Archive for the ‘Thursday Reports’ Category

The Thursday Report – 02.20.14 – 2014 What is April 22, 2015?

Posted on: February 20th, 2014

2014 FLORIDA TAX INSTITUTE EDITION

Quotes from the 2014 Florida Tax Institute

The Jack Freeland Experience

Remembering Michael Keane

Federal Estate Tax Planning for Same Sex Couples – Part 3

Physician Tax Update Series – Sales Tax Applicable to Leasehold Improvements by Michael O’Leary

W. George Allen – A University of Florida and National Hero Who Overcame Racial Obstacles to Succeed in Practicing Law and Helping Others.

What Debtor Creditor Lawyers Need to Know About Student Loans

Seminar and Webinar Announcement – The JEST, the SCGRAT, and the E-Street Software

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Calfee, Leimberg, and Gassman

Professor Dennis Calfee, Steve Leimberg, and Alan Gassman reflect upon what a great event the Florida Tax Conference is and what a wonderful thing an open bar can be! What a great day for UF!

Detzel, Gassman, and Phillips

Conference Chair Lauren Detzel, Alan Gassman, and Professor and Practitioner A. Brian Phillips who practices in Orlando, Florida discuss the Thursday Report and the mitigation of the statute of limitations near the Gassman Law Associates table.

Mark your calendar for Wednesday through Friday, April 22 through April 24, 2015 for the 2nd Annual Florida Tax Institute.

Quotes from the 2014 Florida Tax Institute

It is a unique opportunity when you can hear tax specialists in academia along with practitioners in the business.  Getting the different perspectives is invaluable and keeps you current as to not only prevailing law but also planning strategies that others are utilizing.”

- Steve Rosenbloom, Sheldrick, McGehee and Kohler, LLC, Jacksonville, FL

“This is a well planned, organized and executed conference!”

            - Tim Bronza, Business Valuation Analysts, LLC, Maitland, FL

“It is extremely motivating to continue practicing tax law at the highest professional standard.”

            - Robert Middleton, Nisen & Elliot, LLC, Chicago, IL

Josh Proper gave us his favorite quote from Professor Calfee:

“Put on your ice skates because then you’ll be ready when hell freezes over!”

“I went to prep school, undergraduate, law school and LL.M. at Florida and Florida is the only place I send a check.”

“Everyone is innocent until proven indigent.”

- A. Brian Phillips, A. Brian Phillips, P.A., Orlando, Florida, Class of 1990 and Professor of Criminal Tax Law

SPECIAL THANKS TO PROSKAUER ROSE, LLP AND DAVID PRATT

David Pratt

The Florida Tax Institute has been a great success.  It was estimated that 20 students from the LL.M. program would sign up.  In reality 70 signed up. David Pratt and his firm, Proskauer Rose, were kind enough to donate an additional $10,000 to fund the attendance of the extra students so hats off to Proskauer Rose for their very generous donation!

The Jack Freeland Experience

 Jack Freeland was a well loved and extremely talented and somewhat eccentric tax law professor at the University of Florida who many believe led the program to the preeminence that it still enjoys.

What follows is Tom Ellwanger’s and Bruce Bokor’s description of the Jack Freeland experience:

Tom Ellwanger’s Story:

For nearly 40 years, taking a tax law course in Gainesville gave you pretty good odds on encountering James J. “Jack” Freeland.  If that happened, the odds were even better than you’d consider becoming a tax lawyer, even if such a thought had never previously crossed your mind.

He was the scion of a well-known Miami family.  Jackson Memorial Hospital is named after his grandfather; his father owned Byron’s Department Stores, which later became JByron.  Jack did everything possible to neutralize his early advantages.  As a young man, he led a life which was sufficiently dissolute that his Puritanical father cut his inheritance to $100.  His response, he would say, was to dishonor his father’s memory by spending the entire $100 in “one night of riotous living”-this at a time when $100 would buy plenty of riotous living.

He graduated from Duke in 1950, graduated second in his class from the University of Florida College of Law in 1954, and became a graduate fellow at Yale.  He then joined the Miami law firm of Hugh F. Culverhouse as a federal tax lawyer.

His career there was short but productive.  After a year he was chosen to manage the firm, but by 1957 he had returned to Gainesville to teach tax law.  He turned that experience into nearly 40 years of entertaining war stories, with the best ones always told on himself.

He would recount how he got pretty good at tax litigation, to the point where the local IRS District Counsel wasn’t much of a match.  One Monday morning, however, he walked into court and found the District Counsel, unaccountably smiling at him.  Suddenly the courtroom doors flew open and there entered “two men in bowties carrying briefcases-lawyers sent down from the Chief Counsel’s Office in Washington,” who proceeded to kick Jack around the courtroom, leaving him dazed while they calmly repacked their briefcases and left for the airport.

Ah, yes.

As a tax professor, he defied expectations by being exceptionally entertaining and delightfully unstructured.  He disliked teaching from formal notes or an outline.  He disliked standing in one place.  He strove for spontaneity and achieved it while still making the most abstruse points clear.

He spoke a language all his own.  That hated element of trust income tax law, the throwback rule, became “the throwup rule.”  And, dollars saved by good tax planning became “real dollars”-real because they aren’t reduced by income tax.

His mentor, good friend, and writing partner was Professor Richard B. Stephens.  Professor Stephens was as brilliant and respected as Jack, although two men could hardly differ more.  One was dry, orderly, and dignified.  The other one wasn’t.  The pair collaborated on Fundamentals of Federal Income Taxation, the most widely used textbook, and, with Professor Carr Ferguson of NYU, on Federal Income Taxation of Estates and Beneficiaries, a ground-breaking explanation of one of the more arcane areas of tax law written, so clearly that an English major could understand it.

The two men also collaborated on establishing a graduate tax program at Florida in 1974.  The program has produced many of the outstanding tax lawyers in the country.  After the retirement of Professor Stephens, Jack was director of that program from 1977 through 1982.

Unfortunately, the creation of the program meant fewer chances for undergraduate law students to experience Jack.  Before that, he was recognized as the Outstanding Law Professor at Florida five times.  When in 1982 the Florida Bar Tax Section began to recognize an Outstanding Tax Attorney in the State of Florida, Jack was the first recipient.  That same year he was named a University of Florida Distinguished Service Professor, thus achieving the highest faculty rank at the school.

He had at least three wives-his private life was somewhat confusing to outsiders, if not to him-but this simply burnished his legend.

Probably the only complaint his students could have is this-through his brilliance, his enthusiasm, and his teaching skill, Jack gave us all the impression that tax law was clear, comprehensive, and above all, fun.  I for one feel somewhat misled.   But, I consider that was cheap price to pay for a chance to experience a great guy.

Bruce Bokor’s Story:

About 8 of us had Jack for a seminar course, Advanced Corporate Taxation, before there was an LL.M. program.

This course was by invite only for us “tax nerds with good grades in tax”. Jack loved the course and the students, and I think he gave us a final exam, but he told us we were all getting A’s.

He liked us so much that he had a party for us at his home the night all law school finals were over.

When we arrived, Jack was outside in shorts and a T shirt  smoking his cigarette with lots of clothes and other personal items laying on the ground next to him. Jack told us there would be no party because his wife had thrown him out of the house, and she was going to file for a divorce on Monday. I do not know which number wife this was, but Jack had no problem finding other wives or women.

Remembering Michael Keane

Michael keane

We are very sad to note the passing of St. Petersburg litigator, Michael J. Keane.  Michael was a great friend of almost every client he represented, and had magical powers both in the conference room and the court room.

Michael was always very sympathetic to clients having business, family, and emotional challenges.  Michael settled his matters whenever he could, but also would not hesitate to go to court to fight for his clients rights.

Perhaps one in one-hundred or three hundred lawyers has the passion, total dedication and amazing raw talent that Mike Keane had and so freely shared.

Mike had so many close friends in the community including from the time he spent as a great father, a baseball coach and a friend and confidant for many.  Almost everyone who practices in St. Petersburg and many of us who practice in the Tampa Bay area have a couple of great stories about Mike.  It is time to tell them!

Mike’s amazing partners Shirin Vesely, Brandon Vesely and Charles Gerdes and associates, R. Garrison Mason and Nicole M. Ziegler, along with their wonderful staff will carry the torch to help a great many people in the upcoming years.  Let’s wish them and Michael’s family the very best, and remember how privileged we are to carry our own torches to help others in need while serving as platforms to uphold and improve the integrity of our legal, tax and judicial systems.

We welcome any comments and suggestions for further observance of Michael Keane and express our most sincere condolences to his family and friends.

Federal Estate Tax Planning for Same Sex Couples

By: Alan S. Gassman, Esq. and Danielle Creech, Esq.

The following is a continuation of our sharing sections from the book we are writing entitled The Florida Advisors Guide to Counseling Same Sex Couples in 2014.  Alan Gassman will be presenting these materials at the Wealth Council Florida Forum on Friday, March 21, 2014 in Orlando, Florida.  More details regarding that seminar appear below.

Any questions, comments, and suggestions on these materials would be greatly appreciated:

CATEGORIES OF SAME SEX MARRIAGE RECOGNITION RULES

There are two basic categories of same sex couple recognition rules. The “state of celebration” and the “state or residence.”

1. “State of Celebration”

For some purposes, such as with the IRS and federal income estate and gift tax rules, a same sex couple will be considered as married, as long as their marriage is recognized in the jurisdiction where the ceremony and licensing took place, notwithstanding that the couple may live in a state that does not recognize their marriage, such as Florida.

2. “State of Residence”

For many purposes, however, a same sex married couple will not be considered as eligible to receive married couple rights if they reside in a state that does not recognize their marriage. An example of this is Medicaid eligibility.  Presently the Medicaid statutes do not require the states that administer the Medicaid program to recognize a same sex marriage.  The same applies for social security and the Family and Medical Leave Act.

DOMESTIC PARTNERSHIPS

Many Florida counties and cities have adopted domestic partnership registration ordinances, which permit same-sex couples to register as a Domestic Partnership to be provided with some or all of the following legal rights:

1.         The ability to visit one another and receive confidential healthcare information from facilities and providers.

2.         The ability to make healthcare decisions for one another.

3.         The ability to receive information from schools and other educational entities with respect to the education of each other’s children.

4.         The ability to have priority to serve as one another’s guardian if ever need be.

5.         The ability to make funeral and burial decisions.

In order to register as a Domestic Partnership, each partner must normally be at least eighteen (18) years old, and not be married or in another Domestic Partnership relationship and not related by blood.  The parties must normally reside together in a mutual residence.

Typically each party must agree to be jointly responsible for each other’s basic food and shelter and for the maintenance and support of the Domestic Partnership.  Each partner typically agrees to immediately notify the clerk of court for the county where they reside if the terms of the Domestic Partnership arrangement are no longer applicable.

The registration papers are typically required to be signed by both partners in front of two (2) witnesses and a notary.

The counties that offer this designation will typically issue a Certificate of Domestic Partnership to confirm the registration of the arrangement.

The county ordinances will typically provide for reciprocity so that domestic partners from other counties with similar statutes will bestow the same rights on visiting domestic partners.

The following Florida cities and counties have adopted a Domestic Partnership Registry.

Florida Counties:

Broward County

Leon County

Miami-Dade County

Monroe County

Orange County

Palm Beach County

Pinellas County

Sarasota County

Volusia County

Florida Cities:

Clearwater

Gainesville

Key West

Kissimmee

Miami

Miami Beach

Pensacola

Punta Gorda

Sarasota

South Miami

St. Cloud

St. Petersburg

Tampa

Tavares

West Palm Beach

The Pinellas County Domestic Partnership Registration Information and Summary of Rights and Legal Effects can be obtained by emailing agassman@gassmanpa.com

CONFLICT OF INTEREST RULES

      Advisors will have to be very careful to not violate ethical and practical rules with respect to conflicts of interest. It is important to educate clients so that they understand that information provided to a lawyer or other advisor under joint representation will be accessible to both clients, and that in the event of a conflict, the common lawyer would not be able to advise either client with respect to general subject matter without mutual consent.

Florida Bar’s Professional Responsibility Rule 4-1.7 provides the following language for regulation of conflict of interests between current clients.

RULE 4-1.7 CONFLICT OF INTEREST; CURRENT CLIENTS

(a) Representing Adverse Interests. Except as provided in subdivision (b), a lawyer shall not represent a client if:

(1) the representation of one client will be directly adverse to another client; or

(2) there is a substantial risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a conflict of interest under subdivision (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent                                                   representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a position adverse to another client when the                                           lawyer represents both clients in the same proceeding before a tribunal; and RRTFB – May 1,                                                 2013;

(4) each affected client gives informed consent, confirmed in writing or clearly stated on the record at                                        a hearing.

(c) Explanation to Clients. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.

(d) Lawyers Related by Blood or Marriage. A lawyer related to another lawyer as parent, child, sibling, or spouse shall not represent a client in a representation directly adverse to a person who the lawyer knows is represented by the other lawyer except upon consent by the client after consultation regarding the relationship.

(e) Representation of Insureds. Upon undertaking the representation of an insured client at the expense of the insurer, a lawyer has a duty to ascertain whether the lawyer will be representing both the insurer and the insured as clients, or only the insured, and to inform both the insured and the insurer regarding the scope of the representation. All other Rules Regulating The Florida Bar related to conflicts of interest apply to the representation as they would in any other situation.

The Mike O’Leary Physician Tax Update Series – Sales Tax Applicable to Leasehold Improvements

O'Leary

 

Attorney Michael O’Leary of the Trenam Kemker firm in Tampa, Florida recently lectured on hot tax topics for physicians and physician practices.  The following is his section on sales tax applicable to leasehold improvements.  His contact information is as follows:

D. Michael O’Leary
Trenam Kemker
101 E. Kennedy Blvd, Suite 2700
Tampa, FL 33602
813-227-7454
moleary@trenam.com

A. Overview. Sales tax is imposed on the periodic payment of commercial rent, even though the lessor and the lessee are related parties.

B. Current DOR Position. Based on Seminole Clubs, Inc., 745 So. 2d 473 (Fla 5th DCA 1999), the Florida Department of Revenue has asserted that the construction of leasehold improvements by commercial tenants is also subject to the Florida sales and use tax if (i) the leasehold improvements are a condition of occupancy so that a failure to construct the leasehold improvements would result in a default under the lease and (ii) the improvements become the property of the landlord either during the term of the lease or at the end of the lease.

C. Seminole Clubs. In Seminole Clubs, the City of Sanford, the landlord, gave Seminole Clubs, Inc, the lessee, the option of expending five percent of gross revenues on capital improvements, in lieu of paying cash “rent,” in order to retain possession of premises. The court held that the Lessee’s capital improvements to the golf course premises represented “rent in kind” subject to sales tax.

D. Ruehl. In Ruehl, Case No. 2009-CA-1503, the landlord required the lessee, a retail mail tenant, to completely refurbish the interior of the store. There was no requirement that the tenant spend a particular amount of money on the improvements. The tenant challenged the position of the Florida Department of Revenue that the leasehold improvements were taxable as “rent in kind.” The Circuit Court of the Second Judicial Circuit in Leon County held that amounts spent by the tenant were not subject to sales tax. The factors cited by the court were as follows:

1. There was no record evidence to suggest that the amount the lessee spent on the improvements for refurbishing of the interior of the leased premises was in lieu of rent;

2. There was no requirement that a particular minimum amount of funds be expended;

3. There was no provision for the lessee to be credited against rental payment for such costs;

4. There was no evidence of record that the amount of rent to be paid was somehow manipulated by this provision. Rather, the court concluded, it was simply an expense which the tenant had to incur to get the premises in a condition that would be suitable for its intended purposes.

E. On January 3, 2012, the First District Court of Appeals affirmed the trial court’s holding that leasehold improvements constructed under two commercial leases were not subject to sales and use tax. Florida Department of Revenue v. Ruehl No. 925, LLC, 76 So.3d 389 (Jan. 3, 2012). The appeals court held that the parties to each of the leases did not “intend for the costs of the leasehold improvements to be part of the total rent charged” and therefore the “costs of the leasehold improvements were not part of the total rent and therefore not subject to tax under section 212.031, Florida Statutes.” The Department did not appeal the decision to the Florida Supreme Court.

F. After hearings DOR issued new proposed rules. The rules were never finalized, and new proposed rules are expected in the next few months. There is a bill to phase out the commercial rentals tax, but probably not much chance of passing due to the amount of revenue from the tax which is well over a billion in revenue raised annually.

 W. George Allen – A University of Florida and National Hero Who Overcame Racial Obstacles to Succeed in Practicing Law and Helping Others

By: Alan S. Gassman, Esq. and Dena Daniels

Born on March 3, 1936 in a totally segregated Sanford, Florida, Attorney W. George Allen was the first African-American to receive his J.D. from the University of Florida Law School. Allen grew up working in the celery fields of Sanford, Florida where the county closed down the black schools in the winter and forced every able-bodied black person to work in the fields.  Blacks were arrested for not working.   Mr. Allen never saw a toilet flush until he was four years old. He grew up in a small house on a dirt road and attended elementary school, middle school, and high school in all black programs.

After graduating with the highest grade point average from his high school, Crooms Academy, in 1954, Allen attended college at Florida A&M University in Tallahassee, FL. While he was a student there, Allen was a high level seeker. He mentions in his book, “Where the Bus Stops,”  “I sought out the hardest, most demanding teachers because I learned more from teachers who were demanding and who challenged students to achieve at their highest level.” Allen was extremely active on campus. He became a member of the Alpha Phi Alpha fraternity in 1955.  Allen became vice president and was elected president during his senior year of Beta Nu Chapter of Alpha Phi Alpha. He was also a member of the ROTC.  While in college, Allen suffered financial hardship, “Also, in my freshman year I did not have funds to buy the required texts, so I borrowed my books, principally from athletes who were mostly uninterested in studying and reading the books. I would read the entire book and go to class to take notes.” Because Allen did not have enough money to afford his books, he had two jobs during his junior year. Without being affected by his hardship, Allen gained popularity at FAMU, “I was popular, smoked a pipe, wore bowties, and engaged in my share of extracurricular activities. I made many trips to Hoffman Restaurant and Bar, which was near the campus and where most of the popular students met to drink Spearman Beer.”

Upon graduation in 1958, he was commissioned as a 2nd Lt. in Army Intelligence. In 1960 Allen applied to four law schools: the University of Florida, Florida A&M University, Harvard, and the University of California at Berkeley. Being accepted to the three of the four schools (he never heard from Florida A&M Law School), he decided to attend the University of Florida after George Starke (a Sanford native and the first black to be admitted to the University of Florida Law School) and Regina Langston (one of the first blacks to attend the University of Florida Medical School) withdrew from these University of Florida graduate schools due to unbearable racial discrimination.

Mr. Allen faced significant racial mistreatment from fellow students, but he had some support from the administration. In his book, “Where the Bus Stops”, Mr. Allen shares one of the many tensed racial moments that he experienced at the University of Florida School of Law. During his second semester of law school, Mr. Allen was standing in line for over 30 minutes to register for courses; the courses were assigned on a first-come, first-served basis. Mr. Allen details in his book:

“When it was my turn to choose courses, Ralph Paul Douglas, whom I did not know, stepped in front of me and said, ‘boy I’m next’. I became incensed about being called boy and his attempt to move in front of me, so I hit him with a right cross on the chin and knocked him out. I stepped over Ralph, spread my list of courses in front of Professor Weyrauch, and said, ‘Sir, I would like to register for these courses.’ The professor signed me up, I turned, stepped over Ralph and left the library with many students whispering about my violent behavior.”

Much to his surprise, years later, Mr. Allen appeared in West Palm Beach, FL for a hearing and the presiding judge was none other than the receiver of his deadly cross, Ralph Paul Douglas. Automatically realizing who each other was, the judge asked Mr. Allen, “Should I duck?” and his response was, “Only if I am insulted.” The two laughed as they both reflected on the once tensed situation, but regardless of their past, Judge Douglas was fair and justice was served.

Throughout his law school career Mr. Allen experienced an insurmountable amount of threats and discrimination. Allen and his wife attended a wedding in Tampa in 1958, and to celebrate they went to the famous Columbia Restaurant. They were not permitted to eat there because of their color. He mentions: “That treatment buttressed my desire to attend law school and fight to end discrimination in public accommodations in all institutions in Florida.” He even got into a few physical altercations. In an interview he stated, “I made it known that I don’t believe in non-violence like Martin Luther King. You bother me, I’m violent.” His no nonsense attitude shaped him to be the perfect individual to successfully handle the rigor of being black in a southern institution of higher learning. Allen graduated from the University of Florida Law School in 1963. He has run a successful practice in Ft. Lauderdale, FL for forty-two years, and he has helped to liberate many minority organizations and individuals from being mistreated.  Mr. Allen indicates that there is still a significant amount of discrimination and societal resistance to equal treatment, but he is proud of what he and other black lawyers have accomplished in the past five decades.

Please be sure to read W. George Allen’s autobiography, entitled “Where the Bus Stops.”  You will not want to stop until you are completely done with this book.

Dena Daniels is from the small town of Jasper, FL and is the first individual from both sides of her family to receive a bachelor’s degree.  Dena Daniels is a second-year law student at Stetson University College of Law. She was amongst the first group of students from Hamilton County High School to complete the dual-enrollment program at North Florida Community College; she graduated high school with 62 college credit hours. Dena graduated with her B.S. in Business Administration from the University of South Florida and her Masters of Business Administration from Valdosta State University. Dena is seeking a concentration in Social Justice Advocacy and is a law clerk at Gassman Law Associates.

What Debtor Creditor Lawyers Need to Know About Student Loans

By: Scott Cornwell

Scott Cornwell is currently a third year law student at Stetson University College of Law and a Law Clerk for Gassman Law Associates, P.A. He expects to graduate in May of 2014 with his J.D. and M.B.A.

Student loan debt has recently reached $1.2 trillion and currently accounts for roughly 6% of the national debt.1 With an influx of students seeking higher education, it is unlikely that this cumbersome debt will abate any time soon. Therefore, practitioners must ensure they remain up to date with the current law governing student debts.

Discharge of Student Loan Debt in Bankruptcy Proceedings

            Although many of Americans are encumbered by student loan debt, the bankruptcy courts are not inclined to provide much relief. To get a student loan dismissed, one would need to show “undue hardship”2, a very high standard that is commonly associated with a debilitating illness. Although undue hardship normally involves a debilitating illness, being diagnosed does not guarantee a successful claim. When adjudicating on a claim of undue hardship, the court must use a totality of the circumstances test.3  Essentially, the court looks at every aspect of a debtor’s situation and assesses it on a case-by-case basis.

            For instance, In re Hicks, involves a debtor with Multiple Sclerosis, an incurable and  degenerative  neurological disorder.4  The debtor worked part-time while her husband earned the majority of the family income. The Court looked at the income of both the debtor and her husband when deciding whether or not the debt rose to the level of an undue hardship. The Court asked the question, “Can the debtor now, and in the foreseeable future, maintain a reasonable, minimal standard of living for the debtor and the debtor’s dependents and still afford to make payments on the debtor’s student loans?” In answering the question, the court held that because her husband could work and was likely to maintain his current pay, there would be no undue hardship against the debtor, despite her illness.

            More often than not, a client’s situation will not rise to the level of an undue hardship. When making a claim for undue hardship, practitioners will be responsible for ensuring their clients have realistic expectations regarding the claim.

Where the Loan Came From Definitely Matters

            Student loans come in two forms, one is backed by the federal government and the other  is provided by private lending institutions. The provider of the loan makes a huge difference in regards to collections on delinquent accounts. The largest differences are found in the statutes of  limitation, how the creditor can collect the debt, and judgment renewal.

Federal Student Loans

Pursuant to  20 U.S.C.A. § 1091a(a), loans backed by the federal government have no statute of limitations with regards to collections. Furthermore, 20 U.S.C.A. §1091a(b) provides that “… no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action…” may be taken. The federal government reserves many powers to ensure it can collect on student loan debt.

In the unfortunate circumstance that a student loan enters default, the government can look to withholding money from your wages, withholding money from your tax refund or other federal payments (also known as a treasury offset), or pursue a judgment against your delinquent debt.

A judgment against a debtor sought by the government is governed by  20 U.S.C.A. §3201a. Going further, 20 U.S.C.A. §3201c establishes that the governments lien survives for 20 years and is subject to one renewal of 20 more years.

Private Student Loans

Unlike the federal government, private loan servicers have a statute of limitations to bring a cause of action against a debtor. The statute of limitations depends on the state, but in Florida it is governed by Florida Statutes §95.11 and any actions must be brought within five years. It is important to note that this is five years of non-payment, if a debtor stops payment for a year and then makes a random payment, the term begins all over again.

Private loan servicers cannot affect federal benefits in the same manner as the government, but they can seek to garnish wages, lien property, and pursue other remedies associated with obtaining a judgment in the state of the client’s loan origination.

Every state will be different regarding judgments and the length of time in which they expire. In Florida, judgments are governed by Florida Statutes §55.081 and expire after a term of twenty years. Although the §55.081 provides for only twenty years, Petersen v. Whitson, established that judgments can be extended by filing another suit and, essentially, renewing the judgment.5

Going forward, it is safe to assume that student debt is not going anywhere soon. A wise practitioner will be well versed in the laws governing student debts because many of their clients, current and future, will be encumbered  and have as assortment of questions when their education bill comes due.


1 Chris Denhart, How the $1.2 Trillion College Debt Crisis is Crippling Students, Parents and the Economy, Forbes (August 07, 2013, 12:30PM), http://www.forbes.com/sites/specialfeatures/2013/08/07/how-the-college-debt-is-crippling-students-parents-and-the-economy/
2 In re Hicks, 331 B.R. 18 (Bankr. D.Mass. 2005)
3 Id.
4 Id.
5Petersen v. Whitson, 14 So.3d 300 (Fla. 2d DCA 2009)

Seminar and Webinar Announcements

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To register for this webinar, please click here.

Applicable Federal Rates

Below we have this month’s, last month’s, and the preceding month’s Applicable Federal Rates because for a sale, you can use the lowest of the 3.

Applicable Federal Rates.February 2014

Seminars and Webinars

THE CLEARWATER BAR ASSOCIATION 444 SHOW – ASSET PROTECTION, ESTATE PLANNING AND LLC LAW UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman, Christopher Denicolo and Kenneth Crotty

Additional Information:  To register for the webinar please visit www.clearwaterbar.org

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THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, March 4, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

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FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

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TAX AND ASSET PROTECTION BASICS FOR THOSE WHO REPRESENT PHYSICIANS AND MEDICAL PRACTICES

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

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STRUCTURING JOINT EXEMPT STEP-UP TRUSTS: EMERGING TOOL TO MAXIMIZE STEP-UP IN BASIS

Date: Tuesday, March 18, 2014 | 1:00 – 2:30 p.m.

Location: Online webinar sponsored by Stafford Publications, Inc.

Speakers: Alan S. Gassman, Christopher Denicolo and Edwin P. Morrow, III, Esq.

Additional Information: To register for the webinar please visit https://www.straffordpub.com/products/structuring-joint-exempt-step-up-trusts-emerging-tool-to-maximize-step-up-in-basis-2014-03-18 or email agassman@gassmanpa.com

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COMPOUNDING THE PROBLEMS AND OPPORTUNITIES FOR COMPOUNDING PHARMACIES

Date: Wednesday, March 19, 2014 at 12:30 p.m. or Tuesday, April 1, 2014 at 5:00 p.m.

Location: Online webinar

Speakers: Lester Perling and Alan Gassman

Additional Information: To register for the March 19, 2014 webinar please click here. To register for the April 1, 2014 webinar please click here.

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COUNSELING SAME SEX COUPLES IN 2014

Date: Friday, March 21, 2014 | 10:30 – 12:00

Location: Holiday Inn at the Orlando Airport

Additional Information: For more information and to register for the program please email agassman@gassmanpa.com

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LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

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FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

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DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Sponsored by Gassman Law Associates, P.A. Co-sponsors invited.

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

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1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Jerry Hesch and Alan Gassman will cover Buy-Sell Agreements and associated planning.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

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THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

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40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

We welcome questions, comments and suggestions on variable annuities, which will be Alan Gassman’s topic for this conference.

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

The Thursday Report – 02.13.14 – Beatles, Same Sex, and Landlord Liens

Posted on: February 13th, 2014

Intro without firm name

 

Article Titles Correct

Our musical production Being for the Benefit of Mr. Kite has reached number one on the list of Youtube musical tax videos of all time, as documented by the Thursday Report Self-Serving Documentation Team (TRSSDT). TRSSDT thanks New York Actress and Singer Megan Crain for adding a special twist to an already twisted court decision.  You can see this talented artist sing the song and if you like we can send you a continuing education certificate for 3 minutes.  Just click here

O'Leary with quotes CORRECT

Attorney Michael O’Leary of the Trenam Kemker firm in Tampa, Florida recently lectured on hot tax topics for physicians and physician practices.  The following is his section on the IRS program that offers tax relief from misclassification of workers.  His contact information is as follows:

D. Michael O’Leary
Trenam Kemker
101 E. Kennedy Blvd, Suite 2700
Tampa, FL 33602
813-227-7454
moleary@trenam.com

            A. Overview. Whether or not a worker is performing services as an employee or an – independent contractor is generally dependent on whether or not the service recipient has the right to control and direct the services provided by the worker.

            Misclassifying a worker as an independent contractor instead of an employee can result in severe consequences for the employer, including a failure to pay required payroll taxes on compensation paid to the worker. Trying to fix a misclassification on a prospective basis has, in the past, often presented the issue of whether to also address this retroactively and/or a heightened exposure to the IRS seeking a retroactive reclassification and the associated liability for taxes, interest and penalties. As a result, employers have tended to just stay the course and live with the misclassification risk.

            B.        Voluntary Classification Settlement Program – Worker Misclassification Tax Relief. In September, 2011, the IRS launched a new voluntary correction program, known as the Voluntary Classification Settlement Program or “VCSP,” that allows employers to voluntarily reclassify workers from independent contractors to employees at a greatly reduced retroactive payroll tax cost. The program was revised in December, 2012 (Announcement 2012-45).

            C. Eligibility for VCSP. To be eligible for the VCSP, the employer:

            1. Must consistently have treated the workers in the past as nonemployees;

            2. Must have filed all required Forms 1099 for the workers for the previous three calendar years before the date of the application;

            3. Cannot be currently under employment tax audit by the IRS, the Department of Labor (“DOL”) or a state agency concerning the classification of these workers (can be under an income tax audit and still qualify); and

            4. Must have complied with results of a prior examination if the employer was previously audited by the IRS or DOL for the classification of workers.

            To participate in the VCSP, the employer must file Form 8952, Application for Voluntary Classification Program. Form 8952 can be filed at any time, but should be filed at least 60 days before the date the employer wants to begin treating the class or classes of workers as employees.

            D. Relief Provided by VCSP.

            Employers that are eligible and participate in the VCSP will receive the following relief:

            1. The employer will only be required to pay an amount equal to 10% of the employment tax liability that may have been due on compensation paid to the reclassified workers for the most recent tax year (which is approximately 1 % of the compensation paid to the reclassified workers for the most recent year) (the “VCSP Payment”);

            2. No penalties or interest will be due on the VCSP Payment; and

            3. The employer will not be subject to an employment tax audit regarding worker classification for prior years.

            E.         Other Consequences to be Considered: Although the VCSP provides relief from unpaid payroll taxes, employers must be aware of other consequences arising from the reclassification of employees. The areas in which the VCSP provides no relief include:

            1. The impact of the failure in the past to make any required pension contributions to a qualified plan with respect to the reclassified workers;

            2. The impact of the failure in the past to provide health and welfare benefits to the reclassified workers; and

            3. The impact of the failure to comply with wage and hour laws applicable to the reclassified workers.

            F. Summary. For many employers, the VCSP provides an excellent opportunity to begin the proper classification of workers as employees at a modest tax cost. However, proceeding under the VCSP program can open up a Pandora’s box that heightens the exposure to other costs and consequences. Thus, all implications arising from the reclassification of workers should be considered and evaluated before deciding to seek relief under the VCSP.

            Quality Stores/Severance Payments ­

            On October 1, 2013, the United States Supreme Court granted a writ of certiorari in U.S. v Oualitv Stores, Inc. (In re Quality Stores, Inc.), cert. granted No. 12-1408. Accordingly, the case will be considered by the Court during the 2013-2014 term.

            Normally, FICA tax must be paid on severance pay. However, in Quality Stores, 693 F.3d 605 (6th Cir. 2012), the Sixth Circuit held that there is no FICA tax due on severance pay that qualifies as supplemental unemployment benefits (“SUB payments”). The opinion of the Federal Circuit’s in CSX Corp. v United States, 518 F.3d 1328 (Fed. Cir. 2008) reached the opposite conclusion, that employers and employees both must pay FICA tax on severance payments. As a result of the split of authority between the Circuits, and because of the size of the potential FICA tax refund obligations, the Internal Revenue Service requested certiorari of the Quality Stores case.

       If Quality Stores is affirmed, billions of dollars of FICA taxes collected from employers and their former employees for tax years during which severance payments were made and for which protective FICA tax refund claims were filed would be refunded. If Quality Store is reversed severance pay that qualifies as SUB payments will continue to be subject to FICA for both employers and employees.

            Summary of Quality Stores case. Quality Stores closed all of its stores and distribution centers, and made lump sum severance payments to its employees pursuant to a plan. The severance payments were not linked to the receipt of state unemployment benefits, nor were they attributable to the provision of any particular services. Quality Stores paid FICA tax on the severance payments and filed a claim for a refund.

            SUB payments are a type of severance payment defined by IRC Section 3402(0 )(2)(A) as (1) an amount paid to an employee; (2) pursuant to an employer’s plan; (3) because of an employee’s involuntary separation from employment, whether temporary or permanent; (4) resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions; and (5) included in the employee’s gross income.

            Under Revenue Ruling 90-72, the IRS takes the position that, for severance pay to be exempt from wages subject to federal income tax withholding and FICA, severance payments must be linked to the receipt of state unemployment compensation and cannot be paid in a lump sum.

            In arriving at its conclusion, the Sixth Circuit analyzed the legislative history of the definition of wages for FICA and federal income tax withholding purposes. The Sixth Circuit concluded that SUB payments were considered wages only for federal income tax withholding, and not FICA.

            At this time, all employers who have had involuntary employee terminations during the years currently open under the statute of limitations should consider filing protective FICA tax refund claims.

This is the second part of our series on advising same sex couples:

The chart below describes a number of issues that are discussed in our outline, from the standpoint of whether it is advantageous for a same sex couple to go to a state that permits marriage, and to be married there and reside in Florida, or in any other state in the United States.

            POSSIBLE ADVANTAGES OF SAME SEX MARITAL STATUS

POSSIBLE DISADVANTAGESOF SAME SEX MARITAL STATUS

GOOD FOR ONE SPOUSE, BAD FOR THE OTHER?

Public recognition of an important relationship and commitment. Possible social, professional, business, and family  discrimination for being in a public same sex relationship. Whether marital law can apply.
Presents and a great party. Loss of separate Social Security benefits on death of spouse. Pension inheritance rights- a spouse must consent in writing to not being the sole beneficiary of a federal pension plan.
Government or employer-provided health insurance and tax advantage of employer paying health insurance. For one spouse to receive Medicaid benefits, the other spouse (the community spouse) may need to spend down considerable assets. Alimony is taxable to receiving spouse, but deductible by the paying spouse if requirements are met.
Immigration rights. The marital tax penalty will often apply- higher tax brackets.
Ability to roll over an IRA on the death of one spouse to defer taxable withdrawals. Combined income can cause increase in 3.8% Medicare surtax threshold is $200,000 for a single person, and only $250,000 for a married couple.
Federal estate tax marital deduction for persons who are U.S. citizens having otherwise taxable estates (exceeding $5,340,000 for 2014 decedents). Joint income can cause taxability of Social Security benefits- an individual can earn up to $25,000 without being subject to tax on Social Security benefits.  A married couple can only earn up to  $34,000 without becoming subject to tax on  Social Security benefits.
Portability- the ability of the surviving spouse to make use of whatever part of the $5,340,000 exemption has not been used by the first dying spouse. Potential divorce scenarios, and uncertainty as to what marital law would apply.
The wealthier partner who is a U.S. citizen can make use of the $14,000 per year gifting allowance and the $5,340,000 exemption credit of the less wealthy spouse.
Tax-free transfers in the event of a divorce.
Deductibility of alimony to equalize estate income tax brackets in the event of a divorce.
Possible survivor benefits under governmental and employer pension plans.
Possible Social Security survivor benefits.
Possible creditor protection for tenancy by the entireties property in bankruptcy- discussion.
“Being Married” – Dr. Phil “Being Married” – Rodney Dangerfield

COMMUNICATIONS ETIQUETTE

Socially Acceptable Terminology For Same Sex Couple Conversations

NOT Socially Acceptable Terminology for Same Sex Couple Conversations

“Partner”1

“Husband” or “Wife”

“Equal Protection/Rights”

“Special Rights”

“Gay” or “Lesbian”

“Homosexual”

“Relationship” or “Couple”

“Homosexual Couple”

“Sexual Orientation”

“Sexual Preference”

“Significant Other”

“Domestic Partner”

 


1 Steven Petrow, Is it Gay Husband? Lesbian Wife? Or What?, New York Times (November 27, 2012).

With the prospect of more same sex couples, advisors will also want to be wary of proper etiquette.  According to the GLAAD Media Reference Guide which advises journalists on using appropriate terms, preferred terms include “gay,” “gay man,” “lesbian,” or “gay person/people” rather than “homosexual.”  In addition, “sexual orientation” or “orientation” is preferred, while “sexual preference” is considered offensive.

 Steven Petrow, a New York Times contributor addressing questions on gay and straight etiquette, suggests that the most practical approach is to listen to how a couple introduces themselves or refers to each other, since this will vary from couple to couple. This is an important matter to consider, and advisors should be careful to avoid “downgrading” a couple’s status.  As Petrow explains, “[w]ith all the work that it took for [same sex couples] to make their relationship legal in New York, my pal was not about to settle for ‘friend’ to describe the man he’s been partnered with for nearly three decades.”  When in doubt, Petrow advises that you should not be shy to ask the couple directly how they would like to be referred to.  “It’s not a nosy question–it’s a respectful one,” he says. A copy of Mr. Petrow’s article can be obtained by emailing agassman@gassmanpa.com.

 In an ever changing society, it is best to ask your client if they prefer to be referred to as gay, lesbian, partner, friend, spouse, or some other term.

WHERE TO LIVE- SO MANY DIFFERENT CHOICES

The following chart shows selected US states and some of the characteristics that planners can review with same sex couple clients who are considering where to live.  Other charts in this outline provide further information.  It is unknown whether states that do not recognize same sex marriages would let such couples enter into “Pre-Nuptial” or “Post-Nuptial” agreements or equivalent contracts from a public policy standpoint.

Recognizes Same Sex Marriage

Recognizes Same Sex Marriages From Other States

Same Sex

Prenuptial Agreements Upheld

Tenancy by the Entirety Allowed for Same Sex Couples

Prohibits Workplace Discrimination due to Sexual Orientation

Spouse Has Rights to Homestead

Permits Joint Adoption

California

Yes

Yes

Yes

No

Yes

Yes

Yes

Florida

No

No

Unknown

No

No

No

No2

Nevada

No

No

Unknown

No

Yes

Yes3

Yes

North Carolina

No

No

Unknown

No

No

No

No

Texas

No

No

No

No

No

No

No

New Jersey

Yes

Yes

Yes

Yes

Yes

Yes

Yes

New York

Yes

Yes

Yes

Yes

No

Yes

Yes

 


2 Florida’s Third District Court of Appeals ruled that a statute from 1997 which prohibited “homosexuals” from adopting was unconstitutional. Florida Dept. of Children and Families v. Adoption of X.X.G., 45 So. 3d 79 (Fla. 3d Dist. App. 2010).

3 Same sex couples will receive rights to homestead if registered with the state as domestic partners.

Same sex couples must become educated as to the various considerations that apply to them if they are married versus if they stay unmarried, and also other questions, such as the following:

    • Where to live.
    • Whether to have pre and postnuptial agreements.
    • Whether to have domestic partnership agreements in place and whether the law will allow it to be enforceable.
    •  How to handle beneficiary designations.
    • Survivor and employee spouses benefits and choices.
    • Whether they should file joint tax returns or separate returns, if married.

 YOU CAN MARRY YOUR COUSIN BUT NOT YOUR SAME SEX PARTNER

Many of the states that ban same sex couples from marrying allow 16 year old first cousins to tie the knot. Below is a chart showing the states that allow first cousins to marry and whether those states allow for same sex marriage (only 5 out of 16 do).  Thus, 11 U.S. states allow cousins to marry but do not allow same sex marriages, notwithstanding that the birth defect rate of children produced out of these marriages is between 4-6%.

Legal to Marry First Cousin Legal to Marry Same Sex Partner Minimum Age Minor Can Marry With Consent
Alabama Yes No 16
Alaska Yes No 16
California Yes Yes No Age Limit
Colorado Yes No 16
District of Columbia Yes Yes No Age Limit
Florida Yes No 16
Georgia Yes No 16
Hawaii Yes Yes 16
Maryland Yes Yes 16
Massachusetts Yes Yes Male: 14; Female: 12
New Jersey Yes Yes 16
New Mexico Yes No 16
New York Yes Yes 16
North Carolina Yes No 16
Rhode Island Yes No Male: 18; Female: 16
South Carolina Yes No 16
Tennessee Yes No 16
Vermont Yes Yes 16
Virginia Yes No 16

Please consider attending Wealth Council’s March 21st one day conference for estate planners in Orlando, Florida.  Alan Gassman will speak on counseling same-sex couples.  For more information please contact agassman@gassmanpa.com.

When dealing with personal property and liens, the question of whose lien is superior is one that is somewhat hazy to all parties involved. Both banks and landlords can have liens on an individual’s personal property, but only one has priority.

Perfecting a Lien

Concerning a landlord lien, the landlord is not required to file or record a lien or any other instrument in the public records in order to perfect his lien. The landlord’s lien is established and  perfected when personal property belonging to the tenant is brought onto the leased premises1.

When dealing with a bank lien, in order to perfect a lien against personal property, a UCC Form 1 must be executed and filed.2 Without the filing of this form the lien is not perfected and therefore has no standing.

Which Lien Has Priority

Without giving it much thought, the majority of people would automatically assume that the bank lien undoubtedly trumps the landlord lien. WRONG. According to Florida Statute §83.08 (2) the landlord lien “shall be superior to any lien acquired subsequent to the bringing of the property on the premises leased3. This means that the landlord lien trumps all proceeding liens brought against the personal property. A lien may have priority over landlord lien only if there was a perfected lien in existence before the individual signed a lease and brought his/her property onto the rented premises.

How to Seize Property

Once a landlord has determined that their lien is in fact superior (no prior existing perfected liens), they may enforce the lien when the lessee has failed to pay rent.

When attempting to enforce a lien, a landlord must obtain a Distress for Rent Writ. According to Florida Statute §83.11 “Any person to whom any rent is due may file an action in the court in the county where the land lies having jurisdiction of the amount claimed, and the court shall have jurisdiction to order the relief provided in this part. The complaint shall be verified (under oath) and shall allege the name and relationship of the defendant to the plaintiff, how the obligation for rent arose, the amount or quality and value of the rent due for such land, or the advances, and whether payable in money, an agricultural product, or any other thing of value.”4

When obtaining a distress writ, the landlord, based on Florida Statute §83.12, must pay a cash bond for double the amount of rent that is claimed to be due.5 Once the bond is paid (and approved by the clerk) and the writ is properly executed, the complaint can then be filed with the court requesting that the court issues a Distress for Rent Writ. Once the writ is issued by the court, the Sheriff then serves the complaint to the tenant. The purpose of the Distress for Rent Writ is to prevent the tenant from “disposing, moving or in any way secreting any of its personal property except on the premises”6 This writ informs the tenant that the property is currently under the control of court orders and is the most effective way for a landlord to collect the past due rent.

Hopefully, it is now clear as to whose lien is superior when more than one lien exists on personal property. We all like to think that banks run the show, but based on law, it is apparent that landlords are the underdog and come out on top in the end.

“Hey, I wanted you to know I wish you were mine”. Who knew that the lyrics to this hit song by the legendary rock band, Boston, would now be in relation to the rights of their many hit songs. 

The amendments to the copyright laws in 1976 granted artists who signed over their rights with little to no bargaining power in the early years of their career to finally reap the benefits of the rights to the music by terminating a copyright grant. The amendments to the copyright laws grant artists the opportunity to terminate a copyright grant 35 years after its first publishing.

Releasing their first album in 1976, Boston has reached the 35 year requirement set forth in the copyright amendment and are now on the hunt for the rights, but like Elmer Fudd hunting Bugs Bunny, this would not be an easy catch. In January of this year, lead guitarist and songwriter, Tom Scholz, filed a termination notice in an effort to reclaim rights from the band’s first two albums. His termination notice was rebutted with a lawsuit against him brought by the band’s original co-manager, Paul Ahern and Next Decade Entertainment. The suit claims that Scholz was employed on a exclusive basis as a songwriter and that Scholz, in 1975, “assigned to Ahern all musical works written by him prior to that date as well as those composed, created or conceived in whole or in part by him for a period of five years from that date of agreement.”

The lawsuit claims that there was a modification to the original agreement in 1978, but it had no effect on the 1975 “songwriter agreement”. Scholz claims that his copyright terms are governed by the 1978 modification, therefore, the grant would be eligible for termination in 2015.

There has been no progress in the case, but only time will tell if Boston will be able to have “More than a Feeling” from their music and finally get some rights. 

1 Jursinski, Kevin.Commercial Lease Newsletters. “Distress for Rent”. June 2007.  http://www.kfjlaw.com/kevinjursinski-122012/inc/Newsletter-June-2007.pdf
http://www.wbsonline.com/resources/filing-the-ucc1-form-for-personal-property-liens/
3  Fla. Stat. §83.08 (2)      
4 Fla. Stat. §83.11
5 Fla. Stat. §83.12
6http://www.kfjlaw.com/kevinjursinski-122012/inc/Newsletter-June-2007.pdf

Ever wonder how you can find out what a company’s website said in the past? The past is here, and this is a great discovery tool.

 You can simply go to the website www.archive.org and use the WayBack Machine. To utilize this world wide web online library, type in the company’s  website address and the WayBack Machine presents a calender in which you can view the website as it was on a specific day in the past.

 For example, click here to see he Colonel’s website from 2003!

 Fun Fact: The name Wayback Machine was chosen as a reference to a plot device used in The Rocky and Bullwinkle Show. The plot device, the “WABAC machine” (pronounced “Wayback”),was used by Mr. Peabody and Sherman to travel back in time to visit–and sometimes alter–important events in history.

 Our favorite quotes from the Rocky & Bullwinkle show:

 1. “Military intelligence, sounds like a contradiction of terms.” – Bullwinkle

 2. Bullwinkle: “You just leave it to my pal Rock.  He’s the brains of the outfit.”

General: “And what does that make you?”

Bullwinkle: “What else? The executive.”

 3.[Rocky and Bullwinkle have been flattened by a truck]

Bullwinkle: This movie’s getting kinda… 

Rocky: Don’t say it! 

Bullwinkle: Two-dimensional. 

Beatles will exist without us.” - George Harrison

“I didn’t leave the Beatles. The Beatles have left the Beatles‑‑but no one wants to be the one to say the party’s over.” ‑John Lennon

“Explaining the motives behind the breakup of the Beatles: “Personal differences, musical differences, business differences, but most of all because I have a better time with my family.” ‑ Paul McCartney

On December 31st, 1970, Paul McCartney filed a lawsuit in London=s High Court against the other three Beatles and Apple Corps to dissolve The Beatles’ partnership. He requested that the partnership be dissolved, that a receiver look over Apple throughout the duration of the case, and that Allan Klein, their business manager, be formally charged with mismanagement of The Beatles funds.

 The three reasons cited in favor of dissolution were: (1) The Beatles no longer performed together, and thus, the purpose of the partnership no longer existed, (2) the other Beatles breached their partnership agreement by appointing Allen Klein as exclusive business manager, even after objections from McCartney, and (3) McCartney had not been given audited accounts during the partnership.

 The suit was not settled for years, and The Beatles did not officially dissolve until 1975. Even though McCartney was correct that Klein had severely mismanaged their funds, Klein was not charged and, in fact, received approximately four million dollars of The Beatles’ legacy.

APR

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

February 2014 Annual 0.30% Annual 1.97% Annual 3.56%
Semi-Annual 0.30% Semi-Annual 1.96% Semi-Annual 3.53%
Quarterly 0.30% Quarterly 1.96% Quarterly 3.51%
Monthly 0.30% Monthly 1.95% Monthly 3.50%
January 2014 Annual 0.25% Annual 1.75% Annual 3.49%
Semi-Annual 0.25% Semi-Annual 1.65% Semi-Annual 3.46%
Quarterly 0.25% Quarterly 1.73% Quarterly 3.45%
Monthly 0.25% Monthly 1.93% Monthly 3.44%
December 2013 Annual 0.25% Annual 1.65% Annual 3.32%
Semi-Annual 0.25% Semi-Annual 1.64% Semi-Annual 3.29%
Quarterly 0.25% Quarterly 1.64% Quarterly 3.28%
Monthly 0.25% Monthly 1.63% Monthly 3.27%

S&W

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information:  Please contact agassman@gassmanpa.com for more information.

THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, February 18, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information:  To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

COUNSELING SAME SEX COUPLES

Alan Gassman is speaking to the WealthCounsel Florida Forum on the topic of Counseling Same Sex Couples

Date: March 21, 2014 | Time to be determined

Location: To be determined.

Additional Information:  To register for the forum please contact Alan Gassman at agassman@gassmanpa.com.

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education credit for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

Notable Seminars

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters:       Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor:  UF Law alumni and UF Graduate Tax Program

Additional Information:  For more information and to register for the program please visit www.floridataxinstitute.org.  There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions.  See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities.  Students will be in attendance and will greatly value conversations with any advice from alumni.  Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback?  There is also a reception for all attendees and the guests on February 19, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 20, 2014 at 5:00 p.m. to thank the supporters of the University of Florida, the law school and the LL.M. program.

The Thursday Report – 02.06.2014 – Same Sex Couples Planning, Sale of Personal Goodwill and New Belize Regulations

Posted on: February 6th, 2014

Federal Estate Tax Planning for Same Sex Couples

Physician Tax Update Series – Sale of Personal Goodwill by Michael O’Leary

New Belize Regulations

Thursday Report Humor

Seminar and Webinar Announcement – The Annual Florida Bar Wealth Protection Conference, May 8, 2014 in Miami, Florida

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

University of Florida Tax Institute Webinar

Last Monday, January 27, 2014 Alan Gassman interviewed Professor Michael Friel, Professor Dennis Calfee, and Bruce Bokor, Esq. to find out about the University of Florida Tax Institute, which will be held Wednesday through Friday, February 19-21, 2014 at the Grand Hyatt in Tampa.

Please at least come by and say hello to your favorite tax professors (and visit our booth to win a bucket of Kentucky Fried Chicken) if you are in Tampa.  

To view the webinar click here.

To get a copy of the schedule for this excellent program, click here.  Please remember that you can buy a day pass and attend cocktail and breakfast events as well.

Federal Estate Tax Planning for Same Sex Couples

By: Alan S. Gassman, Esq. and Danielle Creech, Esq.

We were pleased to participate in a conference on same sex couple planning sponsored by the Pinellas County Chapter of the Florida Association for Women Lawyers at Stetson Law School.

             We will be sharing our materials in the next few editions of the Thursday Report.

             Our section on federal estate and gift tax and generation skipping tax planning for same sex couples was written for non-tax lawyers.  Please feel free to share this with anyone who wants to know what differences apply.

             We thank Henry Lee, Esquire of the Howard and Howard law firm in Detroit, Danielle Creech, Esq., and also Kylie Caporuscio, Esq., and India Ingram, J.D. for their work on our outline.

 FEDERAL ESTATE TAX PLANNING

            For more affluent married couples federal income, estate and gift tax planning will provide the most important financial differences when a couple decides whether or not to be married.

            Internal Revenue Service Ruling 2013-17

            On August 29, 2013, the IRS ruled that same sex couples will be considered as married for federal income, estate and gift tax purposes, for 2013 filings and for amending past returns based upon the normal amendment statute of limitations that prevents any change for tax years Any same sex marriage legally entered into in one of the 16 states that allow same sex marriages, the District of Columbia, or a foreign jurisdiction having legal authority to sanction same sex marriages is covered under this ruling, without regard to whether one or both  spouses live in a state or other jurisdiction that recognizes their marriage.

            The IRS pronouncement in Revenue Ruling 2013-17 indicated that individuals who have entered into alternative relationships to marriage, such as domestic partnerships, civil unions, and other non-marriage state or foreign country relationships will not be considered as married for federal income tax purposes.  The ruling provides that as of September 16, 2013, all qualified retirement plans are required to recognize same sex spouses for purposes of spousal inheritance rights and spousal rollover benefits.

            Internal Revenue Service Ruling 2013-17

            Since estate tax exclusion portability became available to taxpayers in 2011, the personal representative of the first dying spouse’s estate needed to file a Form 706 (the estate tax return) after the death of the first dying spouse in order to appropriately make the portability election for the surviving spouse.  This Form 706 needed to be filed within nine (9) months following the date of death of the first dying spouse, unless the personal representative filed for and was granted an automatic six (6) month extension to this deadline.

            However, a great number of personal representatives and surviving spouses were not aware of this deadline or otherwise did not file the Form 706 in order to take advantage of any unused estate tax exclusion amount that remained at the death of the first dying spouse.

            The IRS recently issued Revenue Procedure 2014-18, which provides for an extension of time for the personal representative of the first dying spouse to file a Form 706 with respect to the first dying spouse’s estate for the sole purpose of electing portability.  This Rev. Proc. generally allows the personal representative until December 31, 2014 to file a Form 706 for the first dying spouse’s estate if the first dying spouse died after December 31, 2010 and on or before December 31, 2013, and if no estate tax return was required to be filed for the first dying spouse because the first dying spouse died with assets with a value less than their estate tax exclusion amount.

            Under Rev. Proc. 2014-18, the taxpayer is entitled to relief under Treasury Regulation §301.9100-3, which allows the personal representative to file a Form 706 for the first dying spouse in order to take advantage of such spouse’s unused estate tax exclusion amount.  This Rev. Proc. only applies if the taxpayer is the personal representative of the estate of a decedent who (1) has a surviving spouse; (2) died after December 31, 2010 and on or before December 31, 2013; and (3) was a citizen or resident of the United States on the date of death.  Further, this Rev. Proc. only applies if the personal representative is not required to file an estate tax return because the first dying spouse’s assets were less than his or her estate tax exclusion amount upon his or her death or if the taxpayer did not timely file an estate tax return to elect portability.

            When filing Forms 706 pursuant to this Rev. Proc., the Form 706 must be complete and properly prepared in accordance with Treasury Regulation §20.2010-2T(a)(7) (i.e., it must be prepared in accordance with the instructions to the Form 706), and it must be filed on or before December 31, 2014.  Additionally, the following language must be included at the top of the Form 706 in capital letters: “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER §2010(c)(5)(A)”.

            If the above requirements are satisfied, then the personal representative will be considered to have timely filed the Form 706 to elect for portability to apply, and the personal representative will receive an estate tax closing letter acknowledging receipt of the decedent’s Form 706.

            The impetus for this Rev. Proc. is the recent Supreme Court case of United States v. Windsor, in which the Supreme Court struck down Section 3 of the Defensive of Marriage Act to provide that a law defining “marriage” as a legal union between one man and one woman as unconstitutional.  After the Windsor decision, the IRS released Revenue Ruling 2013-17 to provide the IRS’ interpretation of the Internal Revenue Code vis-a-vis taxpayers’ marital status in light of the Windsor decision.  This revenue ruling held that for federal tax purposes the terms “spouse,” “husband and wife,” “husband,” and “wife,” include an individual married to a person of the same sex if the individuals were lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex.

            Rev. Proc. 2014-18 provides a good analysis of the legal effect of Windsor and Revenue Ruling 2013-17 on the tax law, and indicates that this Rev. Proc. is significantly based upon the outcome in the Windsor decision and the IRS’ interpretation of the Internal Revenue Code as a result thereof.

            Nevertheless, the benefits afforded by this Rev. Proc. are available to provide relief for late portability elections for opposite sex surviving spouses, as well as same sex surviving spouses.

            This Rev. Proc. did not address the situation where a surviving spouse has previously filed a Form 706 late, and the Form 706 was not accepted for the purposes of electing portability due to the late filing.  It seems that in this case the surviving spouse would simply need to re-file the Form 706 (assuming that it was properly completed and appropriately prepared) with the magic capitalized words on top of the first page in order to take advantage of this other relief provided by this Rev. Proc.

            Therefore, for some personal representatives and surviving spouses who neglected to timely file a Form 706 to take advantage of portability, Rev. Proc. 2014-18 provides a second chance.

            Amending Prior Tax Returns

            Revenue Ruling 2013-17 notes that under Internal Revenue Code Section 6511 same sex married couples have the option of amending their prior tax returns by going back to the earlier of (a) three years from the time the return was filed or (b) two years from the time the tax was paid, whichever is later. Same sex couples may also choose to leave the prior returns intact and not amend one or more prior tax years.

            This gives same sex couples some very good choices for income tax planning purposes, but we expect that there will be legislation and/or litigation that will determine whether returns going back farther than the normal limits described above will be amendable. Many same sex clients feel that it is blatantly unfair that they paid more tax then they should have and are unable to amend further back than three years, while others feel that it is very fair that they get the best of both worlds, for they can either amend or not amend. We expect additional political jockeying and possible litigation over whether the equal protection clause is violated if same sex couples are not allow to amend back as many years as they would like.

            Any gift tax return that involved a transfer to a spouse that used up any portion of the donor spouse’s estate tax exemption should probably be amended to regain the exemption amount, unless there are other items on the gift tax return that are best not re-opened, such as large gifts with questionable values to non-spouse individuals, because amending a gift tax return gives the IRS three years after the date of the amendment to revisit all aspects of the gift tax return amended.  We may see possible legislation changing this as well.  Could people be denied a tax right and be punished by undergoing increased audit risk as the result of amending returns to get moneys or allowances back that they would have been entitled to as a matter of federal law in the first place?

            Almost all affluent married same sex couples (or couples where one spouse is affluent) will want to go to an experienced income tax advisor with the right software, to help determine what years they should amend and what years they should not amend.

            Estate and Gift Tax Advantages of Marriage

            Before the IRS issued Revenue Ruling 2013-17, a same sex couple would not receive full married couple benefits under the estate and gift tax and income tax laws unless they were (1) married in a state that recognized same sex marriages and (2) resided in a state that also recognizes same sex marriages.

            Before this decision we published an article entitled “Why Many Affluent Same-Sex Couples Will Be Leaving Florida and Where They Should Go”.  Fortunately, the landscape changed quickly in the right direction.

            As the result of Revenue Ruling 2013-17, couples can marry in any of the jurisdictions discussed above which authorize this and have full federal tax law benefits (and the benefit of having no state income tax or inheritance taxes) in states that do not recognize same sex marriages.

            Individuals in same sex relationships who expect to be subject to federal estate taxes will want to consider several significant advantages that marriage brings:

          1.        The estate tax exemption is presently $5,340,000, and will increase with the Consumer Price Index (CPI), which generally runs 0.5-1% under the inflation rate.

If the value of investments will double every 10 years, as it has in the past for many taxpayers, then a great number of Americans will be subject to federal estate tax in years to come.

          2.        Any gift exceeding $14,000 per year, per person results in the requirement to file a gift tax return, and reduces the applicable allowance on a dollar for dollar basis.

          3.        One spouse can make a large gift and have it be considered to come one-half from the other spouse, if the other spouse will sign a “split-gift” consent return.  Therefore, a wealthy spouse can make a large gift to descendants and have it be considered to come from the less wealthy spouse, to in effect use his or her exemption.

          4.        Gifts or amounts left upon death to a non-spouse can trigger gift tax or estate tax when the exemption has been used.  The tax rate is 40%.

                       There is an estate tax marital deduction for assets that pass directly to a surviving spouse, or into a special trust that is required to pay all income to the surviving spouse for his or her lifetime.

          5.        There is also a portability allowance that allows a surviving spouse to add the unused exemption allowance of a deceased spouse to his or her own, if certain requirements are met.  These requirements are that (1) the estate of the first dying spouse files an estate tax return permitting the portability allowance to exist, (2) the allowance is limited to the amount of estate and gift tax exemption not used by the first dying spouse, (3) the surviving spouse will lose the portability allowance if he or she remarries, and then if the next spouse dies first and leaves no exemption or a smaller exemption.

                       It is important to note that the portability amount does not grow with the Consumer Price Index, and it is therefore often much better to fund a “credit shelter trust” for the surviving spouse that can benefit him or her without being subject to federal estate tax on death, notwithstanding that the trust can grow significantly during the lifetime of the surviving spouse.

          6.        Marital Deduction and QTIP Trust

            Estate and Gift Tax Hypotheticals

            The several different primary tax differences that will occur for same sex married couples could perhaps be best explained by the following hypothetical:

                        First Example

George has a net worth of $15,000,000, and his partner, Sam, has no assets other than significant retirement benefits that he uses to pay his expenses.

George would like to leave $5,000,000 to Sam and $10,000,000 to his (George’s) children, but would also like to avoid federal estate tax.

Assume that George has a $5,000,000 estate tax exemption (even though the exemption increases with the consumer price index each year and is presently $5,340,000 in 2014 – We are sparing the reader the complexity of using that uneven number).

If George dies without being married, then his estate tax would be 40% of $10,000,000, which is $4,000,000.

If George marries Sam and then dies, there will be a $5,000,000 marital deduction for what goes to Sam.  Thus, instead of George’s taxable estate being $15,000,000, it will only be $10,000,000. George’s estate tax will be $4,000,000, a savings of $2,000,000 (40% of $5,000,000).

If George marries Sam, and makes a gift of $4,000,000 to a trust for his children (that George might be a potential beneficiary of if the trust is established in an asset protection state like Nevada, Delaware, or Alaska), and Sam signs a split-gift return, then the gift will be considered to have come $2,000,000 from Sam and $2,000,000 from George. Under this circumstance, George’s estate tax allowance would be reduced to $3,000,000 but he has gotten $4,000,000 plus the future growth thereon out of his estate.

When George then dies, leaving $5,000,000 to Sam, and his remaining $6,000,000 to his children, there would be an estate tax of only $1,200,000, so the gift with Sam’s help saves $800,000 in estate tax.  ($11,000,000 -$5,000,000 = $6,000,000. $6,000,000 – his $3,000,000 exemption = $3,000,000. $3,000,000 x 40% is $1,200,000. But $6,000,000 – his $1,000,000 exemption if no split gift with Sam = $5,000,000 x 40% = $2,000,000).

If George’s gift to the special trust had been $10,000,000, then there would be no estate tax in our example because Sam and George would have each used their $5,000,000 allowances and what goes from George to Sam on George’s death passes estate tax free.

In addition to the above, George can only gift $14,000 to each child per year while unmarried without reduction of his $5,000,000 exemption..  If George and Sam are married, and George has two children, they could gift a total of $56,000 a year. These gifts would reduce neither George’s nor Sam’s lifetime exemption amounts.

This can help keep future growth in George’s assets outside the reach of the estate tax system.

Second Example of Lifetime Gifting

Suppose that instead George has a $10,600,000 estate, and that the exemption amount has increased with the CPI to $5,600,000 and will continue to go with the CPI as it does under present law.

Assume that George is now satisfied with leaving the children $5,600,000, and would like the remaining $5,000,000 to be held for Sam’s lifetime benefit.

George can die, leaving the children $5,600,000, and leaving $5,000,000 in a trust to benefit Sam for his lifetime benefit without being subject to federal estate tax on Sam’s death.  This trust is called a QTIP trust and can qualify for the estate tax marital deduction on George’s death if it pays all income to Sam.

On Sam’s subsequent death, there will be no estate tax unless the combined value of the assets he owns on death, and the assets in the marital deduction trust at the time of his death exceeds Sam’s remaining estate tax exemption amount.  If Sam dies a few years after George then it is very likely that George’s children will be very glad that this happened, because instead of paying $2,000,000 of estate tax on the $5,000,000 they lose out on getting the income for a few years, but there may be no federal estate tax liability on Sam’s estate.

Based on the above and, of course, their love, George sees it as an absolute no-brainer to marry Sam, but only after Sam signs a domestic partnership agreement.

While this law is still untested, it appears as though a domestic partnership agreement will be binding on a same sex couple regardless of whether their state of residence currently recognizes same-sex marriage. This is discussed in more detail below.

             Third Example

             What if Sam dies before George and they are married?

Then, if Sam’s will permits this and he has no assets, or all of his assets go to charity, George can have whatever is left of Sam’s $5,340,000 estate tax exemption (if Sam dies in 2014) added to George’s to reduce George’s estate tax by 40% of $5,340,000 on his eventual death ($2,316,000).  Wow, George should find someone about to die soon and marry them for this reason alone!  Yes, this is happening throughout the US.

Alternatively, whether or not George and Sam are married, George can give Sam a special power to appoint up to the amount of Sam’s estate tax exemption from assets held under George’s revocable trust to a trust that can benefit George and his children and not be subject to estate tax on George’s death.  This way George could have effective use of Sam’s unused exemption without marrying Sam.  This technique is not 100% guaranteed to work, but has been approved by IRS Private Letter rulings granted to individual taxpayers and commented upon favorably by a number of estate tax planning authorities.

      Generation Skipping Tax Implications

      The federal generation skipping tax system prevents more than a certain amount of assets being held to benefit a donor’s children without being taxed at their demise.

For example, if George has a $20,000,000 estate and wishes to leave everything to his descendants, he would be able to have $5,340,000 pass into a trust in 2014 that would benefit his children without being taxed at their level (or go directly to the grandchildren), but anything above that would have to be subject to federal generation skipping tax, which is a 40% tax imposed in addition to the estate tax.

If George marries Sam and Sam has nominal assets, then in 2014 George could leave $5,600,000 worth of assets to a trust for his children that will not be subject to estate tax or generation skipping tax when each child dies, and the remaining $14,600,000 to a QTIP marital deduction trust (like the one described above) that would pay income to Sam, and would not only have the use of whatever remains of Sam’s $5,340,000 (plus increases for future CPI adjustments) for estate tax purposes, but also for generation skipping tax exemption purposes.

Therefore, if Sam dies 10 years later and the $14,600,000 worth of assets that were generating the income for Sam are then worth $15,000,000, and assuming that Sam’s other assets do not exceed $5,340,000 in value (or higher based upon CPI increases after 2014), George’s grandchildren will pay no estate tax or generation skipping tax on the death of their parents.

Alternatively, George could make a $5,000,000 gift to a trust for children, and if Sam allows the gift to be considered as having come ½ through him by filing a split gift consent on a gift tax return, then George will have only used $2,500,000 of his estate tax and generation skipping tax exemptions.  If George later divorces Sam and leaves these assets into a trust system for his descendants, the estate tax and generation skipping tax savings will be based upon the tax rates multiplied by whatever the $2,500,000 grows into before George’s death.

The Mike O’Leary Physician Tax Update Series – Sale of Personal Goodwill

Mike O'Leary

Attorney Michael O’Leary of the Trenam Kemker firm in Tampa, Florida recently lectured on hot tax topics for physicians and physician practices.  The following is his section on the sale of personal goodwill.  His contact information is as follows:

D. Michael O’Leary
Trenam Kemker
101 E. Kennedy Blvd, Suite 2700
Tampa, FL 33602
813-227-7454
moleary@trenam.com

            A. Overview. When a business is sold, buyers typically wish to acquire assets because (i) it generates higher tax benefits and (ii) avoids possibly being liable for debts of the seller. For example, assume a corporation has a valuable patient list and other goodwill worth $5,000,000, but with a tax basis of zero, plus tangible assets worth $100,000 and with a basis of$100,000. If a buyer pays $5,100,000 for the stock of the business, it takes over the business with no step up in basis of the assets (they continue to be a total of $100,000). However, if the buyer pays $5,100,000 for the assets of the business, then the buyer acquires goodwill with a basis of $5,000,000 (and tangible assets with a basis of $100,000). The buyer can amortize the $5,000,000 of goodwill over 15 years and obtain substantial tax benefits (assuming a marginal tax rate of 30%, the tax benefits would be worth $1,500,000 ($5,000,000 multiplied by 30%).

            If the seller is a C corporation, the tax generated by the sale of assets is substantial. In the above example, the C corporation would pay federal corporate level taxes of $1,700,000 ($5,000,000 multiplied by 34%) plus state corporate level taxes of $275,000 ($5,000,000 multiplied by 5.5%). In addition, the remaining assets of $3,125,000 ($5,100,000 less $1,700,000 less $275,000) distributed to the shareholders would generate additional tax at a 23.8% rate, or $743,750 ($3,125,000 multiplied by 23.8%), assuming that the basis of the stock is zero. Accordingly, the total taxes would be $2,718,750 ($1,700,000 plus $275,000 plus $743,750).

            B. S corporations. If a corporation has been an S corporation since its organization, then profit from the sale of assets passes through to the shareholders and there are no corporate level taxes. However, if the corporation has been a C Corporation and subsequently makes an S election, then the “built in gain” at the time of the S election is subject to corporate level taxes at the highest corporate level rate, currently 35%. In general, 10 years after the S election, there is no built in gain. However, for 2009 and 2010, the 10 year period was shortened to 7 years and for 2011, the 10 year period was shortened to 5 years.

            Example. If a C corporation makes an S election effective January 1, 2009, when the value of its goodwill is $5,000,000, but then sells the goodwill, as well as the rest of its assets in 2012, when its goodwill has a fair market value of $15,000,000, then the “built in gain” subject to double tax is $5,000,000 and the balance of the gain from the sale of goodwill ($10,000,000) is not subject to corporate level taxes.

            C. Issue: Can the substantial taxes due upon the sale of assets in a C corporation or an S corporation with substantial “built in gain” be minimized?

            D. Martin Ice Cream. In Martin Ice Cream Co., 110 T.C. 189 (1998), an individual, Arnold Strassberg (“AS”), had never entered into a covenant not to compete or even an employment agreement with a corporation, and the Tax Court held that the customer relationships of AS were a personal asset “entirely distinct from the intangible corporate asset of corporate goodwill.”

            E. Howard. In Howard, No. 2:08-cv-00365 (E.D. Wash. 7/30/10), the court held that goodwill was an asset of dissolving corporation, not of its individual sole shareholder, officer, and director, who worked for corporation under contract and with covenant not to compete.

            F. Kennedy. In Kennedy,.T.C. Memo 2010-206 (2010), the owner of a corporation, Mr. Kennedy, again had not entered into a covenant not to compete or an employment agreement with the corporation. Mr. Kennedy’s corporation was a C corporation and based on some tax advice after the deal terms had been agreed to, the parties (Mr. Kennedy and the buyer, Mack & Parker) agreed to allocate 75% of the purchase price to the sale of Mr. Kennedy’s personal goodwill and 25% to a consulting agreement between the buyer and Mr. Kennedy’s C corporation.

            The Tax Court agreed with Mr. Kennedy that the C corporation owned by Mr. Kennedy did not sell any intangible assets. However, the court focused on the tax treatment of the payments received by Mr. Kennedy, and held that a purported sale of goodwill by Mr. Kennedy must be treated as ordinary income subject to self employment taxes. The Tax Court’s decision was based on various factors, including that (i) the allocation of 75% of the purchase price to personal goodwill was not grounded in any business reality, (ii) Mr. Kennedy “undertook to work for Mack & Parker for five years until his planned retirement date of December 31, 2005,” (iii) Mr. Kennedy entered into a valuable noncompete agreement and (iv) Mr. Kennedy received virtually no compensation for his services for 18 months after the sale. However, the court made it clear that personal goodwill can exist but is a question of fact in each case.

            G. H&M, Inc. T.C. Memo 2010-206 (2010), H&M, Inc. sold its insurance brokerage business to a local bank $20,000. The shareholder of H&M (Harold Schmeets) received a compensation package of $600,000 over 6 years. IRS said $300,000 of payments to Mr. Schmeets were disguised purchase price payments to H&M, Inc. The court looked at personal relationships of Mr. Schmeets, experience in running the insurance agency and said compensation was reasonable.

            Court recognized the personal goodwill of Mr. Schmeets and said

            “Though we think it is clear that some part of his compensation wasn’t for his services, it’s not necessary for us to determine the exact allocation between what he was paid for his services to the agency, his personal goodwill and his promise not to compete, since Schmeets income tax liability is not before us.”

            Essentially court concluded that transaction had economic substance and not tax motivated.

            H. Proposed Approach. Based on Kennedy and Martin Ice Cream, if a shareholder/employee has not signed a noncompete with their own company, it does not appear that failure to allocate some of the purchase price to corporate goodwill should be a major concern (unless the parties really believe that there is corporate goodwill separate and apart from their own personal goodwill). Instead, based on Kennedy, the primary concern appears to be the IRS recharacterizing the payments to the shareholders from capital gain to either compensation or payments for entering into a noncompete agreement.

            In the treatise, “Mergers, Acquisitions and Buyouts” by Ginsburg, Levin and Rocap, the authors assert that “it should be permissible for the parties to allocate no portion of the purchase price to a non-compete covenant entered into in connection with a sale of personal goodwill on the grounds that the non-compete covenant is incidental to, and protective of, the goodwill, although it is not permissible to allocate an unreasonably small amount to a consulting arrangement. “

            Accordingly, if (i) a selling shareholder will be fairly compensated for any services the selling shareholder will provide to the buyer after the sale, (ii) there is no covenant not to compete with the selling shareholder’s corporation, and (iii) the allocation of consideration to personal goodwill is based on economic reality that can be supported, there should be a reasonable basis to treat the payments for personal goodwill as qualifying for capital gain treatment.

            Note that even if the IRS successfully asserts that a portion of the proceeds are allocable to a covenant not to compete, those proceeds are taxed move favorably than amounts allocated to corporate goodwill (approximately 54% combined rate if taxed to the corporation versus maximum 39.6% rate). Based on Barrett v. Comr., 58 T.C. 284 (1972), payments made pursuant to a covenant not to compete are not subject to employment taxes.

             I. Summary (where there is a C corporation or S corporation with significant built in gain and shareholder/employees don’t have a covenant not to compete).

             1. Don’t allocate any of the sales consideration to corporate goodwill unless the parties believe that there really is corporate goodwill (don’t make a random allocation of the purchase price to corporate goodwill).

            2. Make sure that the shareholder/employees are paid reasonable compensation for their services after the closing.

            3. Allocate consideration to a shareholder’s personal goodwill based on economic reality, which should be supportable.

We thank Michael O’Leary for this contribution.  Next week we will provide his write-up on tax relief from misclassification of workers.  If you have ever felt misclassified make sure that you read next week’s Thursday Report.

New Belize Regulations

Belize has always been one of our favorite jurisdiction for off shore trusts, because of the efficiency and effectiveness demonstrated by the people of Belize, not to mention a very good trust law.  We thank Tina Arvin of our office for preparing the following.

New accounting regulations in Belize took effect on October 12, 2013.  The regulations stipulate that accounting/financial records for Belize entities must be maintained and must be accessible at a designated location.  A copy of the Belize Accounting Records (Maintenance) Act 2013 can be viewed by clicking here.

In summary, the Act requires that financial records (further defined as “financial statements; general and subsidiary ledgers; sales slips; contracts and invoices; and records and documents relating to assets and liabilities, all sums of money received and expended and the matters in respect of which the receipt and expenditure take place, all sales and purchase, and all financial transactions”) are kept in one of the following locations:

1.         In Belize, at the office of the entity’s Registered Agent; or

2.         Outside of Belize, at a designated location to be provided to such Registered Agent by written resolution.  Such resolution should include language authorizing such Belize Registered Agent to request up to five (5) years of financial records at any time and that such financial records will be provided to the Registered Agent within one (1) business day of receipt of such request.

        Clients with offshore trusts where a Belize company serves as Trustee or Co-Trustee are also required to comply with the new accounting regulations.  We have developed a Written Resolution (click here to view) that can be completed by clients and provided to the Belize Trust, Co-Trustee or Registered Agent allowing the client to maintain financial and accounting records at his or her home, office or CPA’s office.

        Failure to satisfy the above requirements will constitute professional misconduct on the part of the Belize Registered Agent, punishable by suspension or revocation of license and/or imposition of a fine.

            Clients are strongly encouraged to provide the requested documentation to Belize Registered Agents as soon as possible to ensure the continuation of a favorable professional relationship.

Thursday Report Humor

Colonel Sanders is on his death bed and has one final wish.  So he calls up the Pope and says, “Pope, I’ll donate a million dollars to the Church if you do me a favor.”  The Pope asks what it is.

The Colonel says, “You know the Lord’s Prayer? The line that says: ‘Give us this day our daily bread?’ I want you to change that to ‘Give us this day our daily chicken.'”

The Pope thinks for a minute, because after all, it is a million dollars! But then says no.

The next day, Colonel Sanders calls back and says, “I’ll up my offer.  I’ll donate one hundred million dollars if you change the line to ‘Give us this day our daily chicken.'”

The next day, an announcement goes out to all the Cardinals and Bishops all over the world.  It reads “I have good news and bad news.  The good news is that we just got a one hundred million dollar donation.  The bad news is we just lost the Wonder Bread account.”

Seminar and Webinar Announcements:

The Florida Bar Annual Wealth Protection Conference, May 8, 2014 in Miami, Florida

Please note that the annual Wealth Protection conference will be held in Miami, Florida on May 8 at the Hyatt Regency Downtown, and will feature nationally known speakers and authors Barry Engle, Jay Adkisson and Howard Fisher along with well respected and practical Florida based speakers.

We are particularly looking forward to an ethics and practice development panel discussion entitled “ What are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves” that will feature Barry Engle, Professor Jerome Hesch, Denis Kleinfeld and Alan Gassman.

Jerry Hesch will be presenting his ever improving materials on Income and Estate Tax Issues for 2014.

Please give this conference a try if you have never attended.  The interaction, synergism and information derived from the lectures and from other attendees is always dynamic.

For more information on this seminar please contact Alan Gassman at agassman@gassmanpa.com.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

February 2014 Annual 0.30% Annual 1.97% Annual 3.56%
Semi-Annual 0.30% Semi-Annual 1.96% Semi-Annual 3.53%
Quarterly 0.30% Quarterly 1.96% Quarterly 3.51%
Monthly 0.30% Monthly 1.95% Monthly 3.50%
January 2014 Annual 0.25% Annual 1.75% Annual 3.49%
Semi-Annual 0.25% Semi-Annual 1.65% Semi-Annual 3.46%
Quarterly 0.25% Quarterly 1.73% Quarterly 3.45%
Monthly 0.25% Monthly 1.93% Monthly 3.44%
December 2013 Annual 0.25% Annual 1.65% Annual 3.32%
Semi-Annual 0.25% Semi-Annual 1.64% Semi-Annual 3.29%
Quarterly 0.25% Quarterly 1.64% Quarterly 3.28%
Monthly 0.25% Monthly 1.63% Monthly 3.27%

Seminars and Webinars

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information:  Please contact agassman@gassmanpa.com for more information.

THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, February 18, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please visit https://www2.gotomeeting.com/register/625212018.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information:  To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: Tampa, Florida

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: Ruth Eckerd Hall, Clearwater, Florida

Additional Information: This session qualifies for 1 hour of continuing education creditor for lawyers and CPA’s.  To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.”  As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate limitations and problems they may cause in the future.  Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have.  For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams.  As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death.  The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

NOTABLE SEMINARS PRESENTED BY OTHERS:

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and ConferenceCenter, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters:       Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor:  UF Law alumni and UF Graduate Tax Program

Additional Information:  For more information and to register for the program please visit www.floridataxinstitute.org.  There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions.  See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities.  Students will be in attendance and will greatly value conversations with any advice from alumni.  Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback?  There is also a reception for all attendees and the guests on February 19, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 20, 2014 at 5:00 p.m. to thank the supporters of the University of Florida, the law school and the LL.M. program.

The Thursday Report – 1.30.2014 – Velveeta, Portability and What’s My Line

Posted on: January 30th, 2014

Superbowl Edition

IRS Rev. Proc. Liberates Taxpayers Who Did Not File Timely Portability Elections, by Christopher J. Denicolo, J.D., LL.M.

Velveeta Cheese and the Superbowl

Heckerling Pearls of Wisdom – Part 2

Marty Shenkman’s JEST Review from Heckerling 2014

Colonel Sanders on What’s My Line?

Seminar and Webinar Announcements:

• See Our University of Florida Tax Institute Webinar
• Attend our Private Placement Life Insurance Webinar with Jerry Hesch, Thursday, February 6 at 12:30 p.m.
• The Annual Florida Bar Wealth Protection Conference, May 8, 2014 in Miami, Florida

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

IRS Rev. Proc. Liberates Taxpayers Who Did Not File Timely Portability Elections
By Christopher J. Denicolo, J.D., LL.M.

Chris with wording

Since estate tax exclusion portability became available to taxpayers in 2011, the personal representative of the first dying spouse’s estate needed to file a Form 706 (the estate tax return) after the death of the first dying spouse in order to appropriately make the portability election for the surviving spouse. This Form 706 needed to be filed within nine (9) months following the date of death of the first dying spouse, unless the personal representative filed for and was granted an automatic six (6) month extension to this deadline.

However, a great number of personal representatives and surviving spouses were not aware of this deadline or otherwise did not file the Form 706 in order to take advantage of any unused estate tax exclusion amount that remained at the death of the first dying spouse.

The IRS recently issued Revenue Procedure 2014-18, which provides for an extension of time for the personal representative of the first dying spouse to file a Form 706 with respect to the first dying spouse’s estate for the sole purpose of electing portability. This Rev. Proc. generally allows the personal representative until December 31, 2014 to file a Form 706 for the first dying spouse’s estate if the first dying spouse died after December 31, 2010 and on or before December 31, 2013, and if no estate tax return was required to be filed for the first dying spouse because the first dying spouse died with assets with a value less than their estate tax exclusion amount.

Under Rev. Proc. 2014-18, the taxpayer is entitled to relief under Treasury Regulation §301.9100-3, which allows the personal representative to file a Form 706 for the first dying spouse in order to take advantage of such spouse’s unused estate tax exclusion amount. This Rev. Proc. only applies if the taxpayer is the personal representative of the estate of a decedent who (1) has a surviving spouse; (2) died after December 31, 2010 and on or before December 31, 2013; and (3) was a citizen or resident of the United States on the date of death. Further, this Rev. Proc. only applies if the personal representative is not required to file an estate tax return because the first dying spouse’s assets were less than his or her estate tax exclusion amount upon his or her death or if the taxpayer did not timely file an estate tax return to elect portability.

When filing Forms 706 pursuant to this Rev. Proc., the Form 706 must be complete and properly prepared in accordance with Treasury Regulation §20.2010-2T(a)(7) (i.e., it must be prepared in accordance with the instructions to the Form 706), and it must be filed on or before December 31, 2014. Additionally, the following language must be included at the top of the Form 706 in capital letters: “FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER §2010(c)(5)(A)”.

If the above requirements are satisfied, then the personal representative will be considered to have timely filed the Form 706 to elect for portability to apply, and the personal representative will receive an estate tax closing letter acknowledging receipt of the decedent’s Form 706.

The impetus for this Rev. Proc. is the recent Supreme Court case of United States v. Windsor, in which the Supreme Court struck down Section 3 of the Defense of Marriage Act to provide that a law defining “marriage” as a legal union between one man and one woman as unconstitutional. After the Windsor decision, the IRS released Revenue Ruling 2013-17 to provide the IRS’ interpretation of the Internal Revenue Code vis-a-vis taxpayers’ marital status in light of the Windsor decision. This Revenue Ruling held that for federal tax purposes the terms “spouse,” “husband and wife,” “husband,” and “wife,” include an individual married to a person of the same sex if the individuals were lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex.

Rev. Proc. 2014-18 provides a good analysis of the legal effect of Windsor and Revenue Ruling 2013-17 on the tax law, and indicates that this Rev. Proc. is significantly based upon the outcome in the Windsor decision and the IRS’ interpretation of the Internal Revenue Code as a result thereof.

Nevertheless, the benefits afforded by this Rev. Proc. are available to provide relief for late portability elections for opposite sex surviving spouses, as well as same sex surviving spouses.

This Rev. Proc. did not address the situation where a surviving spouse has previously filed a Form 706 late, and the Form 706 was not accepted for the purposes of electing portability due to the late filing. It seems that in this case the surviving spouse would simply need to re-file the Form 706 (assuming that it was properly completed and appropriately prepared) with the magic capitalized words on top of the first page in order to take advantage of this other relief provided by this Rev. Proc.

Therefore, for some personal representatives and surviving spouses who neglected to timely file a Form 706 to take advantage of portability, Rev. Proc. 2014-18 provides a second chance.

Velveeta Cheese and the Superbowl

The press has recently written about an expected shortage of Velveeta cheese this weekend. If you cannot find Velveeta try Spam. It is equally delicious or undelicious depending on the way you look at it.

Are they eating this or are they throwing it at cars?

The following should be pertinent:

Watch out for Velveeta Rita,
She will come to your party to de-cheese-ya,
And eat your crackers to defease ya,

Sticking with KFC is much less worse,
Because it is too slick to be put in Rita’s purse.

So when you stock up on picante and chips,
Visit the Colonel, or use Cool Whips,
Don’t have Velveeta, without a plan,
And you also can’t trust Sue, or John or Stan.

Velveeta cheese is not the best
But if you don’t care about your friends
It’s less expensive than the rest.

Heckerling Pearls of Wisdom – Part 2

Ken Crotty, Chris Denicolo and Alan Gassman attended the University of Miami Heckerling Institute on Estate Planning the week of January 13 – 17, 2014 and this is part 2 of their summary of a few of the outlines and presentations:

Robert B. Fleming -Representing Clients with Diminishing Capacity: What to Know and How to Bridge the Gap

This presentation provided several practical items to incorporate into the advisor’s practice:

• Never sit in front of the window. The bright light behind you makes it harder for your clients to see you.

• Speak loudly, clearly, and do not cover your mouth or place your hands on your face when speaking. Clients who are not able to hear you will almost never ask you to speak louder. If they do not have an issue hearing they will ask you to speak more softly. Clients who have issues hearing frequently read your lips to supplement their comprehension of what you are saying.

• Mr. Flemming never allows the child who brought the client to the meeting to come into the conference room before first discussing this with the client. His engagement letters state that they will not be able to come into the conference room.

• Be certain that the discussion in your conference room cannot be heard in the waiting room. Purchase a white noise machine if necessary.

Stephanie Loomis-Price and David Pratt – Wrapping Up Your Gift Tax Return with a Tidy Bow: Reporting Gifts with an Eye Toward Audit

• Make your gift tax return as boring as possible. The statement that you attach describing the valuation discount should provide a snapshot of the entire gift detailing what was given, who received the gift, and also the discounts taken. Consider reporting a sale to an irrevocable trust on the gift tax return to get the statute running on the sale instead of just reporting the seed gift made to the irrevocable trust.

• Remember to disclose charitable gifts. If there is an audit and the charitable gifts are not disclosed on the gift tax return, then the auditor may ask what other gifts were not reported. It is a matter of credibility.

Lee-Ford Tritt – Planning for Same-Sex Couples

• Advisors will need to redefine how their documents define a spouse. They will need different alternatives for different clients and this is something that you will need to discuss with the clients.

• Public policy arguments may prevent the definition of a spouse which excludes same-sex couples from being effective.

• Recognize that all same sex couples may not want to be married, either because of personal reasons or for economic reasons, such as avoiding the income tax marriage penalty and causing taxation of Social Security benefits.

Tourney Berry – Recent Developments for Fiduciaries 2014

Clients who have the desire to help charities and also save taxes have a number of opportunities that are not well-known to financial advisors. The tax benefits will almost never outweigh what goes to charity, so any client who starts off by saying that they want to give to charity to save taxes should be further questioned on whether they are willing to have less money after the transaction in order to help the charity. If the real motive is to save more taxes than what the contribution will cost the donor, end the conversation.

Besides an ordinary income tax deduction and reduction of the 3.8% Medicare tax, there are income savings techniques that can be used if the donor is comfortable making a 501(c)(3) organization a partner or shareholder in a family entity.

For example, a client with a $10,000,000 investment portfolio that has a very low tax basis might place the portfolio assets into a limited partnership, and retain the 1% General Partner interest while gifting the 99% Limited Partner interest to a charity.

The charitable gift might be valued at $6,000,000, and if the partnership thereafter sells the investments, there would be no capital gains tax recognized by the charity. This would save almost $2,380,000 of taxes, not counting state or city income taxes.

At a later time, and not based upon any pre-existing understanding, the client’s children might buy the 99% Limited Partnership interest from the charity for $600,000 in cash. It would be safest if this occurred more than three years after the donation in order to make it as clear as possible that this is not a “step transaction.”

The end result is the same as if the client had sold a discounted Limited Partnership interest to his or her children, but with the savings of almost $2,380,000 of capital gains taxes.

Another example involves the use of a charitable shareholder to avoid the tax on the reduction of stock.

If the same donor also owns 49% of a closely held corporation that can afford to redeem her, why not donate the 49% ownership interest to a charity. At a later time, the charity could be redeemed, and pay no income tax on the redemption.

Thanks to book purchasers at the 2014 Heckerling Seminar

We donated $5 for each book purchaser at the Heckerling Institute and thus wrote checks to several Universities, Colleges and Law Schools around the country. Most of the money went to the University of Florida and the University of Miami came in second (as usual!).

Thank you to everyone who supports higher education and estate and tax conferences.

Heckerling with Wording

Professor Jerry Hesch and Danielle Creech, Esq. at the Gassman Law Associates booth waiting for an order of Kentucky Fried Chicken with Velveeta cheese to arrive.

Marty Shenkman’s Heckerling 2014 Review

We were very proud that estate tax lawyer and author Marty Shenkman included mention of our JEST Trust (Joint Exempt Step-Up Trust) in his 47 page Heckerling review, which was provided in Leimberg Information Services Estate Planning Email Newsletter – Archive Message #2188 on January 24, 2014.

Marty’s summary of our JEST technique can be viewed by clicking here.

Our 2 part Estate Planning Magazine article from October and November of 2013 on the JEST Trust can be viewed by clicking here.

Don’t forget that married couples may be able to receive a stepped-up basis on all joint assets on the first death by using the JEST Trust or other techniques.

Colonel Sanders on What’s My Line

It is hard to imagine that such a recognizable figure as Colonel Sanders could have been so unknown. In 1963, when panelists on the popular TV show “What’s My Line” were asked to try to identify the occupation of Colonel Harland Sanders, not only were they stumped, but Colonel Sanders walked away with an extra $50. Maybe the panelists ate too much fried chicken and the grease went to their brains prior to the show which led to them not being able to correctly identify him.

Could this have been a set up? In 1963 there were already 900 Kentucky Fried Chicken restaurants throughout the United States which made it the largest fast food operation at the time in the U.S. Maybe he was disguised as Edward Snowden since there is no mention of Edward Snowden in the 1963 show and where was Mr. Ed? Doubtlessly making the hay somewhere.

So how does the game work? A group of panelists interview contestants with unusual occupations. The panelists are only allowed to answer “yes” or “no” to the questions, with the contestant winning $5 per “no” answer. The game ends with either 10 “no” answers (which was the case for Col. Sanders) or a panelist correctly guessing the contestant’s occupation.

Click here to view a clip of the show.

Seminar and Webinar Announcements:

See Our University of Florida Tax Institute Webinar

On Tuesday, January 27, 2014 we hosted a 15 minute webinar with Professors Friel and Calfee from the University of Florida and Bruce Bokor. You can view this informative webinar about the tax conference that will be in Tampa, Florida on Wednesday, February 19 – Friday, February 21, 2014 (1 day passes are available) by clicking here. For more information about the Institute and to register please click here.

Attend Our Private Placement Life Insurance Webinar with Jerry Hesch

On Thursday, February 6, 2014 at 12:30 p.m. Jerry Hesch and Alan Gassman will present a free live webinar to facilitate discussion of private placement life insurance and this year’s Notre Dame Tax Institute.
The Notre Dame Tax & Estate Planning Institute will be held on November 13 and 14, 2014 in South Bend, Indiana, and features two presentations being given simultaneously most of the time so that attendees can choose the presentation and speaker that best suits them. The focus this year will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis”. To register for the webinar please click here.

The Florida Bar Annual Wealth Protection Conference, May 8, 2014 in Miami, Florida

Please note that the annual Wealth Protection conference will be held in Miami, Florida on May 8 at the Hyatt Regency Downtown, and will feature nationally known speakers and authors Barry Engle, Jay Adkisson and Howard Fisher along with well respected and practical Florida based speakers.

We are particularly looking forward to an ethics and practice development panel discussion entitled ” What are the Ethical, Legal and Administrative Liability Exposures in Wealth Protection Planning and How Do We Protect Ourselves” that will feature Barry Engle, Professor Jerome Hesch, Denis Kleinfeld and Alan Gassman.

Jerry Hesch will be presenting his ever improving materials on Income and Estate Tax Issues for 2014.

Please give this conference a try if you have never attended. The interaction, synergism and information derived from the lectures and from other attendees is always dynamic.

For more information on this seminar please contact Alan Gassman at agassman@gassmanpa.com.

Applicable Federal Rates

Applicable Federal Rates.February 2014

Seminars and Webinars

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

LUNCH TALK – SOCIAL MEDIA

Date: Monday, February 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Aparna Tutak

Additional Information: To register for this webinar please visit www.clearwaterbar.org

PRIVATE PLACEMENT LIFE INSURANCE

Jerry Hesch will be joining Alan Gassman for a free 30 minute webinar to discuss private placement life insurance and this year’s Notre Dame Tax and Estate Planning Institute.

Date: Thursday, February 6, 2014 | 12:30 p.m.

Location: Online webinar

Speakers: Professor Jerry Hesch and Alan Gassman

Additional Information: To register for the webinar please click here.

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information: Please contact agassman@gassmanpa.com for more information.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information: To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

THE JEST, THE SCGRAT AND THE E STREET SOFTWARE

Please join Alan Gassman, Ken Crotty and Chris Denicolo for a 30 minute webinar describing 2 new planning techniques and also free beta testing of the EstateView software that was developed by Gassman Law Associates, P.A.

Date: Tuesday, March 4, 2014 | 5:00 p.m.

Location: Online webinar

Additional Information: To register for the webinar please click here.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices.

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: TBD

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: TBD

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: TBD

Additional Information: This session qualifies for 1 hour of continuing education creditor for lawyers and CPA’s. To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

40th ANNUAL NOTRE DAME TAX & ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Location: Century Center, South Bend, Indiana

Additional Information: The focus of this year’s institute will be on “Business Succession Planning: An Income Tax, Estate Tax and Financial Analysis.” As in past years, several sessions are designed to evaluate certain financial products and tax planning techniques so that the audience can better understand and evaluate these proposals in determining not only the tax and financial advantages they offer, but also evaluate their limitations and problems they may cause in the future. Given that fewer clients will need high-end estate tax planning with the $5 million exemptions, other sessions will address concerns that all clients have. For example, a session will describe scams that target elderly individuals and how to protect the elderly from these scams. As part of the objective on refreshing or introducing the audience to areas that can expand their practice, other sessions will review the income tax consequences of debt cancellation, foreclosures, short sales, the special concerns that arise in bankruptcy and various planning available to eliminate the cancellation of debt income or at least defer it with a possible step-up basis at death. The Institute will also continue to have sessions devoted to income tax planning techniques that clients can use immediately instead of waiting to save estate taxes far in the future.

NOTABLE SEMINARS PRESENTED BY OTHERS:

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: For more information and to register for the program please visit www.floridataxinstitute.org. There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions. See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities. Students will be in attendance and will greatly value conversations with advice from alumni. Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback? There is also a reception for all attendees and the guests on February 19, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 20, 2014 at 5:00 p.m. to thank the supports of the University of Florida, the law school and the LL.M. program.

The Thursday Report – January 23, 2014 – Dental Jokes, Heckerling & Steve Leimberg

Posted on: January 23rd, 2014

Heckerling Pearls of Wisdom – Part 1

Seminar Announcements: Steve Leimberg’s Revolutionary Legal and Estate Planning Practice Acceleration Talk at the University of Florida Tax Institute and PFAWL CLE Talk on DOMA

Affordable Healthcare Plans – The Website is Working – Example Results

Physician Personal Creditor Protection Planning for Healthcare Lawyers and Financial Advisors – with Joel Bronstein’s Outline and Checklist

Lewis Saret’s Wealth Strategies Journal 2.0

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Heckerling Pearls of Wisdom – Part 1

We attended the University of Miami Heckerling Institute on Estate Planning last week and summarized a few of the outlines and presentations for our readers, which are as follows:

Thomas W. Abendroth – Portability: Now Available in Generic Form:

• Consider not using a credit shelter trust and instead relying on portability.

• Provide that assets of the first dying spouse equal in value to the spouse’s portability allowance will pass outright to the surviving spouse, and then have the surviving spouse make a gift to an irrevocable trust using the portability allowance. Because this will be a grantor trust for the surviving spouse he or she can pay the income taxes incurred on the trust assets, and will thus work much like a “super charged credit shelter trust”, with the one difference being that the surviving spouse will not be a beneficiary of the trust unless it is properly structured and situated in an asset protection jurisdiction.

• To use the GST exemption of the first dying spouse in the example above, have the excess assets of the first dying spouse be held in a QTIP, and make a reverse GST election on the estate tax return. This will allow the GST exemption of the first dying spouse to be used on the QTIP assets. Therefore, provide that assets disclaimed from the credit shelter trust will be payable to a QTIP trust to facilitate the above.

Paul Lee- Venn Diagrams: Meet Me at the Intersection of Estate and Income Tax

• Favor recommending estate tax planning strategies that use financial leverage (such as installment sales to grantor trusts and GRATs), rather than advising clients to make large lifetime gifts. Lifetime gifts only shield the future appreciation of the gifted assets from estate tax, while leveraged estate tax planning strategies that take advantage of the low interest rate environment can result in greater estate tax savings while preserving much of the client’s exemption that can otherwise be used in making a lifetime taxable gifts or reducing or eliminating eventual estate tax.

• Income tax planning has become an integral part of the estate planning process. With state and federal income tax rates sometimes exceeding the estate tax rate, advisors need to consider the income tax ramifications of estate planning strategies, and whether clients will be better served by prioritizing planning for income tax avoidance rather than estate tax avoidance. Accordingly, some clients will be better served by causing inclusion of assets in their taxable assets in order to obtain a step-up in basis.

• It is important to draft trust agreements to provide for flexibility for income tax planning in the future. One drafting strategy involves creating a committee of independent trust protectors that would have the power to bestow a general power of appointment upon the grantor’s spouse or other beneficiaries of the trust in order to cause estate tax inclusion for step-up basis purposes. Another is the possible use of the JEST (Joint Exempt Step Up Trust) for married couples residing in non community property states.

Richard W. Nenno – There’s No Place Like Home, But Where’s Home? The Role of “Residence” and “Domicile” in State Income and Transfer Tax Planning — Foreign Service Officers, Corporate Executives, NBA Referees, and More

• Learn what will cause an individual and a trust to be considered to be a resident of a state to be able to sever the contacts with the state to avoid having to pay income tax to that state.

• Change the location of the trust before there is a recognition event. The worst case scenario for clients is to be taxable in more than one state because of the location of the client’s domicile, residence, or place of employment.

Christopher R. Hoyt- Health Care Surtax: Individuals —- Dancing Under a 3.8% Limbo Pole

• The 3.8% Net Investment Income Tax went into effect for tax years ending after December 31, 2012 for affluent individuals, estates and trusts. The tax applies to the lesser of the taxpayer’s (1) Net Investment Income; or (2) the amount by which an individual taxpayer’s modified adjusted gross income exceeds $200,000 ($250,000 for married couples filing joint returns). For trusts and estates, the modified adjusted gross income threshold is $12,150 in 2014.

• “Net Investment Income” for the purposes of this tax means interest, dividends, annuities, royalties, rents, profits from a trade or business in which the taxpayer does not materially participate, profits from a trade or business of the trading of financial instruments or commodities (without regard to material participation), and taxable income from the disposition of property (such as capital assets) other than property disposed of in the course of the taxpayer’s trade or business in which the taxpayer materially participates.

• There are generally 2 ways to reduce a taxpayer’s exposure to the 3.8% surtax: (1) reduce the taxpayer’s income below the applicable threshold amount; or (2) reduce the taxpayer’s Net Investment Income, which can be done by converting income from Net Investment Income into income that is not Net Investment Income (e.g., by materially participating in the taxpayer’s trade or business), or by shifting Net Investment Income to family members in lower brackets or charities.

Donald O. Jansen– When Business Life Insurance Results in Income or Compensation — Depends on Who Owns the Policy

• Generally, where the employee owns the life insurance policy on his or her life, and the employer pays the premiums on the policy, the premium payments are considered to be compensation to the employee, and are therefore included in the employee’s gross income (with a corresponding deduction to the employer for the premiums paid). The policy death benefits are income tax-free under Internal Revenue Code Section 101.

• Where the employer owns the life insurance policy on the employee’s life, and the employer pays the premiums on the policy, the premium payments are generally not taxable to the employee if the employee does not actually or constructively receive the policy without substantial limitations.

• In some situations, both the employer and employee will share the cost responsibility for the life insurance policy on the life of the employee. The taxation of this type of arrangement is governed by the split dollar rules, which entitle the employer to receive out of the policy death benefits or the cash value of the policy at least the premium payments funded by the employer (or sometimes a larger amount). Split dollar arrangements generally can be divided into 2 categories: the loan regime, and the economic benefit regime. The loan regime entails the employee owning the policy and the employer loaning monies to the employee to provide funding for the policy premiums. At the termination of the split dollar arrangement, the employer would be entitled to receive repayment of its loan, with accrued interest based on a collateral assignment of the policy proceeds. Under the economic benefit regime, the employee provides funding for the premium payments each year based upon the “term cost” of the insurance coverage. The employee is the owner of the policy, and often endorses all or part of the policy proceeds to the employer to be payable upon the termination of the split dollar arrangement.

• When choosing between whether to use annual gifting and estate exemption allowances to allow for discounted entity transfers or to pay life insurance premiums, many planners will conclude that it is best to engage in discounted gifting while funding life insurance premiums by split dollar advances or from trusts that have assets that will be exempt from federal estate tax.

Gail E. Cohen- When You Must Adjust — How, When, Why and What Do the Professionals Do?

• The Uniform Principal and Income Act was enacted in 1997, and sets forth the general principle of investing trust assets for total returns. This approach blurs the distinction between income and principal, and gives the trustee discretion to adjust trust returns between principal and income.

• Fiduciaries need to consider potential conflicts of interest between current and remainder beneficiaries when exercising discretion in adjusting between principal and income. Often, the interests of current and remainder beneficiaries are at odds, and the fiduciary should be careful not to favor one class of beneficiaries over another without regard to maximizing the total return of the trust. With any decision, the trustee should document the process and reasoning for choosing an appropriate investment strategy for the trust in order to provide support for making the applicable decision.

• Trustee may implement a unitrust conversion whereby the trust will be converted into a unitrust that distributes a percentage of the value of the assets to the current beneficiaries each year. This can be a solution to balancing the interests of the current and remainder beneficiaries. This can occur under QTIP marital deduction trusts that would otherwise pay “income” to the surviving spouse.

Mickey R. Davis– Funding Unfunded Testamentary Trusts

• Funding testamentary trusts are often based upon formula funding clauses. The allocation of appreciation and depreciation that occurs between the date of death of the grantor and the date of funding is based upon the formula clause that is in the applicable trust instrument. The type of formula funding clause that is the best fit for a particular client generally cannot be determined at the time of drafting. Nevertheless, advisors should be wary of using pecuniary funding clauses in drafting testamentary trusts because an income tax realization event can occur if a pecuniary devise is funded with assets that have appreciated since the date of death.

• Consider the income tax basis of assets when funding testamentary trusts. For example, allocating appreciated assets to a marital trust might be preferable because the assets in the marital trust will receive a step-up in basis on the death of the surviving spouse. Also, it is important to coordinate probate assets with non-probate assets when funding credit shelter trusts.

• When credit shelter trusts are required to be funded per the trust instrument, but are not funded, advisors will need to look at their applicable state law to determine whether the credit shelter trust can be funded long after the decedent has died. There are several approaches that can be taken to address the issue of how assets are held under the law, and whether the IRS will respect the existence of the credit shelter trust. Mr. Davis’ outline goes into excellent detail with respect to these approaches.

Check back next week for more summaries from Heckerling.

Seminar Announcements:

Don’t Miss Steve Leimberg’s Revolutionary Legal and Estate Planning Practice Acceleration Talk in Tampa at the University of Florida Tax Institute on Friday, February 21, 2014 at the West Shore Hyatt at 8:30 a.m.

Leimberg

Steve Leimberg, Author and Photographer
(Click here to view Leimberg Information Systems.
Click here to view Steve Leimberg’s Photography Website)

“Steve Leimberg’s photography website gives naked trusts a new meaning.”

This talk alone is more than worth the $200 day pass cost, and the other speakers and topics for that day are as follows:

• 9:30 a.m. – John J. Scroggin on Basis Planning
• 11:00 a.m. – Lauren Y. Detzel and David Pratt on Formula Clauses: A-Z
• 12:15 p.m. – Samuel A. Donaldson on an Annual Update and Humor Extraordinaire!

All of that, of course, is secondary to the fact that our Thursday Report will be released the day before and personally autographed by Steve for anyone who has purchased any of the books that we are selling so that 75% of the sales revenues will go to the tax program.

Here is more information on Steve’s presentation. If you have never seen him speak you will not want to miss this:

WHAT’S IN IT FOR YOU?

Steve Leimberg’s MARKETING AN ESTATE PLANNING PRACTICE will show you how to build your name – and your firm’s name – into a brand name in your city – and bring more – and higher net worth quality clients into your office – and keep them there in a continuous lifelong stream.

Loaded with creative and innovative ideas, Leimberg’s talk will give you mind-stretching insights such as his “Positive Differentiation” Theorem, “Leimberg Leveraging”, the HT3 formula, The “Firestorm Technique”, The “Silence of the Lambs” Principal, The “Lexus” Technique, the “Nikon” Concept, “Mini-Marketing System, and “the “Pepperoni Bread Principle.

Steve’s objective is no less than to help you see the marketing of your name and your practice as the key to move your professional life to your “personal next level.”

You’ll learn Steve’s “mini-marketing systems” plan to effectively structure a stronger and even more successful estate, financial, business, employee benefit, and charitable planning practice.
You’ll learn the incredible marketing concepts that brought groups at the Heckerling Institute, the American Bar Association’s Tax Section Annual Meeting, The National Association of Estate Planners and Councils Annual Meeting, and the Annual Meeting of the AICPA’s Estate and Financial Planning Sections to their feet.

ABOUT STEVE LEIMBERG:

Steve Leimberg is “MR. MARKETING.” In a one month period of time, Steve was quoted in the Wall Street Journal and Fortune Magazine on Charitable Split Dollar, Forbes Magazine and Standard and Poor’s Outlook on Total Return UniTrusts, in Bloomberg’s Wealth Manager on Charitable Lead Trusts, and in Medical Economics on Abusive Trusts. The late Sylvia Porter called Steve Leimberg a crusader for personal financial freedom and he has served as an advisor for and TV show guest of Jayne Bryant Quinn. He was most recently quoted in the New York Times and Wall Street Journal.

If you are ready to move up to your “Personal Next Level” …

Don’t miss this very profitable session:
It will enrich your practice forever!

Also sign up for a trial membership of Steve Leimberg’s amazing newsletter system by clicking here.

Same Sex Marriage and Associated Laws We Should All Know About Anyway, on Thursday, January 30, 2014 at Stetson Law School

DOMA with language

Affordable Health Care Plans – The Website is Working – Example Results

We asked our law students to tell us how Obama Care would apply for a Pinellas County based 40-year old earning $20,000 a year.

The Bronze Plan with a $6,300 deductible and no co-payment obligation beyond that would cost $34/month with Humana, or $50 a month with Humana with a $4,850 deductible and co-payments of $75 or less per doctor visit until a certain point is reached.

The Silver Plan would be $61/month for a $900 deductible and smaller co-pays.

The Gold Plan would be $97/month for a $2,500 deductible and smaller co-pays.

The Platinum plan would be $131/month for a $1,000 deductible and smaller co-pays.

The details and a checklist chart can be viewed by clicking HERE.

We have found clients who are paying more out of pocket for healthcare than what the Obama Plan would cost them, and those clients presently do not have access to expensive testing or facilities or specialists that are on the Obama Care plans.

The Obama Care website can be accessed by clicking HERE.

Another result of Obama Care is the extensive survey that hospital patients are requested to fill out.

A sample hospital survey for pediatric services to be filled out by parents is attached.

Pediatric hospitals certainly are going to have to stay on their toes when this type of feedback is being requested.

You can view the survey by clicking HERE.

Physician Personal Creditor Protection Planning for Healthcare Lawyers and Financial Advisors – with Joel Bronstein’s Outline and Checklist

Bronstein

On January 17, 2014, Joel Bronstein, Esq. of Bronstein, Carlson, Gleim & Smith in St. Petersburg, Florida presented an excellent outline and checklist to the 2014 Representing the Physician Annual Conference in Orlando, Florida.
Joel has been generous enough to give us permission to reproduce the outline and checklists, which can be viewed by clicking here.

We thank Joel not only for sharing his outline with the Thursday Report readers but also for the many times he has spoken at the Representing the Physician Seminar, and for his stewardship and dedication to The Florida Bar activities, including having been the Chairman of the Tax Section of The Florida Bar, and having served as the Chairman of the Continuing Legal Education Committee for The Florida Bar.

Joel’s contact information is as follows:

Joel D. Bronstein, Esquire
Bronstein, Carlson, Gleim & Smith
360 Central Avenue
Suite 1200
St. Petersburg, FL 33701
727-898-6691
jbronstein@bcgs-law.com

Lewis Saret’s Wealth Strategies Journal 2.0

Saret with wording

Lewis Saret of Lewis J. Saret, Attorney at Law in Washington, DC has a fantastic Wealth Strategies Journal that he publishes on developments in estate planning and taxation, asset protection, business succession planning, fiduciary issues and many other issues. The Journal is free to anyone who wishes to receive it. To sign up please click here.

Here are some of the recent articles profiled in the Wealth Strategies Journal: (Click each one to be directed to the text of the article)
NYT Article on How a Doctor Decided to Become a CFP
Tax Break for IRA Gifts Expires Soon
Oklahoma’s Reduction in Top Rate Ruled Unconstitutional
New Mexico Supreme Court Legalizes Same-Sex Marriage Statewide
How to Regain Tax Exempt Status
The Affordable Care Act’s Impact on Business Reporting Requirements
Developing A Medium Term Investment Strategy With A Three To Five Year Term
Beware of Tax Preparer Fraud During Tax Season
Alimony Payments and Tax Status

Applicable Federal Rates

APPLICABLE FEDERAL RATES.January 2014

Seminars and Webinars

THE 444 SHOW – USING FOCUS GROUPS TO CREATE EFFECTIVE TRIAL GRAPHICS
Date: Thursday, January 23, 2014 | 4:00 p.m.

Location: Online webinar

Speakers: Marcus Castillo and Josh Hoeppner

Additional Information: To register for the webinar please visit www.clearwaterbar.org

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

UNIVERSITY OF FLORIDA TAX INSTITUTE INFORMATIONAL WEBINAR

Date: Tuesday, January 28, 2014 | 12:15 p.m.

Location: Online webinar

Speakers: Bruce Bokor, Alan Gassman, and additional speakers to be announced.

Additional Details: To register for the webinar please email Janine Gunyan at Janine@gassmanpa.com

LUNCH TALK – SOCIAL MEDIA

Date: Monday, February 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Aparna Tutak

Additional Information: To register for this webinar please visit www.clearwaterbar.org

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information: Please contact agassman@gassmanpa.com for more information.

THE 444 SHOW – CREDITOR PROTECTION UPDATE

Date: Thursday, February 27, 2014 | 4:00 p.m.

Location: Online webinar.

Speaker: Alan Gassman

Additional Information: To register for the webinar please visit www.clearwaterbar.org

LUNCH TALK – LAWYER REFERRAL SERVICE

Date: Monday, March 3, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: David Robert Ellis, Esq.

Additional Information:To register for the webinar please visit www.clearwaterbar.org

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications, and Mickey Mouse, Donald Duck and the “dwarf planet” formerly known as Pluto!

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

LUNCH TALK – LAW PRACTICE EFFICIENCY TIPS

Date: Monday, April 7, 2014 | 12:30 p.m.

Location: Online webinar

Speaker: Alan S. Gassman

Additional Information: To register for this webinar please visit www.clearwaterbar.org

FICPA SUNCOAST CHAPTER MONTHLY MEETING

Alan S. Gassman will be speaking at the FICPA Suncoast Chapter’s monthly meeting on the topic of THE FLORIDA CPA’S GUIDE TO PLANNING WITH PHYSICIANS AND MEDICAL PRACTICES

Date: Thursday, April 17, 2014 | 4:00 p.m.

Location: TBD

Additional Information: For more information on this event please email agassman@gassmanpa.com or mary@clawsonasplus.com

DONOR LUNCHEON AT RUTH ECKERD HALL WITH PROFESSOR JERRY HESCH IN CLEARWATER, FLORIDA

Professor Jerry Hesch will be speaking at a Donor Luncheon on the topic of CHARITABLE TAX SAVINGS: HOW TO MAKE SURE THAT UNCLE SAM CONTRIBUTES HIS SHARE TO MAXIMIZE RESULTS

Date: Tuesday, April 22, 2014 | TIME TO BE DETERMINED

Location: TBD

Additional Information: For additional information please contact Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

RUTH ECKERD HALL PLANNED GIVING MEETING

Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Meeting in Clearwater, Florida on the topic of INNOVATIVE CHARITABLE GIVING TECHNIQUES FOR THE WELL TUNED ESTATE PLANNER

Date: Tuesday, April 22, 2014 | 4:00 p.m.

Location: TBD

Additional Information: This session qualifies for 1 hour of continuing education creditor for lawyers and CPA’s. To attend please email Suzanne Ruley at sruley@rutheckerd.net or Alan Gassman at agassman@gassmanpa.com

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: For more information and to register for the program please visit www.floridataxinstitute.org. There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions. See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities. Students will be in attendance and will greatly value conversations with an advice from alumni. Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback? There is also a reception for all attendees and the guests on February 10, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 11, 2014 at 5:00 p.m. to thank the supports of the University of Florida, the law school and the LL.M. program.

The Thursday Report 1.16.14 – Heckled at Heckerling

Posted on: January 16th, 2014

Heckled at Heckerling

Foreign Currencies and Overseas Bank Accounts, an article by Dr. Jack Barrett and Parker Evans

Our article, Imposing Punitive Damages was published last night on Leimberg Information Systems

Seminar Announcement – Innovative Charitable Giving Techniques for the Well-Tuned Estate Planner with Jerry Hesch

Stump the Panel: Consanguinity or Affinity or Affluenza?

Why Wyoming?

The Story of Yellowstone and Teton National Parks

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

HECKLED AT HECKERLING

We brought our JEST (Joint Exempt Stepped-up Basis Trust) to Heckerling,
At booth four-three -oh,(430)
With our peer reviewed articles,
To explain and show,
That a stepped-up basis on the first death is doable,
Based on PLR’s, a TAM, and unique trusts that are movable,
(and no downside because if it doesn’t work
–you are back where you started–but more alert)

A lot of people like the JEST,
Because the only alternative is much less best,
And how proud we were that Professor Jeffrey Pennell,
Commented on our technique, which he found less than swell,

He alluded to TAM’s and PLR’s,
Which support our system, like tires work for cars,
He said that these authorities make the JEST a gift by the survivor,
But did not mention that they also allowed the marital
Deduction, (and that our incomplete gift design is even wiser)

He did say there was less than certainty on the 1014e Rule,
But did not read our article explaining that the suriving
Spouse would not be a surviving 1014e fool,

Professor Pinnell be nimble,
Professor Pennell be quick,
Professor Pinnell torched the JEST like a candle stick,

But we heard him exclaim as he rode out of sight,
“I also think that none of the Alaska, Delaware or
Nevada trusts will work right!”

When evaluating techniques for successful clients who took
Risks in businesses and professions after taking a look,
Make sure you warn them if you decide to be bashful,
Lest their heirs may complain and pursue you for a cashfull,

Especially if the reward is high and the risk is small,
If you don’t try for a higher basis you may take a fall

We thank the other speakers
Whose outlines mention the JEST
And happy Thursday to you and all of the rest.

Foreign Currencies and Overseas Bank Accounts, an article by Dr. Jack Barrett and Parker Evans

Barrett

Dr. John P. Barrett, a retired by very active Tampa Bay orthopedic surgeon, is an internationally known innovator, investor, philanthropist and serial entrepreneur. Dr. Barrett’s passion for investment management and research inspired him to create Successful Portfolios. Dr. Barrett can be reached via email at jpbmd@aol.com.

Parker2-214x300

With thirty years professional experience as an investment advisor, Parker co-founded Successful Portfolios in February 2010. Parker holds the Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Chartered Market Technician (CMT) designations. Parker’s commentary and papers have appeared in the Journal of Financial Planning, CFA Magazine and the Journal of Technical Analysis. He is the former President of First Discount Securities Corp., a pioneering discount brokerage firm acquired by First Union (now Wells Fargo). Parker is a former Vice President of First Union, Smith Barney, and Fifth Third Private Bank. He earned a B.A., with a major in Economics from Eckerd College where he won the Wall Street Journal Award for outstanding academic achievement. Parker received an MBA with Honors from Nova Southeastern University. Parker can be reached at 727-744-3614.
Many clients have asked us recently about buying foreign currency or opening bank accounts offshore to hold foreign currencies, so we asked Dr. Jack Barrett, MD and Parker Evans, CFA, CFP, CMT of Successful Portfolios LLC, a Clearwater based Registered Investment Advisor, for their thoughts on this. They have extensive experience with offshore accounts and foreign currencies and sent us the following memo.

Their memo mentions Interactive Brokers as a low cost broker – we are not endorsing Interactive Brokers here, but like the memo and are therefore making it available below. Doubtlessly there are many possible firms and platforms that offer what they are referring to, and we invite other investment advisors and professionals to chime in on the discussion below. While Switzerland has been the gold standard for bank safety and professionalism for many decades, it is essentially closed to direct accounts for Americans, and therefore intermediary organizations, Lichtenstein banks and other structures are evolving. Some clients may feel that it is best to have a portion of their money or wealth held in foreign currencies or in overseas accounts. Most clients do not have oversees currency or accounts and feel perfectly fine with that, as do we. Now, take it away Jack and Parker………………………

It is easy to see that the US dollar isn’t worth what it used to be. The US Treasury and Federal Reserve continue issuing debt and printing money at an unprecedented rate. High taxes, accelerating inflation and low interest rates could ultimately decimate the value of your cash reserves if held in only US Dollars. Rather than holding all your cash reserves in U. S. Dollars, it might make sense to diversify into currencies that could better protect your purchasing power. For example, historically the value of the Swiss Franc has appreciated versus the US Dollar. Consider too that Australian and Canadian Dollars deposits typically yield more than US Dollar deposits.

Next, let’s carefully examine the how and where of investing in foreign currencies. Consider these alternatives;

1. Go to your local commercial bank and buy the currency of choice. This is a very expensive way to acquire currency for investment purposes.

2. Purchase at the airport currency booth. Don’t do it! This is even more expensive than buying currency at your local commercial bank.

3. Open an account with Interactive Brokers (IB), a public company, where you can purchase up to US $1,000,000 of most any major world currency at low, transparent wholesale prices for a commission of just $2.50.

Once you acquire your foreign currency where do you keep it?

Option one, physical possession:

1. Stuff the paper money in or under your mattress and forget it.

2. A home safe is a better choice as long as no one knows about it.

3. A safe deposit box at your bank is the best choice for physical possession.

For reasons we won’t go into here, we strongly recommend you avoid in- or under-the-mattress currency storage. Also remember currency in a safe deposit box doesn’t earn interest. Not good. If you like the idea of holding some safe harbor assets in your safe deposit box consider holding gold and silver coin numismatics in addition to paper currency.

Option two, an Overseas Bank Account:

There is no requirement to have an overseas bank account to invest in foreign currencies. However, an overseas bank can be a good option for holding foreign currency deposits, especially if you plan on spending some time in the county and if you are ok with reporting your overseas accounts to the IRS as required by U.S. law.

Be aware that these days it is very difficult if not impossible for a US Citizen to open a Swiss Bank account offshore. There are foreign banks that will accept your deposit account if you jump through the required hoops. Caution is in order. Consider for example what might happen if a major hurricane submerges your favorite island tax haven. You should avoid banks paying higher than market interest rates on deposits. If you are adamant about opening an overseas bank account, remember that an affiliate of a systemically important, too big to fail, multinational bank holding company is a safer bet than small locally based banks. Subsidiary banks of any of the Canadian big five banks would likely be a safe choice.

For many investors the best option for buying and holding foreign currencies is……here it comes………. an online IB Brokerage Account. Consider:

1. You can quickly and easily buy a currency ETF (exchange traded fund) from most online on line stockbrokers like Schwab. Currency ETFs are safe but remember ETF prices will fluctuate.

2. At some brokers, like IB, you can buy currency in the cash FX (foreign exchange) market. This usually is the most cost effective approach. Executing a cash market FX trade requires a bit of a learning curve and is more complicated than simply buying an ETF.

3. You can buy FX futures contracts. There are some big advantages with this but don’t leave home without professional advice.

4. Another advantage of a brokerage account at IB is you have the option of investing your foreign currency balance in attractive stock or bonds directly in their home market. Many of these securities are not readily available for trading in US markets.

5. If you have a foreign bank account and an IB brokerage account, you can easily and economically convert your US Dollars to a foreign currency and then wire it overseas.

……and a bucket of Kentucky fried chicken for every IB account you open

Our Article on Punitive Damages

Our article on Punitive Damages was published last night by Leimberg Information Systems. We thank Steve Leimberg, Steve Adkisson, Dave Slenn and Charlie Lawrence for making the article on LISI possible.

Jay’s 12:35 a.m. email today made our day and reads as follows:

Alan,

Just wanted to drop you a line and tell you what a tremendous and helpful article this is — I am frankly awed by the excellent state-by-state research that you have done.

As I don’t have Charlie’s e-mail, please forward my comments to her with my best.

BTW, you guys gave me sole credit for the Cutuli/Elie article, but in truth Dave Slenn contributed tremendously to that article and was the co-author, but was not mentioned.

I do very much appreciate the credit, but Dave is also very deserving of sharing it.

Best,
— Jay

The introduction and the chart from the article are as follows:

“Some states are allowing punitive damages for fraudulent transfers in bankruptcy cases, some states are not allowing punitive damages, and some haven’t decided yet. The majority of states that have considered the issue have jumped on the bandwagon to allow punitive damages for fraudulent transfers, regardless of whether the transfer is considered a crime. Only time will tell how the remaining states will fall.”

After reviewing Jay Adkisson’s Asset Protection Planning Newsletter #229, Alan Gassman couldn’t help but investigate what was going on with punitive damages. He enrolled the help of Charlie Lawrence to investigate the situation, and their commentary captures what they found.

Alan S. Gassman, J.D., LL.M. practices law in Clearwater, Florida. Each year he publishes numerous articles in publications such as BNA Tax & Accounting, Estate Planning, Trusts and Estates, The Journal of Asset Protection, and Steve Leimberg’s Asset Protection Planning Newsletters. Mr. Gassman is a fellow of the American Bar Foundation, a member of the Executive Council of the Tax Section of the Florida Bar, and has been quoted on many occasions in publications such as The Wall Street Journal, Forbes Magazine, Medical Economics, Modern Healthcare, and Florida Trend magazine. He is an author, along with Kenneth Crotty and Christopher Denicolo, of the BNA Tax & Accounting book Estate Tax Planning in 2011 and 2012. He is the senior partner at Gassman Law Associates, P.A. in Clearwater, Florida, which he founded in 1987. His email address is agassman@gassmanpa.com

Charlie Lawrence is a 2013 Stetson Law School graduate and is a member of the Florida bar; she co-wrote this commentary while performing legal research for Gassman Law Associates, P.A.

States chart page 1

States Chart page 2

*Awarded punitive damages when conduct was not a crime
1Does not follow the Uniform Fraudulent Transfer Act.
2Transferee was found to have acted with intent to defraud.

Seminar Announcements

Innovative Charitable Giving Techniques for the Well-Tuned Estate Planner with Jerry Hesch

On Tuesday, April 22, 2014 from 4:00 – 4:50 pm, Professor Jerry Hesch will be speaking at the Ruth Eckerd Hall Planned Giving Council meeting in Clearwater, Florida on the topic of Innovative Charitable Giving Techniques for the Well-Tuned Estate Planner. This session will qualify for 1 hour of continuing education credit for lawyers and CPA’s.
Following Professor Hesch’s talk there will be a social program and networking along with a brief information session.

Ruth Eckerd Hall is also scheduling a donor luncheon so that Professor Hesch can explain how the government will contribute to charity when proper techniques are used.

Please plan to attend this great event.

April 22 Announcement.1e

Stump the Panel: Consanguinity or Affinity or Affluenza?

We see these words all the time in regards to inheritance, but what do they mean? Where did they come from?
Consanguinity means “related by blood.” The word is derived from the Latin word “consanguinitas,” meaning “blood relation.”

Affinity means “related by marriage.” The word is believed to be Latin, derived from “affinitas.”

Affluenza means the guilt or lack of motivation experienced by people who have made or inherited large amounts of money. The word comes from aff(luent) + (in) fluenza. Wikipedia has a good entry on Affluenza that can be reviewed by clicking here.  Also the book Affluenza: The All-Consuming Epidemic by John de Graaf is presently being reviewed by your Thursday Report editors to see how much of it we have. Click here to order your copy now.

Why Wyoming?

Bigger and better than Disney World?

The benefits of limiting liability of owners and shareholders exist under the law of many states and many clients are best served by using a state other than Florida for confidentiality, creditor protection and cost reduction purposes.

While Florida’s limited partnership and LLC laws are among the best in the country, the Florida Supreme Court decision in Olmstead, annual changes in the statutes thereafter, confusion resulting from the above, and the question as to whether there will be further changes leads some planning lawyers to the conclusion that Wyoming secrecy rules and stability help make it the appropriate jurisdiction for many entities.

Many clients are married and want their ownership of an entity to qualify as tenancy by the entireties, which cannot be assured unless the state where the entity is formed or recognition of tenancy by the entireties exists. Delaware and Wyoming are considered to be incorporation havens because they do not impose any income tax and have pro-business laws. In addition, both Delaware and Wyoming recognize tenancy by the entireties, and have good secrecy practices as well, but we have found Delaware to be much more expensive and cumbersome to use than Wyoming, except that Wyoming does not have electronic filing like Delaware does. Colorado and Nevada are also popular, but do not recognize tenancy by the entireties. Wyoming is the only state in the union that is a perfect rectangle with its lines being north and south and east and west. It is more square than Colonel Sanders.

The filing fees and annual report fees for limited partnerships and LLCs in Florida, Delaware, and Wyoming are as follows:

Wyoming Chart

Please note that a Registered Agent will need to be retained in the state of formation.

WHILE IN WYOMING – ON YOUR TAX DEDUCTIBLE TRIP – MAKE SURE TO VISIT JACKSON HOLE AND YELLOWSTONE NATIONAL PARK WHICH ARE AMAZING U.S. GOVERNMENT TERRITORY GIFTS THAT WERE PROVIDED BY JOHN D. ROCKEFELLAR, AS DESCRIBED BELOW.

The Story of Yellowstone and Teton National Parks

Wyoming and small parts of Idaho were well known to have incredible scenery, volcanic mountain, and incredible rivers, spring fed lakes, and natural beauty since originally surveyed by Ferdinand Vandeveer Hayden as part of the Hayden Geological Survey of 1871.

In 1924, John D. Rockefeller, then the wealthiest man in the world, visited part of the 2,221,766 acres that is now known as Yellowstone National Park. This trip turned into an annual family visit to the Yellowstone and Teton Mountain Range areas, including Jackson Hole.

In 1927, Mr. Rockefeller established the Snake River Land Company, which was administered by a Salt Lake City, Utah lawyer named Harold Pegram Fabian.

Much like Walt Disney did in Central Florida in the mid-1960s, Mr. Rockefeller remained completely anonymous as an affiliate of the Snake River Land Company, and the company had confidentiality agreements in place so that land owners were not aware that large portions of their area were being purchased.

The economic travails of the 1920s caused a significant number of land owners to sell their property to the Trust for less than what they felt it was worth, but more than they could get anywhere else.

The Snake River Land Company initially bought some of the 114,170 acres of land that had recently open for purchase on both sides of the Snake River. At that time, land to the west of the river cost $28/acre, and land to the east of the river merely $10/acre.

Most of the property would probably be described as being too mountainous to develop, but at approximately 2.5 million acres, these two parks cover roughly 4% of the real estate within the State of Wyoming. The federal government owns 48% of all land in Wyoming, and the state government owns an additional 6% of the land.

A great many of the citizens of the State of Wyoming were unhappy to learn that John D. Rockefeller had acquired approximately 35,000 acres of land for an overall average of $39.66/acre.  Although the property had been freely sold for a fair price, as soon as it was revealed that Rockefeller was behind the Snake River Land Company, there was indignation that the richest man in America did not have to pay more for the land he purchased. The lands were purchased under willing buyer/willing seller arrangements, but Rockefeller was rich and most of the sellers were suffering in the Great Depression, which drove the cost of land down. Furthermore, the western culture was not keen on being told what to do by a family from the northeast.

John D. Rockefeller held onto the property for 15 years, and finally wrote to President Franklin Delano Roosevelt stating that if the President did not accept the donation of this land immediately and create a national park, that he would dispose of the land privately. President Roosevelt used federal power to bypass local issues and declared the creation of the Jackson Hole National Monument on March 5, 1943.

This caused a major political upheaval in Jackson Hole and throughout Wyoming as people came to realize that they would not be able to live in developing communities, and that the federal government would be telling them what to do on Mr. Rockefeller’s property. The President’s actions were referred to as the death of democratic rights and even compared to the Nazi seizure of Austria, in the midst of World War II no less!

In 1944, President Roosevelt struck down a bill that had passed both houses of Congress, calling for the dissolution of Grand Teton National Park altogether. In 1950, the lands held under the Jackson Hole National Monument finally merged into the 310,000 acres of land that today make up Grand Teton National Park.

Also, a great many families had property within what would become the National Park System, and would not have road access to the outside or would have many miles to travel in order to get to non-public park property.

These negotiations with the federal government resulted in a number of compromises, including permission for big game hunting within specific hunting seasons, grazing rights, and even dude ranching on park property under certain circumstances.

The descendants of many of these families still reside on park lands today.

Once the idea of protecting national lands was extremely unpopular, but today Yellowstone and Grand Teton National Parks are huge tourist attractions. The Jackson Hole Airport accommodates approximately 285,000 visitors per year and is located entirely on the Yellowstone National Park. It is the only airport to be contained within national park property. It is currently undergoing expansion that will be completed in the spring of 2014.

Teton Village in the Jackson Hole area consists of approximately 3,200 acres of hotel, timeshare, condominium, ski resort and ski slope, and upscale housing. It is located at the base of Rendezvous Peak, and is a major tourist spot, particularly for avid skiers (Rendezvous Peak, at 10,536 feet, has the largest vertical rise in America- 4,139 feet).

The interplay between the federal park system and the outside private sector has been an integral part of the park system’s history since its inception.

There is an interesting parallel between the creation of Yellowstone and Grand Teton National Parks and the creation of the Walt Disney World Resort in Orlando, Florida. Like Rockefeller, Walt Disney quietly purchased over 30,000 acres of land in the heart of the state; in the 1970s, the average price was $180/acre. Rockefeller’s aim in purchasing the land was to preserve and protect it from development; Disney’s aim was to create a resort complex with theme parks and hotels for commercial gain. However, Yellowstone and Grand Teton generate a significant amount of commercial revenue from tourism each year, and Disney has a 12,000 acre nature preserve right on its property.

The Disney property today encompasses approximately 25,000 acres, roughly 0.62% of Florida’s 42,083,200 acres. The Magic Kingdom has the most visitors of any theme park in the world (17,536,000), and the Walt Disney World properties together drew 126,479,000 visitors in 2012.

Compared to that, Yellowstone and Grand Teton cover roughly 2.5 million acres, and draw 6,153,000 visitors per year. That is roughly 2.46 visitors per acre of national park. Disney attracts 5,059.2 visitors per acre annually.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

APPLICABLE FEDERAL RATES.January 2014

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2014

Location: The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2014, whether formally or informally. Anyone who would like to attend (dutch treat or bring wooden shoes) will be welcomed. Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

INDIVIDUAL AND GROUP MEDICAL PRACTICES BLOOMBERG BNA WEBINAR

Health care attorney Lester Perling, Pension Actuary Jim Feutz and Alan Gassman will be presenting a 90 minute webinar for Bloomberg BNA Tax and Accounting on Individual and Group Medical Practices.

Date: February 13, 2014 | 12:00 – 1:30 p.m. (90 Minutes)

Location: Online webinar

Additional Information: Please contact agassman@gassmanpa.com for more information.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: For more information and to register for the program please visit www.floridataxinstitute.org. There will be cocktail parties at the Grand Hyatt as part of the programs on Wednesday, February 19 at 5:00 p.m. and then again on Thursday, February 20 at 5:00 p.m. Please plan to attend these receptions. See how your classmates are doing and say hello to your favorite professors. (If they didn’t teach at Florida then you can call them on your cell phone during the cocktail hour). Help us strengthen and improve a UF LLM community, the school, and the synergism that results from these types of activities. Students will be in attendance and will greatly value conversations with an advice from alumni. Do you remember how you felt when you were in the LL.M. program and were able to interact with successful lawyers who gave you valuable feedback? There is also a reception for all attendees and the guests on February 10, 2014 at 5:00 p.m. for attendees and their spouses along with a reception on February 11, 2014 at 5:00 p.m. to thank the supports of the University of Florida, the law school and the LL.M. program.

The Thursday Report – Heckerling, TBE, Important Conferences and the Sea

Posted on: January 9th, 2014

The fate of modern society is in your hands. Or would you rather have a beer? Decide tonight, after reading the Thursday Report (after drinking a beer). Substitute a glass of Silver Oak 2008 Cabernet if you must! No ice please unless you add whiskey.

The Stepped-Up Basis Conversation

Imposing Punitive Damages on Fraudulent Transfers: Where Will Florida Fall? With a State-by-State Chart

Everything You Always Wanted to Know About Motor Vehicle Ownership Planning* and Did Not Think To Ask – Part 2 of a 4 part Series

Frank Jakes is Not Afraid of Virginia Woolf

Seminar Announcement – Same Sex Marriage and Associated Laws We Should All Know About Anyway, Thursday, January 30, 2014 at 5:30 p.m. at Stetson Law School

Downton Abbey and the Dreaded Fee Tail – A Far Worse Fate Than Not Having Air Conditioning, Microwaves or Hair Dryers

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

The Stepped-Up Basis Conversation

Our article with Jonathan Blattmachr entitled “The Stepped-Up Basis Conversation” has been published by Bloomberg BNA Tax Management Estates Gifts and Trusts Journal. The first page and our chart are reproduced with permission below. Click here to read the rest of the article.. We thank Tom Waits for providing the inspiration for this article and for the album Small Change. If you have not heard Small Change download it and listen to it, even before finishing this Thursday Report.

PDFArtic_Page_1

Blattmachr article chart

Imposing Punitive Damages on Fraudulent Transfers: Where Will Florida (and Other States) Fall? With an Informative Chart
By Alan S. Gassman and Charlie Lawrence

When asset protection goes painfully wrong, can your client and transferees be held liable for punitive damages due to fraudulent transfers? Courts in several jurisdictions have imposed punitive damages on transferors and transferees, however, no Florida court has taken a stand on this issue.

The first punitive damages award for a fraudulent transfer that we are aware of was the Ohio case of Locafrance United States Corp. v. Interstate Distribution Servs., Inc which was decided in 1983.

More recently, the California case of Elie v. Smith established that a judge may impose punitive damages on the perpetrators of a fraudulent transfer.1 The recent Pennsylvania case of Klein v. Weidner also imposed punitive damages on what was found to be an “outrageous and intolerable” situation.2

The Pennsylvania statute contains the same exact language as the Florida statute, with reference to enumerating the following language as being included in the remedies that a court can impose in a fraudulent transfer action:

“1) In an action for relief against a transfer or obligation under ss. 726.101-726.112, a creditor, subject to the limitations in s. 726.109 may obtain:

(c) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure:

3. Any other relief the circumstances may require.”3

In Klein, the punitive damages were imposed on the debtor, who willfully defied a court order and used unlawful and threatening means to impede the judicial process.”4 However, in the Elie case, punitive damages were imposed on both the transferee and the transferor because the debtor’s behavior was “despicable and subjected Elie to cruel and unjust hardship” that each defendant’s behavior was “vile, base, and contemptible.”5

In the Elie case, a wife owing money to a third party signed an amendment to her prenuptial agreement with her spouse, which required her to transfer all of her assets to him in exchange for consideration, if any, that was not discussed in the case. To apparently attempt to make this look at arm’s-length, the husband sued Mrs. Smith without giving notice to the creditor. The creditor intervened in the suit, and the husband and Mrs. Smith moved to Florida and filed for a Chapter 7 bankruptcy.

The California court and bankruptcy courts found that the husband and Mrs. Smith engaged in clearly egregious conduct, which included, but was not limited to, what was found to be a deceptive and entirely fraudulent transfer motivated conduct, but also concealing assets with the assistance of a lawyer and severely impeded the court.

The court did not comment on the lawyer’s behavior, but it did describe his involvement. The debtor used the lawyer’s services to transfer funds and held funds in the lawyer’s client-trust account.6 Jay Adkisson was not so kind. In his Asset Protection Planning Email Newsletter Archive Message 229, Mr. Adkisson expressed his view that “there will come a time in every planner’s career when a financially-distressed client will walk through the door seeking asset protection. … It is this point in time which separates the smart planners from the foolhardy ones. The smart planners might voice sympathy for the client’s plight, but will refuse to take the case… The foolhardy planners will give in to their urges, do planning where it lawfully shouldn’t be done, and thereby expose their clients, their own assets, and even their careers to potentially dire consequences.” However, Mr. Adkisson does note that Florida law is different. He explains that “in some jurisdictions, such as Florida, the courts have held that an attorney cannot be liable either under a conspiracy or aiding and abetting theory for a client’s fraudulent transfer.” In other jurisdictions, like California and Pennsylvania, the same act is considered a tort and, in some circumstances, a crime.

However, the lawyer in Elie has not seen the end of this battle. The Bankruptcy Trustee sued him on a number of claims, including unlawful and unfair business practice, injunctive relief, racketeering, negligence, fraudulent transfers, deceptive acts and practices, breach of fiduciary duty, conspiracy, accounting, and constructive trust. The case against the lawyer is set for trial for July 28, 2014. In the Trustee’s complaint to the court, he argued:

“The unlawful business practices of [lawyer] are likely to continue and therefore will continue to mislead the public because [lawyer] holds himself out as a professional who renders sound legal advice yet instead he performs the above-referenced unfair and unlawful activities under the guise of providing legitimate business services, which presents a continuing threat to the public.

As a direct and proximate result of [lawyer’s] conduct, [lawyer] has received and will continue to receive fees for his unethical and unlawful services that rightfully belong to members of the general public who have been adversely affected by [lawyer’s] conduct as well as to Plaintiff by virtue of the money and assets lost due to [lawyer’s] actions.”7

This is much different than a situation where a client who may have a litigation or contingent liability situation goes to a lawyer and determines it appropriate to engage in conventional estate and/or business planning actions that incidentally cause insulation of assets from creditors.

Several states have found that the Uniform Act’s “Remedies of Creditors” Section allows for punitive damages, including Maine, Ohio, and Utah. However, Colorado, Connecticut, and Wisconsin courts have found that punitive damages are not allowed under their respective Uniform Acts, regardless of how egregious the behavior is. All of the states relied on pre-existing state law and common law when interpreting the remedies available under the Act. See the table below for a look at where states have fallen on this issue.

What is the result of a judgment for punitive damages against the debtors besides the fact that the debtor owes more money to the creditor? If the debtor is already insolvent and has no other assets it may make no difference, but transferees will not want to have judgments against them! If the transferee receives money and can give it to the creditor this may not be a problem, but if the transferee receives an asset of questionable value and the judge finds it to be more valuable than it really was then the transferee can suffer an extreme loss, not to mention having to pay attorneys, fees and punitive damages.

For example, a client with a $500,000 IRA and a $200,000 bank account might transfer the $200,000 bank account into a variable annuity contract the day after a judgment is entered into by the debtor. Typically a court can award the creditor the right to set aside the transfer into a variable annuity, plus attorneys’ fees and costs.

Can the judge also order that punitive damages are owed, and will this cause loss of the IRA? Under Florida law, punitive damages are no more or less collectible than any other debt obligation, but, in bankruptcy, punitive damages for willful and malicious injury are not dischargeable.11

In re Fabian is one example of the bankruptcy court holding, and the district court affirming, that damages for willful and malicious injury are not dischargeable.12 In Fabian, the debtor, through a corporation in which he was the sole officer and shareholder, entered into several agreements with a leasing broker. The agreements allowed the leasing broker to purchase equipment and software from the debtor’s corporation, and then lease the same equipment and software back to the corporation. In many cases, the equipment and software did not exist or were of substantially less value than the “purchase price.” As a result of the agreements, the debtor’s corporation obtained approximately $32 million from the leasing broker.

After he defaulted on 11 leases, the debtor transferred money to a for-profit entity that was controlled by the debtor. In addition, he purchased beach property, donated to a private school, and indulged in private jet travel. The debtor’s corporation was forced into bankruptcy by two creditors. The bankruptcy court held, and the district court affirmed, that the transfers were fraudulent. Further, because the debtor acted intentionally, his actions met the willful and malicious injury requirement of Section 523(a)(6) of the Bankruptcy Code. The judgment regarding the willful and malicious injury caused by the debtor was not dischargeable.

States chart page 1

States Chart page 2

*Awarded punitive damages when conduct was not a crime
1Does not follow the Uniform Fraudulent Transfer Act.
2Transferee was found to have acted with intent to defraud.
Will Florida courts follow these decisions for similar egregious situations? It is possible. Our original expectation was that only states that consider a fraudulent transfer to be a crime would allow punitive damages. However, this is not the case.

California has a criminal statute that caused the subject transfers to constitute clearly illegal conduct.8 Florida has no statute making a fraudulent transfer a crime. In fact, the Florida Supreme Court has confirmed that an intentional fraudulent transfer into a homestead is immune from being subject to the Florida fraudulent transfer statute.9 Debtors who have any concern whatsoever about having a punitive damage claim brought against them and/or their transferee may prefer to make transfers to pay off mortgages on homesteads, to purchase new homesteads, or even adjoining homesteads to increase the property that they live on. Florida appellate courts have held that lawyers who intentionally represent and advise clients on transfers intended to avoid creditors are not liable to the creditor, because there is no cause of action against the lawyer.10

St. Petersburg lawyer, Joel Bronstein, has indicated as follows in an outline that will be presented for the Florida Bar Tax Section/Health Law Section Representing the Physician program on January 17, 2014 in Orlando:

However, another cause of action may exist. In Freeman, the court in dicta stated that “we caution that our answer to the certified question in this case is confined to the context of the Florida Uniform Fraudulent Transfer Act. We do not address whether relief is available under any other theory of liability or cause of action.” … Clients have the right to know their rights and advising them of their rights should not result in liability to the client’s creditors. However, if an attorney crosses the line and knowingly and intentionally participates in a client’s unlawful conduct to hinder, delay and/or fraudulently obstruct a creditor, the creditor is likely to bring an action upon a theory of law such as creditor fraud or as a co-conspirator in a fraudulent transfer.

However, Pennsylvania, like Florida, does not have a statute making fraudulent transfers to judgment creditors illegal and it still found punitive damages proper under the circumstances of Klein. Other states, including D.C., Hawaii, Kansas, Missouri, and Texas, have allowed punitive damages for fraudulent transfers when the fraudulent transfer was not considered a crime.

In conclusion, we do not know where Florida will fall on this issue. The majority of states that have considered the issue have jumped on the bandwagon to allow punitive damages for fraudulent transfers, regardless of whether the transfer is considered a crime. Only time will tell what the Florida courts decide to do in this area.

Everything You Always Wanted to Know About Motor Vehicle Ownership Planning* and Did Not Think To Ask

Part 1 which appeared in the January 2, 2014 Thursday Report discussed strict liability for owners under the dangerous instrumentality rule, negligent entrustment and liability of two people who jointly own a car. Click here to read last week’s report.

Part 3 on 1.16.2014 will discuss special planning for children and ownership issues.

Part 4 on 1.23.2014 will discuss survivorship planning and why boats and airplanes are different.

AUTO INSURANCE ISSUES

Most of the exposures to liability for owning and operating a vehicle in Florida can be transferred to an insurance company by purchasing a Personal Automobile Policy (also called PAP). The Personal Automobile Policy gives “insured” status to the person named on the policy, the resident spouse, and any “family members” who must be related to the person named and must also be resident in the household.

“Adequate limits” are based upon personal preference and premium tolerance. The best way to increase your protection is through a “Personal Umbrella” policy that provides excess liability limits over automobile and homeowner’s policies. In fact the umbrella can be endorsed to cover most personal exposures, including boats and recreational vehicles (RVs) as well. It is critical to let the umbrella policy insurer know of all other coverages.

There are circumstances that require special care in structuring your insurance policy.

1. Corporate-Owned Automobile. Where an automobile is provided by a company that does not have a Personal Automobile Policy, a coverage gap can exist when the vehicle is not insured on the corporate policy for personal use. Two endorsements need to be added to the corporate policy, Drive Other Car and Named Individual Broadened Personal Injury Protection. Each family member will need to be named on these endorsements.

2. Non-Married Partners. Since the Personal Automobile Policy considers resident spouses and related family members as insureds, non-married partners should have a separate policy in their own name. It would be advisable to have the same limits and insurance companies to avoid claim issues.

3. Children. A common question is how to insure a child’s car while that child is at home. The safe answer is on the parent’s policy. Often this is the most expensive option since the child is then provided with the same liability limits as the parents. Under Florida law, the parent is liable for the minor child’s operation of a vehicle. Even when the child turns eighteen, they can still be held liable if the child is operating under the direction of the adult (running errands). For example, Susan and Bill have an eighteen-year-old child, Dave, who still lives at home. The vehicle is titled in Dave’s name, and Dave has his own policy. When Dave drives that car, his policy will respond to claims against Dave and his parents, but only up to the limit that Dave’s policy provides. Susan and Bill’s policy will not respond. If Dave’s policy has low limits, then Susan and Bill could have a large gap in coverage.

4. Rental Cars. The Personal Automobile Policy normally covers the named insured and family members for liability from any vehicles except those with less than four wheels. If the rental is for business purposes coverage only applies to private passenger vehicles, vans, or pickups. Coverage for damage to the rented vehicle is afforded based on the vehicle insured on the policy with the broadest coverage. The rental company may provide a physical damage waiver that would also pay for the rental company’s administrative costs and loss of use of a damaged vehicle.

USING SUBSIDIARY ENTITIES

Businesses and individuals who own their motor vehicles through a business entity may expose other assets and operations of the entity to judgments emanating from the driver=s negligence. Therefore, the company should consider establishing a subsidiary limited liability company (LLC) as an operating business to own one or more vehicles. If the driver of the automobile is an employee of the company, liability may accrue to the owner (employer) under the doctrine of Respondent Superior for negligent driving resulting in injuries to another that occurs in the scope of business. After-hours driving, however, which would include most DUI events, may not subject the operating company to liability when the car is driven for personal, non-business purposes after hours. Also, the company may not be responsible for obligations incurred outside of the normal scope of employment, which could include drunk driving. Thus, it is often recommended that the subsidiary LLC owning the vehicles meticulously draft its corporate documents and define its business purpose so as to limit its liability even further.

Clients with significant automobile and trucking operations may employ drivers through a separate company to limit liability that would otherwise accrue under Respondent Superior. It is generally recommended that such a company should be responsible for ownership, maintenance, operation, and all personnel practices relating to automobile and trucking operations. Alternatively, an independent employee-leasing company might handle personnel issues for both the primary operating company and the subsidiary, but it should be clear in all paperwork that the drivers are not identified as employees of the primary parent company.

Some companies with large vehicle operations have attempted to limit liability by creating a number of subsidiaries, each owning a small number of vehicles. In 2005, however, Florida Statute Section 324.021, which excludes rental companies from the limited liability rules, was amended so that “rental company” now includes a related rental or leasing company acting as a subsidiary of the same parent. Under this new statute, the famous case of Walkovszky v. Carlton would have a different outcome. In that case, a personal-injury plaintiff sued a taxi company. The parent owned a large number of small subsidiaries, each owning just two cabs. That court held that the plaintiff could not reach the assets of the parent or the other subsidiary companies. Under this new statute, the other subsidiaries could be liable.

For a parent company to be reached through the negligent acts of a subsidiary, the subsidiary company will have to be “pierced.” Florida courts regard veil piercing as an extraordinary remedy to be exercised with caution. Therefore, parties who seek to pierce the corporate veil carry a very heavy burden. The Florida Supreme Court held in Dania Jai-Alai Palace, Inc. v. Sykes that, before the general rule of limited shareholder liability can be disregarded, the party seeking to pierce the corporate veil must establish by a preponderance of the evidence that (1) the shareholder dominated and controlled the corporation to such an extent that the corporation had no independent existence; (2) the corporate form was used fraudulently or for an improper purpose; and (3) the fraudulent or improper use of the corporate form caused injury to the claimant.

Under the first prong, it must be shown that the corporation had no independent existence. The courts will review the administration of the corporation to determine whether (1) the stockholder controlled the corporation’s administration through centralized legal, accounting, and other support services; and (2) the stockholder eliminated many of the corporation’s own administrative services or the corporation depended on the stockholder for, among other things, its physical premises, data processing facilities, insurance, purchasing, employee benefit programs, employee relations and personnel services, public affairs, property management, internal auditing, legal services, telecommunications, cash management systems, and marketing research.

The existence of certain controls over areas of management and administration does not conclusively result in a finding that the stockholder dominated and controlled the corporation. Courts have recognized the value of centralized services in the holding company structure.

Under the second prong—improper conduct—the corporate veil will be pierced when (1) the corporation was organized, or after organization was used by the stockholders for fraudulent or misleading purposes; (2) “corporate property was converted or corporate assets depleted for the personal benefit of the individual stockholders”; (3) “the corporate structure was not bona fidely established”; or (4) “property belonging to the corporation can be traced into the hands of the stockholders.”

The Florida Supreme Court in Dania Jai-Alai Palace, Inc. v. Sykes held that improper conduct was proved when (1) the parent wholly owned the subsidiary; (2) the two corporations shared common officers; (3) the parent controlled the hiring and firing of the subsidiary’s employees; (4) the subsidiary “existed only to serve the needs of” the parent; (5) the subsidiary’s offices were in the parent’s premises, and gave all outward appearances of being an integrated operation; and (6) the two corporations filed joint tax returns and were jointly insured.17

After Dania, Florida courts have pierced the corporate veil only in extreme cases of abuse of the corporate form. Absent proof of intentionally fraudulent conduct, courts simply do not pierce the corporate veil under Florida law. For instance, in Hilton Oil Transportation v. Oil Transportation Co., the court did not find proof of fraudulent conduct and therefore refused to pierce the corporate veil even though the wholly owned corporation did not observe corporate formalities, had no capitalization and owned only one asset, and the sole shareholder exercised complete control over the corporation’s board of directors.

Further, the corporate veil will not be pierced solely because a subsidiary corporation is thinly capitalized. The claimant must also prove that a shareholder intentionally concealed the corporation’s thin capitalization or defrauded or misled investors as to this fact. The Supreme Court in Dania stated that if allowing corporate veil piercing whenever a corporation is loosely capitalized were the rule, “it would completely destroy the corporate entity as a method of doing business and it would ignore the historical justification for the corporate enterprise system.”

Frank Jakes is Not Afraid of Virginia Woolf

Intellectual property litigation lawyer, Frank Jakes, of the Johnson Pope Tampa office is more than just a phenomenal intellectual property law lawyer and litigator. He is playing the part of George in The Cornerstone Theatre Company’s production of Who’s Afraid of Virginia Woolf? by Edward Albee. The shows run Thursdays at 7pm, Fridays and Saturdays at 8pm and 2pm on Sundays from January 9 through January 26 at the Lowndes Shakespeare Center, 812 E. Rollins St. in Orlando.

Angel Allen plays Martha in this 1966 film adaptation and Chaz Krivan and Janae Riha also star in this 4 person cast. For more information please visit http://www.cornerstonetheatrecompany.com/.

Seminar Announcement
Same Sex Marriage and Associated Laws We Should All Know About Anyway

On Thursday, January 30th, 2014 at 5:30 p.m. at Stetson Law School, Alan Gassman will be speaking at the Pinellas County Chapter of the Florida Association for Women Lawyers’ CLE Program. Professor Jason Palmer, Professor Rebecca C. Morgan, and Charles F. Robinson, will also be speaking. Discussions will include various issues facing America after the Supreme Court decisions in U.S. v. Windsor and Hollingsworth v. Perry.

For registration please click here. Please come out and join us at this fantastic event!

The following are the profiles of 3 of the fantastic speakers:

robinson with wording

Charles F. Robinson, P.A.: Elder Law asset protection planning (Medicaid); fiduciary services

AA Degree, St. Petersburg Junior College
BA and JD degrees, University of Florida

Professional Accreditations:
Florida Bar Board Certified Elder Law Attorney
Accredited Attorney for Veterans Benefits
Certified Court Appointed Arbitrator
Certified as a Civil Circuit Court Mediator by the Florida Supreme Court.
Association of Professional Futurists

Professor Jason Palmer

Jason Palmer

Professor of Law, Stetson University College of Law
B.A., University of Virginia
J.D., George Washington University Law School

Professor Palmer joined Stetson after teaching legal writing and oral advocacy for six years as a professorial lecturer in law at George Washington University Law School. Most recently, he worked for the Department of State as a team leader representing the United States in international arbitration cases before the Iran U.S. Claims Tribunal. He also spent four years in Switzerland working as a claims judge for the Claims Resolution Tribunal for Dormant Accounts, adjudicating claims of victims of Nazi persecution; for the United Nations Compensation Commission, coordinating review of Palestinian claims against Iraq as a result of its invasion and occupation of Kuwait; and for the Europa Institute at the University of Zurich, creating and teaching a course for Swiss lawyers on U.S. legal writing. Before working in Switzerland and at the Department of State, Professor Palmer spent several years in private practice in Washington, D.C., focusing on commercial litigation and international arbitration.

Professor Palmer is the co author, along with Professor Arturo Carrillo, of the article “Transnational Mass Claims Processes in International Law and Practice,” published in 28 Berkeley J. Int’l L. 343 (2010). He is also the author of the book chapter “Remedying Mistakes in Mass Claims without Compounding Errors Lessons from the Palestinian Late Claims Program” in Designing Compensation After Upheaval: Insights From the Experience of the United Nations Compensation Commission (Oxford University Press). This two volume treatise is scheduled for publication in fall of 2010.

Professor Palmer was a judge for the 2010 Michael Greenberg Writing Competition for the National Lesbian, Gay, Bisexual, and Transgender (LGBT) Bar Association. He was also a deputy editor of the “International Year in Review” published in The International Lawyer in spring of 2010 and was an assistant editor for Volume 16 of the Legal Writing Institute’s Journal of Legal Writing. He is a corresponding editor for International Legal Materials, which is published quarterly by the American Society of International Law.

Professor Rebecca C. Morgan

Rebecca Morgan

Professor of Law, Stetson University College of Law
Boston Asset Management Chair in Elder Law and Director, Center for Excellence in Elder Law
B.S.B.A., Central Missouri State University
J.D., Stetson University

Professor Morgan teaches a variety of elder law courses in the J.D. and LL.M. programs and oversees the elder law concentration program for J.D. students. She is the successor co author of Matthew Bender’s Tax, Estate and Financial Planning for the Elderly, and its companion forms book (Lexis), a co author of Representing the Elderly in Florida, (Lexis), The Fundamentals of Special Needs Trusts (Lexis), Ethics in an Elder Law Practice (ABA) and Planning for Disability (Bloomberg BNA Portfolio). She is a member of the elder law editorial board for Matthew Bender. Professor Morgan has authored a number of articles on a variety of elder law issues and has spoken a number of times on subjects of elder law. She is the co editor of the Elder Law Prof Blog, http://lawprofessors.typepad.com/elder_law/ (with Kim Dayton (William Mitchell) and Katherine Pearson (Penn State).

Professor Morgan is a past president of the National Academy of Elder Law Attorneys, past president of the board of directors of the National Senior Citizens Law Center, past chair of the American Association of Law Schools Section on Aging and the Law and of the Florida Bar Elder Law Section, and on the faculty of the National Judicial College. She is a member of the American Law Institute (ALI), academic advisory board for the Borchard Center for Law and Aging, an academic fellow of the American College of Trusts & Estates Counsel (ACTEC), a NAELA fellow, and a member of NAELA’s Council of Advanced Practitioners (chair 2012 2014). After a term on the Board of the ABA Commission on Law and Aging, she is a special advisor to the ABA Commission on Law and Aging. She is a member of the board of directors for the Center for Medicare Advocacy.

Downton Abbey and the Dreaded Fee Tail – A Far Worse Fate Than Not Having Air Conditioning, Microwaves or Hair Dryers

“People are trapped in history and history is trapped in them.”
– James A. Baldwin

The Masterpiece Theatre hit series Downton Abbey is more than a 1900-1920s era English aristocracy and servant class study showcasing lush manors and decadent gowns. The series illustrates a thankfully now outdated concept in property law: the dreaded fee tail. The show centers on a wealthy family in the turn of the century England. Robert Crawley is the Earl of Grantham and head of the luscious estate Downton Abbey, which has been in the family for centuries. Crawley is married to a wealthy American and they have three daughters that live on the estate. As occurred on dozens of occasions after the turn of the century, daughters of wealthy US industrialists inherited large amounts and then found a shortage of well healed men in the US to marry. These wealthy daughters turned to England, where there was a welcomed shortage of women for aristocratic English men to marry, but there was one major catch—England was in a depression and the men needed cash to maintain their estates. In the case of Downton Abbey, Mr. Crawly married a wealthy American, who put her inheritance into Downton Abbey and was not able to get it back or direct how it would pass.

There is much ado about the future possession of the estate, because only a male could inherit title or ownership of Downton Abbey. The Earl’s cousin and son, his two closest male relatives, die on board the Titanic in an early episode of the show. The Earl’s eldest daughter, Mary, will not be eligible to inherit the estate because the estate can only pass to a male heir. As a result, the Earl was forced to reach out to his third cousin, Matthew Crawley, who is (ironically) a solicitor in Manchester, to inform him that he was due to inherit the massive estate. Further intrigue follows, but central to the plotting and scheming is the pestering fee tail.

The time period of the show is essential to understanding the importance that the estate holds to the family. In the early 1900s, land was more than just the soil built upon; land was the key to the aristocracy, a sacred status symbol, and gave the family the right to basically enslave individuals who had the need to work on farms or to extract minerals from the significant properties that were not available to common people in those times.

The property interest at the center of the controversy is a fee tail or entail. This type of property interest is all but abolished today, with only a watered down presence in four U.S. states. An owner of a fee tail cannot devise the property by will or alienate it, but rather, the property passes by law to the owner’s heirs upon his death. The fee tail was employed to keep the land in the family. This often caused confusion about the proper succession of the title of land, especially in a case of a gender specific fee tail, such as a “fee tail male” (seen in the show) which only sons could inherit. An owner of a fee tail could grant, at maximum, a life estate for the period of years of the grantee’s life. After the life estate expired the property would revert back.

In Downton Abbey, the women were excluded from the fee tail, as described above. Women were able to control property not subject to the fee tail estates at the time they were unmarried or widowed, but only after passage of the Married Women’s Property Act in 1882. Without a will, the property passed via the English law of primogeniture, which gave the oldest son the right to inherit real property in the absence of a will, and this was in effect until the Administration of Estates Act 1925. The most recent change in English succession law has been this year: the Succession to the Crown Act 2013, which allows the oldest child, female or male, to take precedence in line to the throne. Before the Act, the oldest male would take precedence over any older female.

Further commentary on the specifics of how this law applies to the characters in Downton Abbey, as published from an interview with an English Barrister, can be viewed by clicking here.

Potter Steward was an attorney who graduated from Yale Law School. He was a member of the U.S. Naval Reserve and served in World War II. In 1954, at the age of 39, Potter was appointed to the United States Court of Appeals for the Sixth Circuit, and in 1959, he was nominated to the Supreme Court.

Stewart was a member of the Supreme Court for landmark court decisions, including Griswold v. Connecticut, Miranda v. Arizona, Sierra Club v. Morton, Ginzburg v. United States, and Roe v. Wade. Stewart retired in 1981, and was succeeded by Sandra Day O’Connor. He is known for both his statement on censorship from the Ginzburg v. United States dissent, “censorship reflects a society’s lack of confidence in itself. It is a hallmark of an authoritarian regime,” and his statement in the obscenity case of Jacobellis v. Ohio. He died in 1985.

Applicable Federal Rates

APPLICABLE FEDERAL RATES.January 2014

The 7520 Rate for January is 2.2% and for December was 2.00%.

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location: The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2013, whether formally or informally. Anyone who would like to attend (dutch treat or bring wooden shoes) will be welcomed. Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2013

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

48th ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING SEMINAR

Date: January 13 – 17, 2014

Location: Orlando World Center Marriott, Orlando, Florida

Sponsor: University of Miami School of Law

Additional Information: For more information please visit: http://www.law.miami.edu/heckerling/

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live

interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: Here is what UF is saying about the program on its website: “The UF Tax Institute will provide tax practitioners and other leading tax, business and estate planning professionals with a program that covers the most current issues and planning ideas with a practical, informative, state-of-the-art approach. The Institute’s schedule will devote separate days or half days to individual income tax issues, entity tax issues and estate planning issues. Speakers and presentations will be announced as the program date nears to ensure coverage of the most timely and significant topics. UF Law alumni have formed the Florida Tax Education Foundation, Inc., a nonprofit corporation, to organize the conference.”

The Thursday Report – 1.2.2014 – New Year 2014 Edition

Posted on: January 2nd, 2014

Everything You Always Wanted to Know About Motor Vehicle Ownership Planning* and Did Not Think To Ask – Part 1

Medical Practice Wisdom by Dr. Pariksith Singh – Part 3 – Medicare Risk Adjustment: Coding and Concepts

Basic Asset Protection for Doctors: Creditor Exempt Assets and Fraudulent Transfer Rules – Part 3 of a 3 Part Series by Alan S. Gassman

What is an ISC? Federal Deposit Insurance Options for Accounts Over FDIC’s $250,000 Guarantee Limits

Not Again, Colonel – AGAIN! – An Update on How to Remove a Mug Shot From Google in 48 Hours for as Little as $99

Ode to the Largo Commissioners

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Everything You Always Wanted to Know About Motor Vehicle Ownership Planning* and Did Not Think To Ask, Part 1 of a 4 Part Series

Part 2 on 1.9.2014 will discuss auto insurance issues and using subsidiary entities to own and operate vehicles to limit liability.

Part 3 on 1.16.2014 will discuss special planning for children and ownership issues.

Part 4 on 1.23.2014 will discuss survivorship planning and why boats and airplanes are different.

INTRODUCTION

Virtually all clients own and operate motor vehicles, which are by far the greatest liability generators in Florida. Multi-million dollar jury verdicts coupled with owner liability and parent-child liability concepts make motor vehicle liability prevention planning an essential part of any individual or corporate representation. This article provides a basic framework for lawyers representing individuals and businesses who own and/or operate motor vehicles.

Basic considerations which must be evaluated with respect to motor vehicle planning include the following:

a. The owner of an automobile is responsible for a permissive driver’s negligence, subject to certain limitations described below.

b. An individual who signs a contract with the state to permit a minor to receive a driver’s license is absolutely responsible for the minor’s negligence.

c. Through proper planning a motor vehicle may be owned by a corporation and driven for business purposes, thus permitting tax deductibility thereof.

d. Upon purchasing a motor vehicle, Florida state sales tax will be incurred, except to the extent of consideration attributable to trade-in allowances where the trade-in has come from the same person or entity who takes title to the newly purchased vehicle.

e. A motor vehicle can be a valuable asset and thus subject to creditor claims, probate proceedings, and other property rights considerations.

f. Liability insurance and costs of coverage for different ownership arrangements are often the “tail that wags the dog” in vehicle planning.

The most important planning consideration for a majority of clients revolves around limiting liability for driver negligence.

STRICT LIABILITY FOR OWNERS UNDER THE DANGEROUS INSTRUMENTALITY RULE

In Florida, individuals who own automobiles may be shielded from strict liability by statute if the owner allows another (a permissive user) to drive the vehicle. If a driver has at least $500,000 of liability insurance coverage, an individual automobile owner is only liable for up to $100,000 per person, up to $300,000 per incident for bodily injury, and up to $50,000 per incident for property damage. However, if the permissive user does not have liability insurance coverage, then the individual owner may be liable for an additional $500,000 in economic damages, but the economic damages responsibility is reduced by amounts actually recovered from the driver and from any insurance or self-insurance covering the driver. For the complete text of Florida Statute Section 324.021(9)(b)(3).

Owner liability emanates from the “Dangerous Instrumentality Doctrine,” which provides that the owner of a dangerous instrumentality is liable for the negligent acts of a person who uses it with the owner’s actual or implied consent. In Florida, the doctrine extends to negligence of someone who borrows the vehicle from someone else who had permission to borrow the vehicle from the owner. For instance, in Fischer v. Alessandrini, a father lent his truck to his son, who then lent the truck to another party, who collided with Alessandrini. There, the father was allowed to limit his liability under Florida Statute Section 324.021(9)(b)(3).3 Further, a vehicle owner’s auto insurer is primarily liable to persons injured as a result of the negligence of a person operating the owner’s vehicle with the owner’s permission. Even in situations like Fischer, where a second permissive user is involved, the owner’s carrier will be primarily liable to the injured parties.

A possible issue is that the statute only covers individual owners. It may not explicitly cover joint owners. If it does cover joint owners, then it is unclear whether the $800,000 limit on liability will apply to both owners to create a joint liability of $1,600,000. This question will be discussed in more detail below. This is why it is often recommended that when spouses purchase a vehicle, the spouse least exposed to liability should take title to the vehicle and the more “at risk” spouse should drive it. In Florida, motor vehicle liability insurance policies cover the owner of the vehicle and any other driver whom the owner gives actual or implied consent, thus protecting a spouse not named on the title.

Further, there are no assurances that this statute would have any affect whatsoever if the negligent operation of the vehicle occurs outside of Florida.

Finally, the statute only applies to an owner who is a “natural person,” thus rendering the provision inapplicable where the vehicle is owned by a business entity. Also the statute does not shield an owner from liability for NEGLIGENT ENTRUSTMENT or for having “signed” with the State of Florida to be responsible for a minor driver.

NEGLIGENT ENTRUSTMENT

In Florida, the doctrine of negligent entrustment of a dangerous instrumentality applies to motor vehicles. The owner of a motor vehicle has a nondelegable duty to ensure that the vehicle is operated safely. Florida Statute Section 324.021(9)(b)(3) does not limit liability for negligent entrustment or negligent maintenance. The cause of action for negligent entrustment exists where the car owner knew, should have known, or had reason to know that the person borrowing the car was incompetent, unfit, inexperienced, or reckless; that the entrustment created an appreciable risk of harm to others; and that the harm to the injured victim was proximately caused by the negligence of the entrustor.

LIABILITY OF TWO PEOPLE WHO JOINTLY OWN A CAR

Although Florida Statute Section 324.021(9)(b)(3) limits a car owner’s liability if a permissive user is involved in an accident, as mentioned above, what happens when two people own the car? Is the limited liability a higher amount? Are they liable for twice as much? Does the victim of the accident benefit because there are two owners?

These particular questions have not yet been addressed by Florida courts. However, in Rouse v. Greyhound Rent-A-Car, the Fifth Circuit decided a case on appeal from the Middle District of Florida, which held that where there were two owners of a vehicle, the owners were jointly liable for the payment of damages to the injured party. The Fifth Circuit reversed the district court because it found that one of the “owners” was not in fact an owner, and thus he was not subject to joint liability. But the court did not address the reasoning of the district court concerning joint liability by two owners. Therefore, since it appears that all the owners would be jointly liable for the amount for which only one owner would be liable, it seems plausible that their liability would also be limited to the amount proscribed by the limiting-liability statute.

Public policy would dictate the same result. Just because a car driven by a permissive user is owned by two people does not mean that the injured victim of a car accident by that jointly owned car driven by the permissive user should benefit and be entitled to a higher amount of damages. This would deter individuals from putting more than one name on the title of a car and indicating joint ownership.

 Medical Practice Wisdom by Dr. Pariksith Singh – Part 3
Medicare Risk Adjustment: Coding and Concepts

Most advisors and almost all physicians are well aware of traditional Medicare and health plan coding, whereby Medicare and the health plans pay doctors based upon numeric codes that indicate services rendered.

Far fewer physicians and advisors understand the MRA score system which stands for Medicare Risk Adjustment. Medicare gives monies to HMO’s to provide turn-key care for Medicare patients to sign up for the HMO system, which is known as Medicare Advantage Plan. The sicker the patient is, the more money that gets paid for this turn-key care. It therefore behooves physicians who are paid based upon the amount the government puts up and the health plans to use the highest MRA code possible, but to not use inappropriate MRA codes.

Dr. Singh does a great job this week in discussion of MRA codes and matters associated therewith.

To understand Medicare Risk Adjustments (“MRA”), one may wish to understand where health care is moving. In my mind, MRA as part of coding is as integral to standardizing health care, auditing, billing and collections, such as Current Procedural Teminology or International Classifications of Diseases, Star rating, Physician Qualify Reporting System, HEDIS criteria, and etc. We are seeing greater objectivization and benchmarking in services that had until now been subjectively evaluated for efficiency and results.

What does this do to the normal practice? It gives, at first glance, the opportunity to compare apples to apples. Thus, if each health care service can be measured on the same terms, such as severity of illness, intensity of intervention, goals achieved, customer service, compliance, and utilization management, there is an even playing field where everyone becomes equal. However, it appears that this now counter-intuitively pits apples against lemons. The “lemons” are those practices who refuse to play catch up, refuse to learn documentation and coding, and insist on staying with old-fashioned beat-up path of health care that has failed miserably in the past.

However, for those who are willing to stay ahead of the curve, this is a chance to shine not only as apples but as the finest and select pièce de résistance fruit on the table. Simply put, it is the chance for those who are nimble, eager to learn, and willing to put processes in place that improve and measure health services to blaze the trail and take the lead in the health care industry. Those who stay behind will be road-kill. This may be shocking and sound stark, but the market can be unforgiving, and the business model of the new health care is ruthless.

No longer will the provider be given unlimited powers and complete freedom to code and bill as they deem fit. If services for home health care, Skilled Nursing Facilities, and hospital care are to measure up to this strict criterion, the provider will be put to test. And if they are not prepared for the new demands of the system, there might be significant penalties or losses from recoveries by the government.

The old managed care had essentially fixed premiums, no matter how sick the patient was, and the only way to increase profits was to pay less to providers, improve contracts and utilization, or deny care by refusing to treat illnesses or dumping sicker patients (which used to be called cherry-picking the healthier population).

The newer managed care system paid more for sicker patients, for improved documentation, coding and billing, and ensuring that claims reached CMS via the HMO. The way to increase profits was not only to reduce expenses but also by increasing premiums (what might be called cherry-picking the sicker population).

The third wave in managed care introduces some more changes where Star Ratings, Customer Satisfaction, and HEDIS criteria become more and more important. The Star Rating system was developed by CMS to help consumers compare nursing homes more easily and held identify areas which a patient or their family would want to ask questions about. This third wave ties MRA to utilization for proper data reporting, review, and analysis. This, in turn, ties all of these requirements into a strong compliance system, care management, customer service, ACOs, and Medical Homes. This field is evolving rapidly, but providers can significantly overlap these several new initiatives which are overseen by the same agencies. It is no wonder why Florida Medical Quality Assurance is certifying Medical Homes, ACOs, the indicators for meaningful use, for the reporting criteria for Medical Homes and ACOs have significant similarities.

You cannot manage what you cannot measure. This is an old axiom, but this was the case under the older systems. However, now the government insists that it has created the tools to measure the efficacy of managed care and allow the more efficient practices to be more profitable and creates opportunities to save on wasted resources. So, the theory seems to be; however, in practice, what will separate the men from the boys (or women from the girls) will be a successful implementation of strong systems which will capture the MRA diagnoses correctly.

As we see the increasing standardization and objectivization of medical care, we will also see another phenomenon, which I call the “subjectivization of health care.” By this I mean, when parameters are created by which, in theory, one practice can be gauged against the next and these findings can be easily posted and shared on the internet and other media, customers will clamor for those practices which can be distinguished for going that extra yard by providing that additional touch of customer service or providing the “health care experience”, akin to the Disney experience or the Apple gestalt.

How to succeed with MRA? These are some of the basics that will need to be implemented in any practice that intends to “hang ten” on this third wave:

1) Constant education and training of the providers (including specialists), staff, auditors, and billers. Last but not least, the plan.

2) Creating a partnership with specialists, vendors, IT systems, and, again, the plan.

3) Implementing a system to retrospectively check the chart on a constant basis and bring codes forth.

4) Mandatory compliance training and certification of every employee at least annually.

5) Use a Utilization Management software and system that ties all the data together making it actionable and becomes the pivot for all the services provided to the patient whether it is inside or outside the practice.

6) A data collection system, including getting all the hospital records, discharge summaries, consults, labs, radiology reports, and other information into your client’s record.

7) Incentivizing physicians to improve the overall quality of care and compliance testing.

8) Focusing intensely on customer service and experience and educating the patients about their conditions and health care status.

9) Developing special needs plans and specialty clinics.

10) Getting a constant feedback from the plan about the MRA scores of the practice, patient by patient, and constant updating of one’s data portals.

A strong MRA push is part of the overall compliance program and cannot be ignored in this era of rising health care costs and decreasing revenues.

A Poem by Dr. Singh:

Experience without words
Is the door without walls
That opens you to worlds
You inhabit within

Thus thoughts lose relevance
And feelings their anchor
Choiceless one encounters
The world without distinction

Basic Asset Protection for Doctors: Creditor Exempt Assets and Fraudulent Transfer Rules – Part 3 of a 3 Part Series by Alan S. Gassman

Most physicians are aware that certain types of assets cannot be reached by creditors.

Most physicians are also aware that under the Federal Bankruptcy Rules an individual can file a Chapter 7 Bankruptcy, which can discharge the debt otherwise owed to a malpractice creditor, notwithstanding that the physician may be allowed to keep all of his or her creditor exempt assets.

Most physicians are also aware of the “Fraudulent Transfer Rules”, which can provide creditors with the ability to obtain otherwise exempt assets if these assets were purchased with non-exempt monies or other assets that were “converted” for the purpose of avoiding creditors.

Many clients are also aware that a bankruptcy discharge may not be received if a “fraudulent transfer” has occurred.

Many clients are also aware that a bankruptcy discharge may not be received if a “fraudulent transfer” has occurred within two years of the bankruptcy being filed.

The interaction of the above rules has important implications for the individual planning strategies employed by physicians under varying circumstances. To make this more complicated, the laws and interaction of State Law and Federal Bankruptcy Law are often uncertain, and subject to change. Further, bankruptcy judges will often “bend the rules” to arrive at results that they believe to be just.

The various “exempt assets” and some unique rules that apply to each of them are as follows:

1. The Homestead. The Florida Constitution strictly protects homestead property, being up to one half acre within city limits or up to one hundred and sixty acres if outside of the city limits. Properties that have a home plus other buildings or real estate not associated with the home may or may not be protected depending upon the circumstances.

The Constitutional protection of the homestead is so strong that under Florida Law a “fraudulent transfer” of monies into a homestead by purchase, mortgage paydown, or for improvements cannot be set aside in the Florida courts as a fraudulent transfer unless the monies transferred constitute stolen funds or are otherwise considered to be “contraband.”

Nevertheless, the Federal Bankruptcy Law was amended in 2005 to deny even Floridians the right to retain their homestead in a bankruptcy under certain circumstances:

a) If the homestead was acquired within three years and four months of the filing of the bankruptcy, except to the extent acquired from the proceeds of the sale of a prior homestead that was owned within such time parameters.

b) To the extent that funds put into the homestead as a “fraudulent transfer” within ten years of filing of the bankruptcy.

c) Where the bankrupt individual has a judgment against him or her based upon gross negligence, willful misconduct, or corporate fraud or certain white collar crime related matters.

As a consequence of the new Federal Bankruptcy Law, many physicians are well advised to pay their home mortgages down earlier rather than later, contrary to prior advice that was given before the bankruptcy law was passed.

What is an ISC? Federal Deposit Insurance Options for Accounts Over FDIC’s $250,000 Guarantee Limits

In the US, bank depositors are protected by the FDIC, or Federal Deposit Insurance Corporation. This independent US agency protects up to $250,000 per a depositor. But what if your account is over $250,000? What if it is in the millions?

Promontory Interfinancial Network, LLC has developed several services for those individuals with cash assets of over $250,000: CDARS and ICS. These services utilize the FDIC protections by separating funds into several different accounts at other banks. However, while the funds may be in several banking institutions, the account owner is kept completely confidential with the original bank. The service also provides the ease of one statement for the account owner.

Previously, we reported on CDARS, the Certificate of Deposit Account Registry Service, which protects multi-million-dollar CD deposits, while allowing the deposits to earn an often favorable interest rate.  Click here to view that Thursday Report.

With an ICS, or Insured Cash Sweep, money is placed into an ICS Account. The account owner has two options: a Savings or a Demand Account. Demand deposit accounts have a deposit interest rate, and the Money Market Deposit Account Interest is available with the savings option.

Once one or both account options are selected, the money is then separated into bundles of less than $250,000, and placed at separate ICS banking institutions. This way the bundles can earn interest, and still be covered by the FDIC limit of $250,000.

Although separated, the accounts are on one monthly banking statement, and the client is able to treat it as one account. The money can be withdrawn within 24 hours, and for the ICS Savings Account, you can only withdraw six times a month.

With ICS, the bank is the custodian for the funds, but the funds also have a sub-custodian: The Bank of New York Mellon.” The disadvantage is that right now ICS has very little return.

Some individual banks also have their own insured bank deposits. For instance, BB&T has IDP, an Insured Deposit Program that is limited to $1,750,000. Edward Jones has an Insured Bank Deposit that provides coverage for savings accounts up to $1.5 million depositor.

Not Again, Colonel – AGAIN! – An Update on How to Remove a Mug Shot From Google in 48 Hours for as Little as $99

In May we ran an article called “Not Again, Colonel! – How To Remove A Mug Shot From Google In 48 Hours For As Little As $99.” (Click here to view the article.) This month we are re-running the article with an addition for removing your client from other public search engine services.

Sometimes bad things happen to good colonels. And sometimes good colonels make mistakes. Unfortunately these types of situations can result in an arrest and mug shot, like the Colonel’s above. Regardless of innocence or guilt, mug shots often end up online and can appear when someone searches an arrested person’s name. This can be very harmful in many situations, such as when someone is searching for a new job or deciding which fried chicken proprietor to visit. Well do not fear. The Thursday Report has found a cheap and quick way to stop mug shots from appearing in Google searches. Read on for details.

In most counties in Florida, the county sheriff’s office will make mug shots available online. Most county sheriff’s websites have a feature where you can search to see if a person has ever been arrested. If the person has been arrested, then the county sheriff’s website will usually display details of the arrest and a mug shot. But the good thing about most county sheriff’s office websites is that the arrest information and mug shots normally do not show up in a regular Google search for a person’s name.

The real problem is third party websites like www.mugshots.com and www.florida.arrests.org. These types of websites take the mug shots from county sheriff’s office websites and then publish the mug shots on their own website. Mug shots on these third party websites will then show up in regular Google searches and Google image searches.

Fortunately, there are services that can stop a mug shot from showing up in a Google search. We do not know how they do it, but they work. We also do not know if the mug shot websites and the removal services are in cahoots, but we would be very interested if someone looked into this.

An online search for “mug shot removal service” will yield a number of different companies offering the service. We have found one website that works well and is very inexpensive: RemoveMyMug.com. We do not endorse this website or have any affiliation with RemoveMyMug.com; we can only say that it has worked in the past for us. We cannot get into details, but the Thursday Report has a “checkered” past.

RemoveMyMug.com costs $99 per mug shot removal. This means that you will have to pay $99 for each website that displays a mug shot. RemoveMyMug.com claims they typically take 24 hours or less for a removal, with some taking only minutes. They also offer a money back guarantee if they are unsuccessful.

Once the mug shot removal service removes the mug shot, the Google search result will not disappear automatically. Eventually Google will see that the link to the mug shot website no longer works and eliminate all search results. Until then, the mug shot listing will appear in Google’s search results, but if someone clicks on the search result they will receive a message that the page is no longer available. This is called a dead link. Google’s removal process can take anywhere from one to thirty days. But it is possible to make the dead link disappear in a few hours.

Google allows people to report dead links, like a removed mug shot. To do this, first you go to the Google content removal page. Click here for the page. Click on the option that says “Remove content that’s not live.” Then log in using a Google account. You can make one up if you do not already have one. After that you will see a button in the middle of the Google webpage that says “Create a new removal request.” Click on this button and paste the URL for any mug shot webpage that was deleted. The easiest way to do this is to open a second webpage or browser, perform a Google search for the person’s name, and then copy and paste any search results that are showing. We have found that Google will often remove a dead link in just a few hours.

That should take care of any Google search results. If you or your client are interested in expunging an arrest record, then you should check individual county websites to learn how to do so.

ADDITION:

InstantCheckMate.com is a paid service that searches and compiles public records on an individual. This includes current and former addresses, criminal records, and sex offender databases. Service charges range from $29.95 for a single report, to monthly memberships. We were able to get a 5 day unlimited trial for $1.00 by exiting out of the payment options page (you can also google “instantcheckmate.com trial membership” to get a trial rate). The catch is to cancel the membership, you must call customer service. Otherwise you will be billed the full membership amount that automatically renews.

It is free to enter a name and a listing of the search results for the name, which includes any cities the person has lived in and will sometimes display an exclamation point next to the name. We ended up having to call InstantCheckMate.com to find out what this exclamation meant, since the website does not tell you. It simply means the information is being updated, and the county clerk is doing something with the individual’s name; however, our first instinct was it involved criminal actions, since the website advertises “Police Records, Mugshots, Contact Information and Much More!”

If you purchase the service to view the individual record, it will show any public information on an individual, including any arrests regardless of whether the charges were dropped. It will also include prior addresses (with aerial photographs of residences), an individual’s birth date, astrology sign, licenses, marriage/divorce records, related persons (including business associates and roommates), and sex offenders living near the individual’s address.

Fortunately, information can be removed from the website by going to http://www.instantcheckmate.com/optout. There are two ways to remove information. Option 1 is to mail a request to Instant Checkmate’s physical address in Las Vegas. The information will be removed within 3-7 days after Instant Checkmate receives your request. Option 2 is an expedited Opt Out, which includes a form which is submitted on the website. This option takes 48 hours to remove the information. The catch is that the information must be entered exactly as it appears on the website, and you are only allowed a limited number of submissions with a single e-mail address. If an individual has multiple listings, then each listing must be submitted.

After submitting an opt out request, InstantCheckMate.com will send a confirmation e-mail, with a link to finalize the request. After finalizing the request, it takes 48 hours for the entire listing to be removed.

InstantCheckMate.com is just one of many services available to the public to access information. We found the customer service to be pleasant, and did not have any problems cancelling a trial membership after submitting opt out requests. The entire listing was promptly removed after submitting an expedited opt out request.

It is important to actively review your search results, especially if you have any criminal records, even if the charges were dropped.

ODE TO THE LARGO SEPTIC COMMISSION

We have lots of neat things in Kent Place,

Including fresh poop that gets in your face,

When driving in from Belcher the smell is strong,

Much worse than the sulphur water that might help a lawn,

But it is fun to see and smell the pumping

Each Friday evening,

As Sabbath comes in,

Our rabbi is leaving

(he is moving to Flushing, NY).

There’s a problem with the pipes,

That we don’t understand,

And that can’t be fixed,

Despite the demand,

And the damages to the coyotes,

Is of concern,

They’ve asked us for incense,

That they can burn,

And barking “Arff please,

Spare us from disease.”

As values go down,

Our taxes will too,

So we can afford gas masks,

And have bought quite a few,

And we reached out to Fidel,

So he is sending a crew,

To save us from sewage,

And democracy too.

Yes the problem is big,

 

And our choices limited,

Are we confused,

Or are the systems demented?

So last Tuesday,

We went to see,

How the commissioners would handle

Our poop and our pee.

What we heard last Tuesday,

Was frustrating and tough,

Mostly they didn’t know,

And their engineer cannot do enough.

So to Mayor and commissioners,

Thank you for being good listeners,

We hope you will act anew,

So that the sewage doesn’t end up on you.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

APPLICABLE FEDERAL RATES.January 2014

The 7520 Rate for January is 2.2% and for December was 2.00%.

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location: The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2013, whether formally or informally. Anyone who would like to attend (dutch treat or bring wooden shoes) will be welcomed. Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2013

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

48th ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING SEMINAR

Date: January 13 – 17, 2014

Location: Orlando World Center Marriott, Orlando, Florida

Sponsor: University of Miami School of Law

Additional Information: For more information please visit: http://www.law.miami.edu/heckerling/

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: Here is what UF is saying about the program on its website: “The UF Tax Institute will provide tax practitioners and other leading tax, business and estate planning professionals with a program that covers the most current issues and planning ideas with a practical, informative, state-of-the-art approach. The Institute’s schedule will devote separate days or half days to individual income tax issues, entity tax issues and estate planning issues. Speakers and presentations will be announced as the program date nears to ensure coverage of the most timely and significant topics. UF Law alumni have formed the Florida Tax Education Foundation, Inc., a nonprofit corporation, to organize the conference.”

The Thursday Report 12.26.13 – Tonto, Toto and a Poem

Posted on: December 26th, 2013

Twas the Thursday After Christmas Poem

Residential Borrower’s Rights to a Three Day Rescission Notice – What If This Notice is Not Given in a Family Situation?

Long Term Care: Expecting the Unexpected

Medical Practice Wisdom by Dr. Pariksith Singh – Part 3 – The Medical Home: A Position Paper

Seminar Announcements – Heckerling 2014 and Dates Announced for Notre Dame 2014

Larry Katzenstein’s Leimberg Article on How the Medicare Tax Impacts Charitable Trusts and Arrangements

Basic Asset Protection for Doctors: Getting Sued for Malpractice, Malpractice Insurance and All That Jazz – Part 2 of a 3 Part Series by Alan S. Gassman

Do You Remember Alfred E. Neuman?

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Twas the Thursday After Christmas

Twas the Thursday after Christmas
And all through the Report,
Not a creature was amused,
And there was much retort!

The stock market was hung,
At over 16,000 with care,
In hopes that next week,
The Thursday Report will still be there.

While the editors of the Thursday Report,
Were shopping offshore,
To find new content,
And articles of allure.

So have a great New Year’s,
And toast with good cheer,
We’ll see you next Thursday,
And also next year!

Residential Borrower’s Rights to a Three Day Rescission Notice – What If This Notice is Not Given in a Family Situation?

Many estate planners, family and tax attorneys, and advisors are asked for assistance in putting mortgages into place between related parties. As a result, residential mortgage laws are of great importance. The three day rescission notice is a law that easily falls through the cracks, but can have great repercussions when families no longer get along.

Federal law requires lenders who take mortgages on the principal dwelling of a consumer to give the borrower three (3) business days after becoming obligated on the debt to rescind the transaction. Further, the lender is required to clearly and conspicuously disclose this right to the consumer and provide the appropriate documents. Lenders are required to deliver two copies of the Notice of the Right Rescind and one copy of the disclosure statement to each consumer entitled to rescind. The lender does not need to disburse monies to the borrower or to pay for recording, stamp, or other expenses until the three days has run.

The specific language of the federal law is found in 15 U.S.C. Section 1635(a) and is expressed as follows:

Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Bureau, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Bureau, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Bureau, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.

Transactions that are covered by the Right of Rescission are:
∙ Home-equity loans
∙ Home-equity lines of credit; and
∙ Refinances of existing mortgages in which the transaction is not performed by the lender who holds the current mortgage.

Transactions that are not covered are:
∙ A mortgage for the purchase of a home
∙ A refinance transaction with the existing lender, state agency mortgages, or loans on second homes or investment properties.
∙ The other exceptions listed at the bottom of this article

Borrowers can only waive the three day rescission period if there is a “bona fide personal financial emergency.” The emergency must be documented by a signed and dated waiver statement that describes the emergency and specifically waives the right and is signed by all borrowers who would be entitled to rescind the transaction.

A borrower who has not received proper notice of the 3-day right of rescission will have three years from the date of the loan to rescind the arrangement and repay the principal owed in order to get a refund of all interest and fees paid. A written recision notice must be sent before the end of the three year period. Nothing else needs to happen within the three year term, according to a Third Circuit case, before the borrower is required to pay back the loan, but the Statute states in 15 U.S.C. Section 1635(b) that the “procedures prescribed by this subsection shall apply except when otherwise ordered by the Court.”

When the borrower gives notice, it is therefore important that the lender consider going to court to change the order of the repayment procedure in order to avoid giving up the mortgage position and having the borrower simply refuse to repay or file bankruptcy.

For a consumer to rescind a transaction, the consumer must notify the lender in writing by midnight of the third business day after the latest of three events: 1) consummation of the transaction; 2) delivery of material TILA disclosures; or 3) receipt of the required notice of the right to rescind. If a borrower prevails in exercising his/her right to rescission and they have enough cash to repay the loan principal, borrowers can get a refund of their interest and fees.

Within twenty (20) days of receiving a rescission notice, the creditor is required to return all monies and property that the borrower gave in connection with the transaction and to terminate the creditor’s mortgage on the property. By the letter of the law, the lender must give up its mortgage before the borrower is required to give back the amounts borrowed.

If the order of remedies is not changed then not only would a creditor have to sue the borrower to try to get the money back without having a mortgage on the borrower’s property, but a borrower with other creditors might file bankruptcy or be forced into bankruptcy, and the borrower might thereby be able to discharge their obligation to pay the creditor.

Section 1635(e) lists exemptions from this right. The following transactions are exempt:

1) a residential mortgage transaction, as defined in Section 1602(w) as “a transaction in which a mortgage… is created or retained against the consumer’s dwelling to finance the acquisition or initial construction of such dwelling.”

2) a transaction constituting a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property;

3) a transaction in which an agency of a State is the creditor; or

4) advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such a plan.

Life becomes more complicated, but someday our smartphone will enable us to comply with just about everything we do, including automatic payment of the smartphone bill!

Long Term Care: Expecting the Unexpected

What are the chances that you or a client or your loved ones will need long term care – is it worth paying the premiums on expensive long term care policies?

We had our law clerks look at a number of articles to try to determine what the probability of needing long-term care will be, and how long the care will be needed for.

The vast majority of Americans can continue to rely upon Medicaid to provide long term care under the present system and are not able to afford to pay the premiums on any sort of long-term care policy that would have a substantial positive impact if they were to become disabled.

Affluent Americans typically have more than enough assets to pay for a typical nursing home visit, which may now cost as much as $8,000 a month plus supplemental expenses.

Long-term care is a range of services and supports a person may need to meet their health or personal needs over a long period of time. While long-term care can mean medical care, most long-term care is basic assistance with the personal tasks of everyday life. Two types of non-medical long-term care services are Activities of Daily Living (ADLs), such as bathing, dressing, or eating, and Instrumental Activities of Daily Living (IADLs), such as housework, paying bills, or taking medications. Needless to say, the cost of long-term care services can be extremely high and financially burdensome on elderly clients.

While it would be nice for planning purposes to know if an individual will need long-term care (“LTC”) in the future, the harsh reality is that no one knows for sure. However, statistics do show that the longer a person lives, the higher their chances are that they will need LTC.

When planning for a loved-one or client’s future the following facts should be weighed to make a sound decision:

• In general: Women have a higher risk of needing LTC than men and face a greater risk of lengthy periods of need for LTC. Furthermore, singles are more at risk because they usually do not have someone that can properly take care of them. While 1/3 of today’s population may never need LTC, 20% will need LTC for over five years. Furthermore, the average person’s lifetime expenditures for long-term care are estimated to be an average of $55,000 in 2012 ($47,000 in 2005).

• Ages 18-64: While most individuals think that long-term care cost only impact seniors, younger individuals are also in need of these services. According to the Long Term Care survey by Genworth Financial, 40% of the individuals receiving long-term care are from ages of 18-64.

• Ages 65-Up: It is also projected that 70% of 65-year-olds will need some sort of long-term care during the remainder of their lives. There were 37 million Americans age 65 or older with LTC needs in 2005, and there is an expected number of 81 million in 2050. See chart above for projected LTC need by gender.

• Ages 85-Up: Around 97% of the people that are over the age of 85 will at least require assistance for the last year of their life.

It seems that making a decision about long-term care needs means weighing the probabilities and risks. All in all, odds seem to favor that the average American will evidentially need long-term care. Thus, these high statistics should be kept in mind when either opting for long-term care insurance or self-insurance.

LTC CHart 2

For more information on long-term care planning please see: www.longtermcare.gov.

Medical Practice Wisdom by Dr. Pariksith Singh – Part 3
Medical Home: A Position Paper

Some advisors are not aware of what a “Medical Home” is.

This is a residence where patients can live and receive medical treatment without having to be in a hospital or a formal nursing home.

It seems that the time of Medical Homes has come and gone. The buzzwords now are ACO, bundled-payments, or Health Information Networks. No longer are Medical Homes the hot topic of discussion or debate nor has there been any movement on greater payment for accredited practices from Medicare or Commercial plans recently. Yet, in some ways, Medical Homes are the keystone that supports all these grand structures of Accountable Care Organizations, Managed Care, or Health Information Networks.

Without there being medical practices that are state of the art, and using advanced technology and the principles of Medical Homes, there can be no compliance, no quality, no coordinated care and no patient involvement. It may be worthwhile to review the concept of a Medical Home and see if this understanding sheds light on the trends in health care. While buzzwords may come and go, patient care will remain central. The relationship between the provider and patient is the axis around which any super-structure (whether ACO or HMO or PSN or PPO) erected to solve the present impasse in health care will revolve.

It may well be that all other architectural concepts will fail if the tipping point is not found. It is my opinion that the area which can use the most improvement is the doctor’s office.

What is a Medical Home?

Simply speaking, I like to think of a Medical Home as the patient’s second home, with all the same comfort, security, familiarity, constancy, satisfaction and reliability. To paraphrase Dorothy from ‘The Wizard of Oz’, one might say that for a patient “There is no place like Medical Home.”

A Medical Home is a facility where patients can live and receive medical treatment without having to be in a hospital or a formal nursing home. The ultimate goal of these facilities is to keep patients, particularly patients with chronic illnesses, healthy enough to avoid expensive hospital visits. Medicare will be providing physicians with extra incentives by providing a monthly care-management fee in addition to their normal Medicare fee-for-service.

In my opinion the most critical elements of a successful Medical Home are as follows:

1) Comprehensive care: This means not just primary care, but all aspects of the patient’s health, including but not limited to his social, cultural and familial circumstances. This should not just be limited to when the patient is sick but also when the patient is healthy, and not just primary but pre-primary, prophylactic, or preventive health care.

2) Coordinated Care: This should be between all specialties, facilities, modalities, and health affiliates. The staff at the Medical Home is a team that ensures that all clinical interventions are communicated to the primary care provider and the patient, that the care is integrated, and that a coherent plan is adopted rather than taking a sporadic approach to health care.

3) Compliant Care and Quality of Care: Compliance is the means, and quality is the end. Here, as in most things in life, the means define the end, and results are not separate from the means. A practice that rewards the constant vigilance and out-of-the-box thinking among the employees who question any activity that is not in sync with the vision of quality will always be ahead in providing the best care to the patient.

4) Communication of Care: Advanced IT systems and a way to communicate with patient both to and from the provider and Medical Home team is mandatory. The patients need to be educated and involved in clinical decision-making with an objective evidence-based approach to medicine. This will ensure buy-in from those who are at the receiving end of health care.

5) Cost-Effective Care: Finally, the best medicine is the most cost-effective medicine, e.g. a myocardial infarction saved in time or a diabetic foot infection prevented will end up saving several-fold more money, reduce mortality and morbidity, and lower the liability of the practice. The Medical Home is uniquely positioned to provide the best managed or accountable care to a whole population.

Infra-structure for a Medical Home:

In my opinion, these elements are the sine qua non for Medical Home:

1) State of the Art technology, EMR, HER, and e-prescribing;
2) Advanced data systems and analysis;
3) A full-fledged compliance program and inculcation of a culture of compliance in the entire practice along with adoption of the best practices;
4) Emphasis on the best customer service and care;
5) Aggressive case management and coordination;
6) Team-based approach to patient care with the primary care center as the nodal point of health care;
7) Self-review and audit programs as part of the quality initiative; and
8) Improved access, enhanced services on weekends, walk-in services, etc.

Advantages of a Medical Home:

1) A sudden evolution and a radical leap in systems, processes, and philosophy of practice;
2) Segue to ACO (Once a Medical Home is set up, it is ideally paced to fulfill all the requirements of an ACO if part of similarly structured and functioning practices joined in a network or group);
3) As Meaningful Use is adopted to take advantage of the financial incentivization, this is an ideal time for the practice to advance to a new level of functioning. Thus, the required expenditure in information technology will be partly paid for, and the improved technological integration of the practice will make the transition to Medical Home easier with better data collection and analysis;
4) Less liability due to better customer satisfaction, improved communication with patients, and better coordination of care seems to be an obvious and necessary outcome of improved services and systems. Care will improve, errors will be reduced and mortality and morbidity will be reduced as mentioned earlier;
5) Increased patient satisfaction;
6) Increased provider satisfaction and less burn-out;
7) Focus from disease to health;
8) Takes advantage of latest IT technology which makes the practice nimble and adaptable;
9) Compliant care;
10) Better case management, disease management, utilization management and care management;
11) Increased payment from Medicaid with Medicaid HMOs and PSNs;
12) Outside review makes the practice stronger, more objective and with less deficiencies which may be missed on a purely subjective approach; and
13) Marketing advantages.

Disadvantages of a Medical Home:

1) Initial cost to create the infra-structure;
2) Long application process and paper work;
3) No increase in profits for practices restricted to commercial and Medicare products at present;
4) Lack of awareness among patients and lack of adoption by patients of advanced technology;
5) Requires extra effort, research and constant vigilance; and
6) Constant training of staff.

It is the author’s opinion that the Medical Home approach is here to stay. Practices which wish to be on the cutting edge of medicine must adopt the principles and objectives of Medical Home as soon as possible despite any short-term disadvantages or increased expenditure. Not only is accreditation of advantage competitive, but it helps to sharpen the skills, processes and organization of the practice.

Seminar Announcements:

See us at Heckerling

Notre Dame 2014 Dates Announced

SEE US AT HECKERLING!

We are continuing to develop and improve our Estate View estate tax planning software. For Notre Dame last October we debuted our installment sale feature, which includes analysis and numerical illustration for self-cancelling notes and both defective and complex grantor trusts.

We are now updating our life insurance trust module so that clients can see the difference between using and not using irrevocable life insurance trusts on each spouse’s life and for second-to-die life insurance policies.

Please join the Estate View beta testers core by visiting Booth 430 and also check out our books and most importantly the Thursday Reports that we will hand out.

Alan Gassman, Ken Crotty and Chris Denicolo will all be spending time at the booth to say hello, especially during lunch and during breaks.

Notre Dame Tax Institute Dates Announced

Thursday and Friday, November 13 and 14, 2014, followed by the Notre Dame vs. Northwestern football game on Saturday, November 15.

The Notre Dame Tax Institute is pleased to announce that the 2014 program will take place on November 13 and 14 in South Bend, Indiana at the Century Center, which is conveniently located in downtown South Bend, directly across the street from the Doubletree Hotel.

This year’s program theme is business succession planning, and as with prior years will feature the very best speakers and outline materials, with the vast majority of sessions being the attendee’s choice between two or more presentations that will be offered each hour.

We are also very pleased to announce that the attendee reception will be held at the Convention Center itself for attendees and their spouses or significant others and will feature cocktails and hors d’oeuvres on the beautiful waterside view of the convention center. The 2014 program will also feature more opportunities for attendees to mingle and be able to meet one another.

The complimentary late Wednesday afternoon additional two hour session topic and speaker will be announced in the near future.

Please make your plans to attend this excellent program, and please let Jerry Hesch or the Thursday Report know of any suggestions you might have. Alan Gassman will serve on the Board of Advisors of the Notre Dame Institute, but don’t tell anyone.

We welcome any and all questions, comments and suggestions for this year’s conference.

Let’s also congratulate Jerry’s daughter, Erin on her admission to Northwestern University. Coincidentally, the Fighting Irish will be playing Northwestern on Saturday, November 15, 2013!

Hesch

Larry Katzenstein’s Leimberg Article on How the Medicare Tax Impacts Charitable Trusts and Arrangements

Last week the LISI Network released Larry Katzenstein’s excellent write up on how the new Medicare tax regulations impact the following entities:

1. Charitable Purpose Trusts

2. Charitable Remainder Trusts

We thank Steve Leimberg and Larry for giving us permission to make this newsletter available to readers of the Thursday Report.

Click here for your complimentary copy.

Basic Asset Protection for Doctors: Getting Sued for Malpractice, Malpractice Insurance and All That Jazz– Part 2 of a 3 Part Series
by Alan S. Gassman

OLYMPUS DIGITAL CAMERA

It can be a very cruel world for physicians, and no part is crueler than our tort “justice” system.

The unfortunate fact is that every doctor, whether perfect or imperfect, faces the possibility of a multi-million dollar judgment being imposed upon both the doctor and the medical practice entity. Just as bad, perhaps, is the number of years that a doctor being pursued has to endure worrying about these types of situations. Experience tells us that all doctors survive the ordeal financially if they have done proper planning in advance. Not all doctors survive the psychological effects of having to deal with worry over loss of substantial assets and their entire practice entity, particularly when advance planning has not been implemented in an appropriate manner.

Most physicians have many strategies that can be followed to assure that they can survive a multi-million dollar malpractice judgment, and have reasonable certainty during the litigation process to allow some degree of peace of mind.

Strategy #1 – Have good malpractice insurance.

Many clients ask us if they should go bare, especially once their “asset protection planning” has been completed. Going bare, or using a substandard carrier (as described in the first part of our article) can be a huge mistake.

Most doctors are not mentally or financially prepared to pay the defense costs that are required in a malpractice action. These can easily amount to $30,000 to $40,000 in the initial stages of investigation, depositions, and witness selection and preparation, and then climb well past $100,000 to be prepared for and to go through a trial. Imagine paying anywhere from $6,000 to $15,000 per month to defend a malpractice claim!

Secondly, where there is malpractice insurance we often do see the plaintiff’s lawyer make a mad rush to settle for the coverage limits. While we far prefer $1,000,000/$3,000,000 limits to $250,000/$750,000 limits, it is true that most of the time the plaintiff lawyer will accept policy limits where the doctor’s individual and practice assets have a good degree of protection.

The advantages and disadvantages of having small versus large limits of liability for malpractice insurance are covered in one of the Exhibits to this article.

Finally, and most important for catastrophic multi-million dollar verdicts, most of the time in these situations the carrier has an obligation to pay the entire verdict. Most smart plaintiff lawyers will offer to settle within policy limits, and if a carrier refuses to settle within policy limits and an excess verdict occurs, then most of the time the carrier is going to be responsible for paying the entire judgment if the doctor and the doctor’s legal counsel have communicated appropriately with the carrier.

This is one reason why it can be very important to have a lawyer independent of the attorney hired by the insurance carrier involved in helping to defend a doctor in a medical malpractice case.

Strategy #2 – Being “creditor-proof”.

A plaintiff lawyer and his or her client must look at what is available to satisfy their claims in a lawsuit. While it is simplest and easiest to settle for policy limits, a plaintiff lawyer does not want to be sued later by his or her own client for not having pursued whatever assets or items of value might have been available to settle a claim.

This may include determining whether there were transfers made after the claim came into existence that could be pursued as “fraudulent transfers.”

The personal creditor protection rules will be reviewed in a subsequent part of this series, but the very basic concepts are as follows:

a) Yes, it may be too late to protect assets once the patient has a bad result. The primary question under the fraudulent transfer statute is whether the purpose of the transfer was to avoid exposure of assets to a claim. There is no exact moment where that intention would or would not be proven. The best answer to when a clients asks me whether it is too late to transfer assets into a protective mode is that “if you having to ask that question, it may be too late.” DO YOUR CREDITOR PROTECTION PLANNING BEFORE ANY PATIENT HAS A BAD RESULT – IN FACT DO IT IMMEDIATELY AND MAINTAIN IT CONSISTENTLY.

b) Understand the categories of ownership and the types of assets that are creditor protected, and follow guidelines provided by qualified advisors to help assure that personal assets are protected. The categories of assets include assets owned by one’s spouse, assets owned by one’s spouse’s revocable trust, tenancy by the entireties assets, annuity contracts when properly structured, life insurance contracts when properly structured, IRAs, pension and 401(k) plans, homestead (up to half an acre within the city limits), 529 college savings plans, and certain other items. MANY MISTAKES ARE MADE BASED UPON ASSUMPTIONS OR ERRORS RELATING TO THE CREDITOR PROTECTION RULES AND PLANNING. BE CAREFUL, AND USE THOROUGH AND QUALIFIED ADVISORS. DO NOT BE LED INTO THINKING YOU NEED ONE PARTICULAR TYPE OF ASSET OR TECHNIQUE, PARTICULARLY WHEN THAT IS TOUTED BY A PROFESSIONAL WHO SELLS ONLY THAT TYPE OF ASSET OR TECHNIQUE. FOREIGN AND DOMESTIC “ASSET PROTECTION TRUSTS” AND OFFSHORE “TAX SAVINGS” ARRANGEMENTS SHOULD BE PARTICULARLY SCRUTINIZED, AS SHOULD THE PROFESSIONAL RECOMMENDING THEM.

Strategy #3 – Protecting medical practice assets.

Under the legal doctrine of respondent superior, the employer of a doctor will be legally responsible for the medical malpractice verdict against the doctor. The plaintiff lawyer therefore needs to scrutinize not only the doctor but also his or her practice entity to determine whether there are assets that can be used to satisfy a potential judgment.

To cut to the chase, the very best way to help assure that a plaintiff lawyer will not assume that there are significant practice assets is to (a) have any significant equipment and furnishings owned by a separate entity and/or being subject to bank debt exceeding its value, and (b) have significant bank debt as a lien against the accounts receivable of the medical practice. A future issue of this article will review techniques for protecting accounts receivable, none of which are perfect.

Strategy #4 – Proper Conduct During Litigation

A fourth leg of the table for the protection of physicians who are or will be the defendant of a medical malpractice lawsuit is to make sure that appropriate actions are taken with respect to the matter. These include the following:

a) Carefully preserve the entire medical record and make sure that any requests for copies of records are absolutely accurate and do not omit any pages or include pages from other patient’s files that might inadvertently be in the subject file folder.

b) Do not alter or backdate the medical records, except for the possibility of notations and clarifications that would be appropriately dated and approved in advance by a qualified defense lawyer. Juries have no mercies on doctors who backdate or “forge” medical records.

c) Prepare a memorandum marked “Attorney/Client Privileged Communication” providing anything and everything that comes to memory about the case, including any communications within the staff and with third parties. This can be invaluable as memories fade away over time.

d) Do not discuss the case with anyone but the attorney or attorneys representing you. Any discussions you have with any other party may be discoverable in depositions or otherwise.

e) Especially do not discuss the case with the patient, the family of the patient, or the lawyer for the patient. Anything you say can and often will be used against you.

f) Do not instruct your lawyer not to settle the case. It may be in your best interest to get the case settled early, and there may be an opportunity to do so, before the plaintiff lawyer has to expend a lot of money on experts. The plaintiff lawyer may be able to use a small settlement from one defendant doctor to fund the experts needed to pursue other doctors and institutions in the case. You may want to get out early while you can.

g) Update your creditor protection planning in a careful manner. Certain “moves” may be deemed to be “fraudulent transfers” that cast a negative appearance, while some transfers may be essential to preserve assets and income.

During the tendency of a serious lawsuit it can be important to review the Florida Statutes on wage protection and to make sure that monies received for services rendered in the practice are classified as wages (as opposed to dividends), and that the doctor is the head of a household providing more than fifty percent of the support of at least one person other than the doctor.

h) Most importantly, when an offer is made to settle within policy limits strongly consider making a strong demand upon the carrier to settle at that time. Once that has occurred the doctor may have very little exposure, since the carrier should be responsible for any excess verdict.

If you are dealing with a small or out of state malpractice carrier, then it is prudent to periodically review the financial health of the carrier. If the carrier goes under then the doctor may be “bare” and unable to receive monies to help defend the claim or to pay a judgment. The plaintiff lawyer may be much more willing to settle within policy limits, and even at a significant discount if he or she can be shown that the malpractice insurance carrier may go under.

Do You Remember Alfred E. Neuman?

Those of us who were fortunate enough to grow up with Mad Magazine understand parody, sarcasm, and good old low class humor.

Alfred E. Neuman was a great hero in the 1960’s and early 1970’s.

The Familiar Smile Loved by Generations

Alfred E. Neuman, popularly known as the lovable, jug-eared icon of Mad Magazine, is still adored by America to this day, over fifty years after his creation. His gapped toothy grin and carefree familiar slogans have brought joy to generations of children and adults alike, and have become a centerpiece of pop-culture.

Alfred’s character, briefly appearing under the alias “Mel Haney,” has starred on the cover of Mad Magazine for over fifty years, appearing in a majority of the magazine’s 500 issues. Alfred is no stranger to disguises, as he has frequently appeared on the cover dressed in a variety of guises over the years, including Barack Obama, Darth Vader, Bart Simpson, Barbara Streisand, Bruce Springsteen, and Abraham Lincoln. Most notably, he is known for his satirical presidential candidacies and his slogan “You could do worse…and always have!”

The Mysterious Origins of Alfred E. Newman

Despite Alfred’s continuing popularity, his creation is still a mystery to this day. The name Alfred E. Neuman was borrowed from Alfred Newman, a music arranger from the 1940s and 1950s. When Al Feldstein, editor of Mad Magazine in 1956, hired artist Norman Mingo to create the official portrait of Alfred, Norman Mingo was initially less than pleased to hear where he would be working. Unsurprisingly, Feldstein was able to convince Mingo to stay with Mad Magazine by offering a few rough sketches of Alfred’s lovable face. The name Alfred E. Neuman was first paired with the face in the 29th issue of Mad, released in 1955.

The origins of Alfred’s character have been so frequently questioned that in 2012, when current editor Nick Meglin was again asked about Alfred’s identity, he was quoted as saying, “Does the average Playboy reader care about where the rabbit came from? It’s just a symbol that lets you know what’s on the inside.”

Alfred’s goofy smile and “what, me worry?” attitude have made him a pop-culture icon in American society. He has transcended generational boundaries, while his growing popularity is enjoyed by children and grandchildren of original readers of Mad Magazine. There is no question that Alfred’s goofy grin will not be disappearing from the newsstands anytime soon.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

December 2013 Annual 0.25% Annual 1.65% Annual 3.32%
Semi-Annual 0.25% Semi-Annual 1.64% Semi-Annual 3.29%
Quarterly 0.25% Quarterly 1.64% Quarterly 3.28%
Monthly 0.25% Monthly 1.63% Monthly 3.27%
November 2013 Annual 0.27% Annual 1.73% Annual 3.37%
Semi-Annual 0.27% Semi-Annual 1.72% Semi-Annual 3.34%
Quarterly 0.27% Quarterly 1.72% Quarterly 3.33%
Monthly 0.27% Monthly 1.71% Monthly 3.32%
October 2013 Annual 0.32% Annual 1.93% Annual 3.50%
Semi-Annual 0.32% Semi-Annual 1.92% Semi-Annual 3.47%
Quarterly 0.32% Quarterly 1.92% Quarterly 3.46%
Monthly 0.32% Monthly 1.91% Monthly 3.45%

The 7520 Rate for December is 2.0% and for November was 2.01%.

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location: The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2013. Anyone who would like to attend (Dutch treat or bring wooden shoes) will be welcomed. Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date: January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date: March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is. For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law

Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date: March 12, 2014

Location: Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger (sara.younger@baycare.org) or Thomas Ferrante (tferrante@carltonfields.com).

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors: Ave Maria School of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2014

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTRE DAME TAX AND ESTATE PLANNING INSTITUTE

Date: November 13 and 14, 2014

Speakers: TBA

Location: Century Center, South Bend, Indiana

Additional Information: Don’t miss this year’s Notre Dame Tax and Estate Planning Institute. Rooms will sell out fast so book yours now. We will let you know when registration details become available. If you have any questions please email agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

48th ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING SEMINAR

Date: January 13 – 17, 2014

Location: Orlando World Center Marriott, Orlando, Florida

Sponsor: University of Miami School of Law

Additional Information: For more information please visit: http://www.law.miami.edu/heckerling/

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and Conference Center, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters: Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor: UF Law alumni and UF Graduate Tax Program

Additional Information: Here is what UF is saying about the program on its website: “The UF Tax Institute will provide tax practitioners and other leading tax, business and estate planning professionals with a program that covers the most current issues and planning ideas with a practical, informative, state-of-the-art approach. The Institute’s schedule will devote separate days or half days to individual income tax issues, entity tax issues and estate planning issues. Speakers and presentations will be announced as the program date nears to ensure coverage of the most timely and significant topics. UF Law alumni have formed the Florida Tax Education Foundation, Inc., a nonprofit corporation, to organize the conference.”

The Thursday Report – 12.19.13 – Same Sex Cookies for Rookies

Posted on: December 19th, 2013

Colonel Sanders Christmas Albums – Colonel Sanders is Coming to Town

Ugly Sweater Contest

How to Get Your Firm’s Share of the $6.05 Billion Class Action Settlement for Merchants Who Accepted Visa and Mastercard from 2004 to Present

16 States and Counting: Changes to the Article on Counseling Same Sex Couples

Medical Practice Wisdom by Dr. Pariksith Singh – Part 1 – Why Have a Strong Compliance Program in Place?

Seminar Announcements: Ave Maria School of Law Estate Planning Conference and The Florida Bar Leadership Academy Conference

Fried Chicken Cookies for Christmas

Basic Asset Protection for Doctors – Part 1 of a 3 Part Series by Alan Gassman

Do You Tweet?  The Florida Department of Revenue Does!

Phil Rarick’s Informative Blog: Before the Wedding: 3 Legal Points Every Parent Should Know (Or Why a Prenuptial Agreement May Be a Smart Idea)

Passing the Bar in 1776

We welcome contributions for future Thursday Report topics. If you are interested in making a contribution as a guest writer, please email Janine Gunyan at Janine@gassmanpa.com.

 This report and other Thursday Reports can be found on our website at www.gassmanlawassociates.com.

Colonel Sanders Christmas Albums – Colonel Sanders is Coming to Town

We all knew how Colonel Sanders loved to share his chicken with the world, but we didn’t know about his love of spreading holiday cheer.  From 1967 to 1969, KFC released three Christmas albums. These albums featured popular artists of the time singing Christmas music. The three albums are Christmas Eve with Colonel Sanders (1967), Christmas Day with Colonel Sanders (1968), and Christmas with Colonel Sanders (1969). Unfortunately, Colonel Sanders’ taste of music was not as good as his fried chicken. BuzzFeed rated Christmas with Colonel Sanders as the 38th worst Christmas album of all time. Rounding out the top five worst Christmas albums are Roseanne Barr Sings the Christmas Classics at number five, The Freakscene Christmas Album at four, Conway Twitty comes in at number three with his album A Twismas Story, Twisted Sister with A Twisted Christmas at number two and the number one worst Christmas album was David Hasselhoff’s, The Night Before Christmas.  The only thing worse than that was last week’s edition of the Thursday Report.  Click here to see the entire list of awful Christmas albums.

The United States isn’t the only place Colonel Sanders brings cheer to. When it comes to Christmas in Japan, Colonel Sanders is the guy dressed up in the red suit, not Santa. Turkey isn’t common in Japan, and few people own ovens big enough to cook a large bird. In 1974, when people couldn’t find turkey on Christmas day, they opted for fried chicken. It has become a Christmas tradition in Japan. Sounds like a very merry Christmas for Colonel Claus!

We think some of the best holiday songs are “We Wish Every Thursday Could be Christmas” by Mel Connick, Jr. and “Wish Every Christmas Could Be on a Thursday” by Hank Williams and Al Jolson!

Ugly Sweater Contest

 Join our ugly sweater contest.  This year on December 24, 2013 our staff will wear their ugliest Christmas sweaters and any other ugly clothes they might have.  Please send pictures of your whole office staff and of each individual so that we can see who wins buckets of Kentucky Fried Chicken that you can put the sweaters into after you’re done with the chicken.

Our firm personally challenges Phil Rarick’s firm in a contest that can be decided by subscribers to the Thursday Report on Thursday, December 26, 2013.

How to Get Your Firm’s Share of the $6.05 Billion Class Action Settlement for Merchants Who Accepted Visa and Mastercard from 2004 to Present

The U.S. District Court for the Eastern District of New York has approved a class action settlement suit with an initial fund of $6.05 billion to be distributed among businesses and other entities that accepted Visa or Mastercard charges any time between January 1, 2004 and November 28, 2012.

Clients and colleagues are already receiving deceptive advertisements provided by non-lawyer services that invite the recipient to sign up for a “free registration” whereby the illicit sign up service will receive a percentage of the settlement for doing almost nothing.

The court has not yet released or approved a claim form, but we will keep our readers posted on this important development.

The Class Settlement can be viewed by CLICKING HERE.

16 States and Counting: Changes to the Article on Counseling Same Sex Couples

In the October 17th Edition of The Thursday Report, we featured a draft of our article “Counseling Same Sex Couples in a Post-DOMA America.” Since the last publication, three states, Illinois, New Jersey, and Hawaii, have made it legal for same sex couples to get married in their jurisdiction.

As the number of states that allow same sex marriages rise, it becomes increasingly important for practitioners to consider the many aspects of the legal profession that are changing and evolving as a result of the new legislation. To read the new and improved article please click here.

Medical Practice Wisdom by Dr. Pariksith Singh – Part 2 of a Multi-Part Series featuring Dr. Pariksith Singh – Why Should One Have a Strong Compliance Program in Place? 

This is a continuation of a multiple part series featuring the writings of Dr. Pariksith Singh, who is a leading physician, practice and medical business operator and thinker from Spring Hill, Florida – some call it Singh Hill, Florida.

The reasons are many:

1)         It is the right thing to do. It gives peace of mind to everyone in the company, and it is a cultural shift towards quality patient care.

2)         It keeps everyone safe. Health Care providers should be getting paid every penny that they deserve. When this attitude is instilled in every provider and employee, it creates a balance between greed and fear and brings in a safety check to aggressive coding and billing into the workplace. Compliance is the first line of defense against audits and/or lawsuits.

3)         It can make everyone more profitable. Compliance makes certain that a providers goal towards more profit is correctly and ethically achieved.

4)         It is (or should be) the standard that everyone will run their businesses by.

5)         It is the best way to take care of patients. When patients know that they are coming to a facility that places a premium on quality and compliance, they will learn to respect the provider and practice even more and cooperate with the processes, which in turn produces more money!

6)         It is an opportunity and a challenge. The practices that make compliance the standard of care shall be at the forefront of the new shift in health care and shall reap the most benefit. Compliance is business strategy.

7)         It fulfills something deep within us, a need to be good, to be right, to be charitable and conscientious (somewhat akin to Maslow’s fifth level of self-actualization).

8)         It improves communication among the employees and with the patients.

How can a provider group be compliant?

1)         By educating every employee about it. Compliance starts at the top. If the CEO or the person at the top does not believe in it or only wishes to pay lip-service, an organization will be unable to start the ball rolling. It is perhaps better to have no compliance than to have compliance mechanisms in place that are not followed.

2)         By empowering and requiring every employee to immediately inform their superiors anytime someone or something is out of compliance so that it can be fixed immediately. With constant re-enforcement this will eventually become a habit.

3)         By meaning what one says and saying what one means. Communication encouraging compliance should not just be sending e-mails and circulars around.  It should be real and effective communication in which superiors enforce compliance impartially and objectively.

4)         By auditing and re-auditing oneself. Do not be afraid to audit yourself. Just think, it is way better that it is you other than someone from an outside coming in when you have no choice in the matter. Even by being totally open to outside audits from business affiliates (e.g., from HMOs) has its perks, for an organization can use their help, knowledge, and resources as a learning process. By questioning, researching, networking, an organization can assure that it is on the cutting edge of newest changes in health care. Transparency of the system is key.

5)         By honing company processes to perfection. There are two components to compliance: the process and the people. The process should be accountable and accessible. And it should go to the very source of diagnostic criteria, such as ICD-9s, CPT coding, etc.

6)         By creating a system that is intelligent, responsive, and oriented towards patient safety and care. This can be established by being obsessively focused on patient results and care. Integrity is everything.

7)         By making compliance real-time and hands on. In my practice, each chart completed by the provider is reviewed by a coder who makes sure that the “I”s are dotted and the “t”s are crossed before billing goes out. If there are any discrepancies, they are immediately brought to the attention of the provider who either has to justify it or fix it. Any change to the chart should be made within 24 to 48 hours and documented as such.

8)         By showing the people who made an error what the error was and fixing it, one reduces the chances of it recurring. Never let anyone lie, fudge or change documents. It is best to be open about an error than to try to conceal it within or without the company.

9)         By fixing things again and again until it becomes ingrained as a habit in each employee and in each process.

10)       By making compliance the cornerstone of the company. Compliance is not just about rules or arcane laws; it is a culture, a way of thinking, and feeling. It is not just about billing and coding but about every rule in the book, including HIPAA laws, OSHA rules, anti-kickback, and Stark laws.

11)       By making compliance a department of its own.  One that is not involved in daily management, human resources, billing or any other activity. However, it still requires monitoring to insure that every activity and everyone fully conforms to the law. Compliance needs to report directly to the CEO and is answerable to the CEO ultimately. Compliance cannot report to human resources or administration, for the fox cannot mind the coop.

12)       The overall policy should be to take compliance very seriously as the market gets tougher. Compliance is really about quality control. The emphasis should be to be the very best. The compliance officer should behave in a manner that is above reproach, be as fair as humanly possible, and try to create objective criteria with which to evaluate a physician or office. The rules should be for everyone, including compliance officers and personnel.

13)       Employees should be comfortable coming to compliance officers and voicing their concerns. Confidentiality has to be maintained.  The employees should be listened to with respect, and their concerns should not be made light of or ignored. Listening to employees, vendors, and patients is key. Many for disasters could have been averted if someone at the top had listened and acted on the concerns of the employees.

14)       A sign indicating the practice’s commitment to compliance should ideally be posted in each room and on each notice board. Do it right from the first step, and keep it simple. Providers should create a basic compliance manual which can be used to train and as a reference. Furthermore, they should use the help of experts who have experience in the business when in doubt. As many of your attorneys will inform you, ignorance of law is no excuse.

15)       Insist on better record keeping, proper documentation, appropriate billing, and the right coding. Let compliance begin before the patient walks through the door and continue after the patient walks out.

These are only broad guidelines. Details may differ according to the size, scope, and structure of the practice. In the final analysis, compliance should inspire, enable, and promote a higher standard. It should challenge everyone to stretch beyond the status quo. Compliance is a great facilitator if patients always come first.

A Poem by Dr. Singh – see his poetry for children website by clicking here

Aspiring to reach the sky

I become the sky

Reaching to hold the rose

I bloom

Dreaming, I grow into that

Which I ardently seek

Seminar Announcements

Friday, April 25, 2015 – Ave Maria School of Law Estate Planning Conference in Naples

March 15, 2014 – The Florida Bar Leadership Academy Conference in Tampa

AVE MARIA SCHOOL OF LAW ESTATE PLANNING CONFERENCE

Estate Planners – plan for a great Friday and weekend in Naples, Florida on Friday, April 25, 2014.

The Ave Maria School of Law will be hosting the inaugural conference of the Ave Maria School of Law Estate Planning Conference.

Laird Lile and Barry Nelson are mainstay pillars of the tax, estate planning and trust community in Florida.  Laird Lile has published many articles on estate and trust topics and has frequently lectured on the same topics.  One of our favorite recent past law clerks Sydney Smith works for Laird, and Barry is renowned for running numbers and for his fantastic depth of detail, thought and analysis.  Please join Laird, Barry and the other speakers and attendees for what will be a very interesting, stimulating, and rewarding conference.

Thanks especially to Jonathan Gopman and his team in Naples for making this great cause an important reality.

Other speakers and topics include:

  • Florida’s New Decanting Statute;
  • Greg Holtz on Estate Planning Ethics;
  • Barry Nelson on Homestead Portability: Pitfalls, Opportunities, and Traps;
  • Jonathan Gopman and Kevin Carmichael on International Asset Protection;
  • Al W. King, III on Domestic Asset Protection; and
  • Bill Snyder on Income Taxation of Trusts and Estates.
  • Jerry Hesch and Alan Gassman on Using Estate Planning Techniques to Optimize Family Wealth Preservation

Please plan on attending this wonderful seminar at Ave Maria School of Law in beautiful Naples, Florida.

FLORIDA BAR LEADERSHIP ACADEMY – MARCH 15, 2014

IDEAS NEEDED!

On March 15, 2014, Alan Gassman will be speaking at The Florida Bar’s Leadership Academy program which was funded recently by the Young Lawyers Division of The Florida Bar to enable talented and promising Bar members to engage the Bar, their communities, and charitable and pro bono causes.

What are your stories and what is your advice on how to give back to the community, and how the community responds.

We are also designing a workshop exercise to help lawyers prioritize and decide what kind of causes to support when taking into account time, costs, and direct and indirect benefits to the community and others.

If you would like to help us develop this workshop exercise please let us know by emailing Janine Gunyan at Janine@gassmanpa.com.

Fried Chicken Cookies for Christmas

 While looking for the secret recipe to Colonel Sanders famous KFC chicken we came across this recipe for Fried Chicken Cookies that we thought we’d pass along to all of our fellow KFC lovers just in time to add to their Christmas cookie repertoire.  These would definitely be a hit at all of your cookie swaps!

Give them a try and send us a picture of your fried chicken cookies, but please send the cookies somewhere else!

Mix up your favorite sugar cookie recipe and create a chicken leg shaped cookie template.  Cut out your cookies and bake on a parchment lined cookie sheet.

When they are done and have cooled, outline the chicken leg in black royal icing with a #3 tip.

Thin the white & brown/gold icings (reserve a bit for later) with water, a little at a time, until it is the consistency of thick syrup.  Cover with a damp dishtowel and let sit several minutes.

Stir gently with a rubber spatula to pop any large air bubbles that have formed. Transfer to squeeze bottles or a piping bag.

Flood the chicken leg with the thinned icings.  Use a toothpick to guide into corners and edges and to pop and air bubbles.

Let sit overnight.

The next day, mix 1/2 teaspoon meringue powder with 1/2 teaspoon of water.  With a small paintbrush, brush the mixture onto the “meat” part of the chicken.  Sprinkle on crushed cornflakes.  Press lightly to adhere.

Let dry for 15-30 minutes.  Pop into a bucket from KFC…they’ll sell you an empty bucket for about a quarter!

Thanks to Bake at 350 for the idea!

Basic Asset Protection for Doctors – Part 1 of a 3 Part Series by Alan Gassman

The following was adapted from a physician newsletter piece that we wrote several years ago to help doctors understand basic information and motivations for making sure that they have their wealth preservation planning up-to-date.

We find that not a lot has changed from a 30,000 foot standpoint.

We hope that you can use this to help convince physician clients that they need to be as responsible as possible when it comes to planning their estates.

PART I – THE BIGGEST MISTAKES POINT OUT IMPORTANT PLANNING CONSIDERATIONS

This is the first in a series of articles being written at the special request of the Marion County Medical Association by Alan Gassman.

After working so many years to obtain a medical license, to be recognized in a specialty, and to have created a stream of income to provide financial security and support, a physician must make sure that adequate protection is paid to assuring that assets accumulated will not be subject to confiscation or unnecessary expenses.

While most physicians are understandably concerned about making sure that assets are not lost as a result of a malpractice claim, physicians outside of South Florida have other exposures which quite often result in significant problems which should be addressed.

Being a “first article” in a series, we thought it would best serve physicians to have a list of common mistakes which include mention of many asset protection legal concepts and rules that will be covered in more depth in future editions.

Here are common catastrophic errors that we often find when reviewing a new client’s “protection planning”:

1.         Having significant gaps or deficits in insurance coverages.  Automobile ownership and driving, ownership of rental properties, and many other non-medical practice related liability risks present significant exposure to many physicians.  We know from experience that very serious lawsuits can result from these exposures.  Many clients fail to recognize that a $1,000,000 to $5,000,000 umbrella policy can be placed “over” other coverages to help assure a physician and his or her family that they will not have a significant threat of asset loss as the result of a non-medical malpractice related catastrophe.  A personal umbrella liability policy will not cover many types of activities.

2.         Failure to have a financially solvent state-registered malpractice insurance carrier and appropriate malpractice coverages.  Many clients have “placed their bets” on small and sometimes unstable or even non-identifiable malpractice insurance “carriers” who offer substantially lower premiums and are somehow reinsured and registered, if at all, in an offshore jurisdiction.

Many of our physician clients have been left “high and dry” while defending suits where the carrier went bankrupt or into receivership, causing personal bankruptcies or personal payments to settle cases.

Even where a carrier has reinsurance through Lloyds of London or other carrier, a review of the reinsurance contract may show that the reinsurance company is not required to renew the reinsurance coverage and that the offshore carrier would have to pay a significant tail policy charge to ever make the coverage permanent, if permanency is even offered.

Further, having coverage with a “substandard” carrier not approved by the State of Florida is the equivalent of going bare from the point of view of the Florida Statutes, which require a doctor who does not have a state registered malpractice insurance policy to post notices to the effect that he or she is “going bare” or to post escrow deposits which are $750,000 if the doctor has medical staff privileges at a hospital or an ambulatory surgical center (with exposure of the escrow account up to $250,000 per claim).  Those doctors taking the risk of not following the “going bare” statute while using a substandard carrier also face the risk of loss of the ability to go bankrupt and potential forfeiture of their medical license.  We are shocked at how many physicians are putting themselves into this potential risk.

3.         Failure to procure a permanent tail or proper retroactive coverage when changing carriers.  Many clients switch malpractice insurance carriers without making sure that they have good “tail” or continuing coverage.  One big chasm can occur where a doctor switches carriers without telling the prior carrier or the new carrier about a patient event that has occurred, which could result in neither carrier having responsibility if the patient brings a lawsuit.  It is vitally important to inform a new carrier, and the prior carrier, of any incident that would rise to the level of being reportable.

4.         Failure to keep assets out of the doctor’s individual name.  We are always surprised to find doctors who have significant assets in their individual names, totally unprotected.  Oftentimes this is inadvertent, or simply the result of not having time to even know how an asset is titled.  It should go without saying that no practicing physician should have assets in their individual names that are not creditor protected.  A future column will briefly discuss the creditor protected assets, which are also covered on our website at Gassmanbateslawgroup.com under the Asset Protection Planning tab.  These include homestead, life insurance policies, annuity contracts, IRA’s, 401K and pension plans, and 529 plans, assuming proper titling has occurred.

Single physicians who cannot make use of tenancy by the entireties or other mechanisms can consider family limited partnerships, limited liability companies, and special trust arrangements that can provide some degree of creditor protection.

5.         Confusion over tenancy by the entireties.  Most married physicians understand that if assets are owned as tenants by the entireties with their spouses, then they can be protected from creditor claims as long as both spouses are not sued by the same creditor.  Many clients own assets jointly, but not as tenants by the entireties.  It is important to have a qualified advisor review joint assets to be sure that they will qualify as tenants by the entireties.  Common mistakes include deposits made on contracts to purchase real estate where the contractual rights themselves are not held as tenants by the entireties, investments in private companies, and ownership of out of state real estate.  Special measures can be taken to help assure that almost any joint asset qualifies under tenancy by the entireties, but this needs to occur before problems arise, and not after.

6.         Purchasing the wrong investments because of biased advice.  We are sorry to say that there are advisors who will encourage physicians to make financial moves that are to a great extent motivated by commissioned or similar transaction related fees.  This has commonly occurred in the insurance, retirement plan, and, to some extent, in the real estate industries.  Doctors making any potential purchase or investment commitment would be well advised to consult with a team of qualified advisors, which would normally include a CPA who does not accept commissions on the sale of investments, a lawyer who does not accept commissions on investments, and a qualified pension advisor who does not sell investments.  There are conscientious investment advisors who work on a commission basis, and they are usually known of by other advisors who can make appropriate referrals.

The Florida Medical Association CAPS asset protection program may be one example where insurance products and high professional fee mechanisms will cause more harm than good to physicians, in the author’s opinion.

7.         Failure to make sure that medical practice assets are protected.  It is becoming more and more difficult to convince Plaintiff’s lawyers to settle for policy limits in catastrophic cases, especially where the hospital may no longer be a deep pocket because of the elimination of joint and several liability.  There is nothing in the law to prevent a physician from borrowing monies secured by medical practice assets, or having medical practice assets owned by separate entities that can lease them to the practice entity.  It is essential, however, that competent tax and legal advisors be consulted in how to best structure medical practice strategy.

8.         Failure to coordinate estate/trust/asset ownership/beneficiary designation planning.

Many physicians come to us after having engaged in estate planning with significant exposure resulting from failure to follow through, failure to have appropriately structured trusts, and by reason of common errors that occur.

Examples of this are as follows:

(a)       Many clients are the direct beneficiary of their spouse’s life insurance or make their spouse the direct beneficiary of their life insurance.  While life insurance is creditor proof if owned by the insured spouse, the beneficiary is not protected from creditor claims.  Life insurance should usually be payable to a trust that can benefit the surviving spouse without being subject to creditor claims.  Oftentimes this is called a “bypass trust” or a “family trust.”

(b)       Failure of a bypass trust or a family trust to provide creditor protection.  Oftentimes the surviving spouse will be the sole trustee of the bypass trust, and the trust will require that all income be paid to the surviving spouse.  The trusts often do not have the appropriate spendthrift provisions that are necessary to keep creditors out of them.

(c)       Failure to have proper homestead planning.  In most cases the homestead should be owned jointly by a husband and wife, but in some cases the physicians have been advised to have the home owned by them only so that on the first death a bypass trust can be funded.

Unfortunately, the Florida Constitution has archaic provisions which indicate that if one spouse owns the homestead and dies, the children own a vested remainder in the home, and the surviving spouse only takes a life estate.  This means that the spouse would not be able to sell the home without getting permission from the children, and paying them a significant portion of the sales proceeds.  This can be avoided by having the non-physician spouse sign a special consent form before the death of the physician spouse.

Many planners are unaware that even jointly owned assets can be used to fund a bypass trust, notwithstanding that they are owned as “tenants by the entireties.”  Florida disclaimer rules have to be understood when physician clients are planning with bypass trusts and significant joint assets.

Do You Tweet? The Florida Department of Revenue Does!

 The FL Department of Revenue does.  In fact, they have three official Twitter feeds relating to all things FLDOR. MyFLDOR_TaxInfo reminds business owners to pay their sales tax, provides floating interest rates, and other helpful links about tax information.  MyFLDOR_PTO is the feed for property tax, and lists course offerings and updated information about property tax.  Finally, MyFLDOR_CSE updates followers on child support options and tax tips.

Of course, we recommend following the KFC Colonel @kfc_colonel for all things related to fried chicken.

 Phil Rarick’s Informative Blog: Before the Wedding: 3 Legal Points Every Parent Should Know (Or Why A Prenuptial Agreement May Be a Smart Idea)

The Big Announcement:  your daughter tells you she plans to marry Hank, a great guy. She is so excited – and in love!  The last thing you want to do is discuss “practical issues”.  But, at the right time, it will be important to discuss  these issues to help prevent future heartbreak – and hardship.  There are three legal points your daughter  should know – and you should know and discuss before the big day.

Click here to read more. 

Passing the Bar in 1776

Lawyers across the country know the pain and suffering of the dreaded bar exam.  Studying for months on end from dusk til dawn has become a rite of passage for lawyers. But it hasn’t always been that way. The Multistate Bar Exam wasn’t created until the 1970’s. Written bar exams weren’t given until the late 1880’s. So how were the bar exams given?

John Adams was admitted to the Bar in October 1758. He recalled his bar admission in his autobiography. He was an apprentice for over two years before seeking admission to the bar. His master was supposed to present him to the Court of Common Pleas in Worcester for his Certificate of Oath and Admission, but had forgotten to do so before Mr. Adams moved to Boston. Mr. Adams went to see a Mr. Gridley about presenting him to the Court in Boston. Mr. Girdley stated that Mr. Adams’ master had mentioned him and proceeded to ask him questions like how long he had practiced with his master and how many books he had read. After a conversation about the books Mr. Adams read, Mr. Gridley lent him one of his own. At the end of the conversation, Mr. Gridley told Mr. Adams to be at the courthouse on the last Friday of October and he would present him to the Court.

On the last Friday of October, Mr. Gridley presented Mr. Adams to the Court. A man asked whether anyone knew him well enough to satisfy the Court and Mr. Gridley answered that he knew Mr. Adams

In the 19th Century, bar exams were oral and the requirements minimal. Applicants would meet with a bar examiner in person and answer a set of questions. A famous illustration of these loose standards was the admission of Mr. Jonathan Birch. Mr. Birch was admitted to the bar by simply answering a few questions, such as what books he has read, and obtaining a certificate to the court by a local attorney. Who was the local attorney that interviewed him? It was only the future president of the United States of America named Abraham Lincoln.

Applicable Federal Rates

Below we have this month, last month’s, and the preceding month’s Applicable Federal Rates, because for a sale you can use the lowest of the 3.

SHORT TERM AFRs

MID TERM AFRs

LONG TERM AFRs

December 2013 Annual 0.25% Annual 1.65% Annual 3.32%
Semi-Annual 0.25% Semi-Annual 1.64% Semi-Annual 3.29%
Quarterly 0.25% Quarterly 1.64% Quarterly 3.28%
Monthly 0.25% Monthly 1.63% Monthly 3.27%
November 2013 Annual 0.27%

Annual

1.73% Annual 3.37%
Semi-Annual 0.27% Semi-Annual 1.72% Semi-Annual 3.34%
Quarterly 0.27% Quarterly 1.72% Quarterly 3.33%
Monthly 0.27% Monthly 1.71% Monthly 3.32%
October 2013 Annual 0.32% Annual 1.93% Annual 3.50%
Semi-Annual 0.32% Semi-Annual 1.92% Semi-Annual 3.47%
Quarterly 0.32% Quarterly 1.92% Quarterly 3.46%
Monthly 0.32% Monthly 1.91% Monthly 3.45%

The 7520 Rate for December is 2.0% and for November was 2.01%.

Seminars and Webinars

THE FLORIDA BAR – REPRESENTING THE PHYSICIAN

Date: Friday, January 17, 2013

Location:  The Hyatt Hotel, Orlando, Florida

Additional Information: The annual Florida Bar conference entitled Representing the Physician is designed especially for health care, tax, and business lawyers, CPAs and physician office managers and physicians to cover practical legal, medical law, and tax planning matters that affect physicians and physician practices.

This year our 1 day seminar will be held in the Hyatt Hotel near Walt Disney World.

A dinner for the Executive Committee of the Health Law Section of The Florida Bar and our speakers will be held on Thursday, January 16, 2013, whether formally or informally.  Anyone who would like to attend (dutch treat or bring wooden shoes) will be welcomed.  Your tax deductible hotel room to start a fantastic week near Disney, Universal, Sea World and most importantly Gatorland, can include a room at the fantastic Hyatt Hotel for a discounted rate per night, single occupancy.

PINELLAS COUNTY CHAPTER OF THE FLORIDA ASSOCIATION OF WOMEN LAWYERS SEMINAR

Alan Gassman will be speaking on Same Sex Marriage and Associated Laws We Should All Know About Anyway.

Date:  January 30, 2014 | 5:30 p.m.

Location: Stetson Law School, Gulfport, Florida

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

FLORIDA BAR HEALTH LAW REVIEW 2014

Alan Gassman will be speaking on What Healthcare Lawyers Need to Know About Tax Law and Business Entities at this excellent annual Florida Bar conference that is attended not only by those who are taking the Board Certification exam but also healthcare lawyers and other advisors.

Other speakers will include Lester Perling who is the co-author of A Practical Guide to Kickback and Self-Referral Laws for Florida Physicians and a number of other books and publications.

Date:    March 7 – 8, 2014

Location: Hyatt, Orlando, Florida

Additional Information: We thank Jodi Laurence and Sandra Greenblatt for all of their hard work in making this conference as successful as it is.  For more information please contact Jodi at jl@flhealthlaw.com or Sandra at sg@flhealthlawyer.com.

HILLSBOROUGH COUNTY BAR ASSOCIATION HEALTH LAW SECTION LUNCHEON

Alan Gassman and Christopher Denicolo will be speaking at the Hillsborough County Bar Association’s Health Law Section Luncheon on the topic of Tax and Asset Protection Basics for Those Who Represent Physicians and Medical Practices

Date:    March 12, 2014

Location:  Chester H. Ferguson Law Center in Tampa, FL

Additional Information: For additional information please contact Co-Chairs Sara Younger at sara.younger@baycare.org or Thomas Ferrante at tferrante@carltonfields.com.

1st ANNUAL ESTATE PLANNER’S DAY AT AVE MARIA SCHOOL OF LAW

Speakers: Speakers will include Professor Jerry Hesch, Jonathan Gopman, Alan Gassman and others.

Date: April 25, 2014

Location: Ave Maria School of Law, Naples, Florida

Sponsors:AveMariaSchool of Law, Collier County Estate Planning Council and more to be announced.

Additional Information: For more information on this event please contact agassman@gassmanpa.com.

THE FLORIDA BAR ANNUAL WEALTH PROTECTION SEMINAR

Date: Thursday, May 8, 2013

Speakers: Speakers will include Barry Engel on Offshore Trust Planning and Developments Over the Past 2 Years in Asset Protection, Howard Fisher and Alex Fisher on “Designer Entities – The Cutting Edge in Asset Protection”, Denis Kleinfeld on The Roadmap to Wealth Protection Planning and Alan Gassman on Structuring Business and Investment Assets and Entities – Wealth Protection 401 for the Dedicated Planner.

Location: Hyatt Regency Downtown, Miami, Florida

Additional Information: For more information please contact agassman@gassmanpa.com

NOTABLE SEMINARS PRESENTED BY OTHERS:

48th ANNUAL HECKERLING INSTITUTE ON ESTATE PLANNING SEMINAR

Date: January 13 – 17, 2014

Location:  OrlandoWorldCenter Marriott, Orlando, Florida

Sponsor:University of MiamiSchool of Law

Additional Information: For more information please visit: http://www.law.miami.edu/heckerling/

16th ANNUAL ALL CHILDREN’S HOSPITAL ESTATE, TAX, LEGAL & FINANCIAL PLANNING SEMINAR

Date: Wednesday, February 12, 2014

Location: All Children’s Hospital Education and ConferenceCenter, St. Petersburg, Florida with remote location live interactive viewings in Tampa, Sarasota, New Port Richey, Lakeland, and Bangkok, Thailand

Sponsor: All Children’s Hospital

THE UNIVERSITY OF FLORIDA TAX INSTITUTE

Date: February 19 – 21, 2014

Location: Grand Hyatt, Tampa, Florida

Presenters:       Martin McMahon, Jr., C. Wells Hall, III, Abraham N.M. Shashy, Karen L. Hawkins, Lawrence Lokken, Stephen F. Gertzman, James B. Sowell, John J. Rooney, Louis Weller, Ronald Aucutt, Karen Gilbreath Sowell, Herbert N. Beller, Peter J. Genz, Stephan R. Leimberg, John J. Scroggin, Lauren Y. Detzel, David Pratt and Samuel A. Donaldson

Sponsor:  UF Law alumni and UF Graduate Tax Program

Additional Information:  Here is what UF is saying about the program on its website: “The UF Tax Institute will provide tax practitioners and other leading tax, business and estate planning professionals with a program that covers the most current issues and planning ideas with a practical, informative, state-of-the-art approach.  The Institute’s schedule will devote separate days or half days to individual income tax issues, entity tax issues and estate planning issues.  Speakers and presentations will be announced as the program date nears to ensure coverage of the most timely and significant topics.  UF Law alumni have formed the Florida Tax Education Foundation, Inc., a nonprofit corporation, to organize the conference.”

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