Tax Lawyer Blog

A Blog written by the Tax Attorneys for Individuals and Businesses

Estate Planning: It’s Not Just About Your Money and Your Stuff

Gene Roddenberry, the creator of Star Trek, left provisions in his Last Will and Testament to have his cremated ashes scattered by a space satellite orbiting the Earth. His wishes were carried out in 1997 and his ashes were taken off the planet along with the remains of a space physicist, a rocket scientist, and those of psychedelic guru Timothy Leary.

In previous posts we discussed the importance of planning not only for the distribution of your assets after you pass away, but also designating an individual to manage your assets if you become incapacitated. In this post, we will touch upon a few other highly personal decisions that are part of every estate plan.

Instructions for medical care during incapacity

An Advance Health Care Directive (AHCD) contains provisions that in the past were part of two separate documents: The Durable Power of Attorney for Health Care (also known as a healthcare proxy) and the Living Will. Advance Health Care Directives are far more detailed, however, setting forth a person’s instructions on a wide variety of important medical decisions, including:

  • Do Not Resuscitate (DNR) orders
  • The choice to administer or withhold artificial nutrition and hydration at the end of life
  • Whether or not medications should be administered and/or surgeries performed to prolong life in the event of a terminal illness

The choice to have home care or to be moved to a residential facility may also be designated in the AHCD and other estate planning documents. An AHCD may also explain religious-based decisions such as a refusal to accept blood transfusions and other treatments.

Disposition of your remains

A Last Will and Testament usually states whether you prefer burial, cremation or an alternative disposition of your remains. Your Advance Health Care Directive can be more specific:

  • While there are some instances where an autopsy would need to be performed whether or not authorized (e.g., as part of a murder investigation), you can specify whether or not you would like to have it done in any event to determine cause of death, or under what circumstances.
  • Your AHCD can authorize your health care agent to donate any of your organs, tissues or parts – you can specify whether you wish for your donation to be for transplant, therapy, research and/or educational purposes.
  • You can also donate your whole body to science, but note that medical and scientific institutions generally require that you go through an advance screening and authorization process.
  • A simple or elaborate burial can be requested, or cremation can be designated (and whether you prefer to have your ashes buried, kept in an urn, or scattered).

Guardians for minor children and other dependents

No one could do a better job raising your minor children that you can, but if you (and/or your spouse or partner) can no longer do it, someone else will. The care of other dependents, such as elderly or disabled relatives should also be considered. Make sure that you designate responsible individuals in your Last Will and Testament.

Comprehensive estate planning services in San Francisco

Note that having cremated remains taken into space is rather costly, but there are many other meaningful options available for your loved ones to carry out. Contact the California estate planning attorneys at Moskowitz, LLP for assistance in designing an estate plan that not only protects your assets and investments, but that also ensures that your personal and spiritual preferences are followed.

Getting Into Compliance with Your Foreign Account Reporting, Part III

When Lionel Messi was charged with tax fraud in Spain, his first line of defense was "I was playing football, I knew nothing." The court did not care that Messi signed documents handed to him by his father and advisors without reading them, and ruled that the renowned soccer player knew enough to be found guilty of tax fraud. Messi and his father were fined millions of Euros for using offshore companies in Uruguay and Belize to defraud the Spanish government of roughly $4.5 million in taxes between 2007 and 2009. They also received 21-month suspended prison sentences.

Getting all the information

If you don’t already have a good understanding of your foreign assets, it is time to begin gathering as much information as possible. Expect to be asked to provide documentation regarding your interests in the following, going as far back as eight or nine years:

  • Foreign bank accounts, including accounts held at a foreign branch of a U.S. financial institution, and any foreign financial account for which you have signature authority
  • Foreign investment and brokerage accounts, including foreign mutual funds, as well as foreign stocks and securities not held in an account at a foreign financial institution
  • Foreign hedge funds and private equity funds
  • Foreign retirement plans and deferred compensation plans
  • Foreign corporations, partnerships and trusts
  • Foreign life insurance and annuity contracts

Foreign real estate is not directly reported, but the value will need to be included in reports if held through a foreign entity (bring all documentation to your tax advisor).

Note that some of our clients have had to travel to the country in which their accounts and/or assets are located in order to get the required information.

Filing thresholds

You must file an FBAR if the combined value of all your foreign financial accounts exceeds $10,000 at any point (day, hour or minute) of the calendar year. The filing threshold for Form 8938, Statement of Specified Foreign Financial Assets, ranges from $50,000 to $600,000, depending on whether you live in the U.S. or abroad, and your marital/filing status. Note that there are a number of other international tax filing obligations, most of which must be included with your annual individual or corporate tax returns.

Answering questions

In addition to gathering the required information, be prepared to answer some questions that are likely to be posed by the IRS:

  • How did you obtain the foreign account or asset?
  • Did you know about reporting requirements?
  • Why didn’t you report this information to begin with?

Needless to say, "I was just playing football" is not an acceptable response!

Don’t accept less than the highest quality tax preparation and legal services

Accountants and tax attorneys can’t help you come into compliance with your IRS and FinCEN foreign account reporting unless they have all the information. The highly experienced tax attorneys at Moskowitz, LLP are on your side! We will talk to you, learn the details of your situation, and tailor a program that is right for you. We will do everything possible to get you into compliance with your foreign account reporting without your having to pay outrageous, disproportionate penalties. Call our San Francisco office today.