Attorney Suzanne Sayward discusses Fiduciaries, for our Smart Counsel for Lunch Series. Please watch and if you have any questions or want to learn more please call us at 781 461-1020.
What’s New at Samuel, Sayward & Baler LLC – Don’t Miss Our January 2024 Newsletter
Get Ready Small Business – the Corporate Transparency Act is Coming for You. Five Things to Know about the CTA
The Corporate Transparency Act (CTA) is a federal law passed in 2021 intended to reduce money laundering and tax fraud – noble goals. In order to achieve these goals, the federal government is going to require all ‘entities’ (other than those that are exempt…a story for another day) to file an annual report with the Financial Crimes Enforcement Network (FinCEN) disclosing detailed information about the entity and the individuals associated with it. The government expects over 32 million initial reports to be filed at an estimated cost of about $22 billion, plus an additional $2 billion each year for updated reports.
Read on for 5 Things to Know about the CTA.
1. Who has to Report?
Business entities that are required to report are called reporting companies. These include corporations, limited liability companies (LLCs), and other entities created or registered by filing a document with a secretary of state or similar state office.
Keep in mind that ‘business entities’ such as LLCs are often used as part of an estate plan especially if rental or commercial real estate is owned. Those LLCs fall within the scope of the CTA and must comply with the reporting requirements.
2. What Information is Required?
Reporting companies created before January 1, 2024, must provide information about the company and its beneficial owners. Reporting companies created on or after January 1, 2024, must provide information about the company, its beneficial owners, and its company applicants.
A. Company Information
The reporting company must provide its name and any alternative names, the address of its principal place of business, the state of formation, and its taxpayer identification number.
B. The Identities of the “Beneficial Owners”
A beneficial owner is anyone who owns at least 25 percent of the reporting company or ‘exerts substantial control over it.’ Each beneficial owner of a reporting company must furnish their full legal name, date of birth, residential address, and an identification number from a driver’s license, passport, or other state-issued identification (ID), along with a copy of the ID document.
Note that while a trust is not a reporting company, it may be subject to reporting information as a beneficial owner if ownership interests in a reporting company are held in trust.
C. What is a “Company Applicant?”
A company applicant is the person who files the business entity’s creation documents, as well as the person who directs this action. This could include the business owner(s), a lawyer, a CPA, other advisors, and potentially their assistants and staff. A company applicant is required to submit the same information as a beneficial owner.
3. What are the Deadlines for Filing?
Entities created prior to January 1, 2024, have until January 1, 2025, to file an initial report; reporting companies created after January 1, 2024 and before January 1, 2025, will have 90 days after creation to file an initial report. Entities created on or after January 1, 2025 will have 30 days to submit an initial report to FinCEN.
This is not just a one-time reporting requirement. A company, beneficial owner or company applicant must report any changes to reported information to FinCEN. For updates, the 30 days start from when the relevant change occurs. For corrections, the 30 days start after becoming aware of, or having reason to know of, an inaccuracy in a prior report. There are no safe harbors for filing an incorrect report.
4. What Happens if a Report is not Timely Filed?
The penalty for failure to file is up to two years in prison and $10,000.
5. How do you file a report?
The reports must be filed electronically via the FinCEN website.
There is a possibility of at least temporary relief for small businesses in the form of a bill entitled ‘The Protect Small Business and Prevent Illicit Financial Activity Act (H.R.5119)’ which was passed by the House and is currently before the Senate. If passed, this bill would extend the deadline for existing companies to January 1, 2026. The deadline for companies formed on or after January 1, 2024 to file their initial report would be codified as 90 days; and the deadline for companies to report changes in their reports would be extended from 30 to 90 days.
If you have a small business that is an LLC, a corporation or other registered entity, you should consult with your business attorney about your filing duties. If you have an LLC or other entity for liability protection or as part of your estate plan, we recommend you consult with your CPA to discuss your reporting obligations and the steps needed to achieve compliance.
Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit our website at www.ssbllc.com or call 781/461-1020.
January, 2024
© 2024 Samuel, Sayward & Baler LLC
Hope and Planning for The New Year
Attorney Suzanne Sayward gives us a message of Hope and Planning for the New Year, for our Smart Counsel for Lunch Series. Please watch and if you have any questions or want to learn more please call us at 781 461-1020.
Important Numbers for 2024 Estate Tax Planning
Important Numbers for 2024 Estate Tax Planning
Each year around this time, the IRS comes out with the inflation adjusted federal Estate and Gift Tax exemption amounts for the following calendar year. Here are the numbers for 2024.
2024 Federal Estate Tax Exemption
The federal estate tax exemption is the amount that each person is permitted to pass on free of any federal estate tax. For 2024, this amount is $13.61 million per person (up from $12.92 million in 2023) which translates into $27.22 million for a married couple.
2024 Annual Gift Tax Exclusion
The Annual Gift Tax Exclusion amount is the amount that a person may gift to any number of other individuals during a calendar year without impacting the donor’s Lifetime Gift Tax exclusion. For 2024, this amount will be $18,000 per person. For example, a grandparent may give each of his or her five grandchildren $18,000 for a total of $90,000 during 2024 without needing to file a gift tax return (form 709) reporting the gifts and without any impact on the donor’s Lifetime Gift Tax exclusion.
2024 Lifetime Gift Tax Exclusion
In addition to the Annual Gift Tax Exclusion, each person has a Lifetime Gift Tax exclusion which is currently equal to the federal estate tax exemption – $13.61 million for 2024. If gifts in excess of a person’s Lifetime Exclusion amount are made, tax on the excess gifts is payable by the donor (person making the gift) at the rate of 40%. To the extent a person makes gifts over and above the Annual Gift Tax Exclusion amount, their Lifetime Gift Tax exclusion amount is reduced
2024 Gifts to Spouses
Amounts passing to a U.S. citizen spouse either at the death of the first spouse or during lifetime in the form of gifts, pass free of federal and Massachusetts estate tax regardless of the amount.
The same does not apply for non-U.S. citizen spouses. When one spouse dies leaving assets to a surviving non-U.S. citizen spouse, there is no marital deduction permitted for those assets. Since the deceased spouse may leave $13.61 million free of federal estate tax, the lack of a marital deduction does not matter for many people.
Lifetime gifts to a non-U.S. citizen spouse are limited to $185,000 (2024) per calendar year.
What about Massachusetts?
Massachusetts has its own estate tax system which until very recently had a $1 million threshold for taxable estates. As of October 4, 2023, we have a $2 million exemption and this is effective for estates of decedents dying on or after January 1, 2023. This amount is not indexed for inflation so it will take another act of the Massachusetts legislature to increase it. But still, we are grateful for the bump up to $2 million ($4 million for a married couple who undertake estate tax planning).
Keep in mind that Massachusetts does not have a gift tax. As such, there is no limit on the amount you may give away under Massachusetts tax law.
If you are interested in discussing estate tax planning or creating a gifting plan, please contact our office to schedule a time to meet with one of our attorneys.
Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.
November, 2023
© 2023 Samuel, Sayward & Baler LLC
What’s New at Samuel, Sayward & Baler LLC – Don’t Miss Our October 2023 Newsletter
Five Ways to Protect your Estate
When we meet with clients for their estate planning, I ask them about their goals. One of the most frequent answers I hear is that they want to ‘protect their estates.’ Of course, my next question is, from what? There are a variety of risks that estate planning can address when timely and properly undertaken. Read on for five ways to protect your estate from risks that can negatively impact the estate, and legacy, you intend to leave.
1. Protect your assets from long-term care costs.
One of the biggest concerns people have when they are planning their estates is that their assets will be consumed by their long-term care costs. Given the very high cost of such care, whether provided at home or in a long-term care facility, this is a valid concern. While many people think Medicare will cover long-term care costs, it does not. Advance planning to protect assets from spend down on long-term care costs often includes creating and funding an irrevocable trust. Depending on age, health and financial circumstances, purchasing a long-term care insurance policy which provides financial assistance for services like home care, assisted living, or nursing home care is another excellent way to protect a legacy from loss to long-term care costs.
2. Protect the inheritance you leave your beneficiaries
It is essential to thoughtfully decide how your assets will be distributed upon your passing. If you have minor children or beneficiaries with special needs, it is critical that assets not pass directly to these beneficiaries but instead pay into a Trust for them. A person with a disability who is receiving or may be entitled to receive public benefits may lose those benefits if they receive an inheritance.
Under the law, a minor is not legally able to receive assets. As such, if a minor is named as a beneficiary, a court appointed conservator will be required to collect the benefit on behalf of the minor. The conservator will need to manage the assets and report to the court on an annual basis – time consuming and expensive. Once a beneficiary turns age 18, the beneficiary is entitled to receive the asset – often another bad result.
Leaving an inheritance to beneficiaries in trust is often beneficial even if your beneficiaries are non-disabled adults. An inheritance that passes outright to beneficiaries is subject to the easy reach of their creditors such as a divorcing spouse, failed business, lawsuit, etc. Structuring your estate plan to leave the inheritance to your beneficiaries in trust will protect it from the easy reach of those creditors.
3. Protect your estate from avoidable costs and taxes
One key aim of estate planning is to minimize expenses and taxes that can diminish the value of your estate. Estate taxes can significantly reduce the assets you leave behind. Strategies like creating trusts, gifting assets during your lifetime, and making use of tax exemptions can help reduce the impact of estate taxes.
Furthermore, the way your assets are titled and structured can affect administrative costs. Proper titling of assets and careful planning can avoid probate and streamline the estate settlement process, saving both time and money for your beneficiaries.
4. Protect your unique assets
If you possess unique assets like a vacation home, valuable art, or collectibles, it’s crucial to incorporate them into your estate plan. These assets often hold sentimental value and can be a significant part of your legacy. The last thing most people want is to have their heirs fighting over their possessions following their deaths.
To protect and preserve these unique assets, your estate plan should clearly outline how they should be managed or distributed. You might consider creating a family trust to oversee the vacation home’s usage and maintenance, or specifying how your art collection should be appraised and distributed among your heirs.
By planning for these unique assets, you preserve your legacy by ensuring they continue to hold value and significance for your loved ones in the years to come.
5. Protect your privacy
Maintaining privacy is a fundamental aspect of estate planning. When you work with an estate planning attorney, you can establish measures to safeguard your personal and financial information.
One critical tool for privacy protection is the revocable living trust. Assets titled in a trust will avoid probate, a public court process that exposes your estate details to the public record. This means your assets can be distributed privately, without the need for public disclosure.
Additionally, working with professionals who understand the importance of confidentiality ensures that your affairs remain private during the estate settlement process. Protecting your privacy not only shields your financial matters from unnecessary public scrutiny but also preserves your family’s confidentiality during a potentially challenging time.
In conclusion, protecting your estate and preserving your legacy involves a comprehensive estate plan that considers various factors, from minimizing long-term care costs and taxes, safeguarding the inheritance you will leave, and planning for your unique assets. Working with an experienced estate planning attorney will help you tailor a plan that aligns with your specific goals and priorities, ensuring that your legacy is preserved and passed on as intended.
Attorney Suzanne R. Sayward is a partner with the Dedham law firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit our website at www.ssbllc.com or call 781/461-1020.
October, 2023
© 2023 Samuel, Sayward & Baler LLC
Estate Planning for Out of State Real Estate
Attorney Suzanne Sayward discusses Estate Planning for Out of State Real Estate, for our Smart Counsel for Lunch Series. Please watch and if you have any questions or want to learn more please call us at 781 461-1020.
What’s New at Samuel, Sayward & Baler LLC – Don’t Miss Our July 2023 Newsletter
What’s Love Got to do with it? – Estate planning for Second Marriages
As June is sometimes referred to as ‘wedding season’, what better time to talk about critical planning for those who dip their toes into the legal status of ‘married’ for the second (or third, or fourth) time.
Marriage is not just about declaring your love in the presence of your family and friends. Marriage is a legal contract which creates certain rights and obligations under the law for those who enter into that contract. While most people understand that divorce results in a couple’s assets being divided between them as a court determines if they cannot agree to terms themselves, not everyone is aware that marriage creates rights in a surviving spouse as well, and unlike divorce, it doesn’t matter whether it was a 2-week long marriage or a 2-decade long marriage.
Death without a Will
When someone dies without a Will in place they are said to have died ‘intestate’ and their probate estate will be distributed under the intestate laws of the state in which they were domiciled at the time of death. If a married person dies intestate, the determination of the share of the probate estate that will pass to the surviving spouse is based on the decedent’s other family members who survive. For example, if husband dies leaving wife and children surviving and all of the couple’s children are children of their marriage, then husband’s entire estate will pass to the surviving spouse. However, if either husband or wife has a child from a prior marriage/relationship, then the amount passing to the surviving spouse is the first $100,000 plus 50% of the remaining probate estate.
Death with a Will
A Will is the estate planning document that controls the distribution of a person’s probate estate. If you do not want the Commonwealth of Massachusetts to dictate the distribution of your estate, then make a Will that sets out your wishes. Under the Massachusetts Uniform Probate Code (enacted in 2012) even a Will made prior to a new marriage remains valid where that Will leaves assets to the decedent’s children.
But Beware the Spousal Elective Share
However, even if a deceased spouse leaves a Will, there is a Massachusetts statute that grants a surviving spouse the right to ‘take against the Will’ of the deceased spouse and claim the so-called spousal share. Similar to the intestate share, the amount of the spousal share depends on who are the other surviving family members of the decedent. For example, if the decedent left descendants, then the surviving spouse would be entitled to $25,000 and a ‘life estate’ in one-third of the remaining estate. While this law is intended to protect a surviving spouse from being disinherited, the effect of this statute can be to wreak havoc on an estate plan in a second marriages and can feel especially unfair in short-term marriages.
What’s the Solution?
As with so many things, the solution lies in advance planning. A prenuptial agreement which is properly entered into before the marriage, is the best way to make sure that both parties’ intentions are carried out. This allows the parties, and not the Commonwealth of Massachusetts, to determine how their assets will be distributed in the event of divorce or death.
If we can be of help to you with these or other estate planning or estate and trust administration matters, please contact our office to schedule an appointment to meet with one of our attorneys.
Attorney Suzanne R. Sayward is a partner with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. She is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.
June, 2023
© 2023 Samuel, Sayward & Baler LLC