficant portion of the taxpayers in Ohio, and replacing these with a single tax based on the gross receipts of the business.

Ohio's legislature passed the legislation without precisely defining some important terms.  There are several subsequent announcements which have dealt with some of these matters.  No doubt, there will be more to come.  No one really knows the full impact or the significance of the changes that were implemented.  I will definitely return to this topic as it develops.

Welcome

Welcome to my new experiment in blogs.  As you can see, this is a work in progress and I hope to have  interesting information and commentary here (or have more here) in the near future.  If you have a topic that might deserve some attention, please let me know.

As an introduction, I am an attorney in Dayton, Ohio.  I am also a Certified Public Accountant.  Since graduating law school in 1994, I have been serving my clients generally in a capacity as a business consultant.  Prior to returning to my home in Dayton, I worked overseas as a tax and business consultant.  So, in all liklihood, the remainder of my career will revolve around business, financial, tax, and operational matters faced by business owners and by the businesses of my clients.

My practice focuses on estate planning (wills, trusts, powers of attorney), tax, business start ups, corporation law, real estate, and financial planning for businesses and business owners.