Category Archives: Trust Fund Recovery

THE IMPORTANCE OF ESTATE PLANNING & ASSET PROTECTION

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By:  Coleman Jackson, Attorney & Certified Public Accountant

May 1, 2023

So many Americans died during the Covid-19 Pandemic!  Many families learned during this period of hardship and lost that estate planning and asset protection is not merely for the powerful and well-to-do but is for everyone.  You see, we are not born to stay here and everyone need to plan their exit most importantly spiritually but also temporally.  We are all passing through.  We are all fellow travelers on this journey towards life.  We form relations; we impact other’s lives for the good or bad; we amass property and other things during this journey.  Estate planning embodies our goals and objectives as to how we desire to protect our love ones and pass our personal legacy and property and things to our love ones, charities and whoever else we choose.  Estate Planning allows us to choose when beneficiaries inherit or receive our wealth.  Estate planning allows us to plan for incapacities that might come our way.  Estate Planning and Asset Protection is very important. It is the responsible thing to do!

Many Americans learned during Covid-19 that they or their love ones failed to properly plan for being incapacitated for long-periods of time or their sudden deaths.  Many Estate Planning, Tax and Asset Protection Lawyers have seen an uptick of families and individuals with these type matters on their heart and in their minds these days.  They are determined not to make the mistakes of their elders in failing to plan for their incapacities and demise. I think the public needs to know about asset protection and estate planning.

That is why I am writing this blog on estate planning and asset protection today.  It will be published and free of charge to anyone who goes to our law firm’s website www.cjacksonlaw.com and click on our blog page.  Incapacity, death and taxes impacts all of us one way or another eventually regardless of our economic station in life, or our cultural background or any other particular as it relates to us.

What is Estate Planning and Asset Protection:

  • Definitions: Estate Planning– Proper estate planning allows you to plan for yourself and your loved ones (which include your family, your church and community) without giving up control of your affairs. Your estate plan should allow for the possibility of your own disability. It should give what you own to whom you want, when you want, and the way you want at the least amount of costs.

Estate Planning is so important that you cannot afford not to do it and when you do it you cannot afford not to hire competent legal representation.  Estate Planning and Business Structuring are state specific which means that state law impacts your estate plan.  That means that if you are a resident of Texas; you should strongly consider hiring a lawyer licensed in Texas.  Federal tax law is implicated so you should consider hiring a lawyer skilled in the relevant sections of the Internal Revenue Code.

Some general things you could possibly talk to your estate planning lawyer about during your initial consultation:

There are five common ways to pass assets to your intended loved ones –

  • Wills
  • Trusts
  • Beneficiary designations (e.g., life insurance, pensions, IRAs, etc.)
  • Joint property arrangements
  • Life estate deeds
  • Non-probate Assets
  • Joint tenancy with right of survivorship
  • Payable on death accounts
  • Joint Accounts
  • Life Insurance

 

  • Tax Issues– The specter of taxes is always there (so, you cannot ignore the tax ramifications of dying. Some of the basic tax considerations that you need to discuss with your estate planning attorney about during your initial consultation are as follows:
  1. Federal Unified Tax Credit
  2. Estate Taxes
  3. Gifts and gift tax
  4. Community Property vs Separate Property—Texas is a community property state and the impact of that reality on estate planning cannot be underestimated.
  5. Property Taxes—Texas property taxes are some of the highest in the nation. Many elderly people fall behind on their property taxes and lose their property due to delinquent taxes. And often time those who inherit property in Texas is unaware of these delinquent tax problems until they are faced with foreclosure procedures. Due diligence is required to investigate the various ways property of an estate is encumbered.

Some more things to talk about during your initial consultation with your estate and asset protection lawyer.  It is very helpful if your estate planning and asset protection lawyer is schooled in federal tax issues because federal taxes are always around potentially impacting the value of your estate.  You should consider asking about—

  1. Importance of Having a Will
  2. Basic Types of Wills
  3. Community property laws in Texas
  4. Will and testamentary trust
  5. Special provisions and things unique to you
  6. Executors
  7. Execution of Wills
  8. Revocation of Wills
  9. Effect of Divorce on Wills and Trusts and Community Property
  10. Effect and Implication of Immigration Status, the United States of America is a land of immigrants and many immigrants have family, business interest and property in their native countries; therefore, effective estate planning and asset protection must consider these facts and circumstances. Pre-immigration planning in some cases is critical. Immigration status cannot be ignored in estate planning and tax planning.

What else might you consider bring up during your initial consultation with your estate planning and asset protection lawyer.

  • Ancillary Documents: So, what are these all about? Dying is not all you have to think about.  During Covid-19, folks were in the hospital for months-and-months-and months.  Who was to handle their household affairs?  Who was to handle their business affairs?  Who was to take care of their minor children?  Incapacity issues are also part of effective estate planning and asset protection.   Estate planning is about planning for your being unable to care for yourself, your minor children and your financial affairs.  Some tools estate planning lawyers use in consideration of your incapacity to act for yourself are as follows:
  1. Durable Powers
  2. General Powers
  3. Special Powers
  4. Revocation of POAs
  5. Health Care POAs
  6. Directive to Physicians
  7. Trusts
  8. Creation of trusts
  9. Purpose, Types and Taxes with respect to Trusts
  10. Community Property Agreement and Pour-over Will
  11. Crummey Powers
  12. Termination of the Trusts
  13. Marital and Bypass Trusts
  14. When Trust are not advisable
  15. How Trusts work
  16. Living Trust
  17. QTIP Trusts
  18. Charitable Remainder Trusts
  • Guardianships
  • What about Long-Term Care? (Elder Care, such as Social Security, Nursing Homes,

SSI, Medicare, Medicaid and Hospice).  These matters too are addressed in comprehensive estate and asset protection.

CONCLUSION:  ESTATE PLANNING AND ASSET PROTECTION IS NOT ABOUT THE DOCUMENTS

Estate planning is not about the documents!  Estate Planning is all about your goals and objectives in passing your legacy, values and property to who you want and how you want and when you want with the least amount of spillage such as for taxes, court costs and other expenses as possible.  It is dangerous to pull documents off the internet or obtain them from friends, relatives or others because law is complicated and what you find on the internet or elsewhere might not accomplish your goals and objectives.  A counseling attorney is critical for effective estate planning, tax planning and asset protection.  These plans need to be within the bounds of all applicable international, federal, state and local laws and ethical principles.  What are your goals and objectives in such matters as these?

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432 | Portuguese (214) 272-3100

Immigrant Tax Alert – Tax Scam Targets Immigrants

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Blog By: Coleman Jackson, PC

Immigration & Tax Law Firm

Firm Site www.cjacksonlaw.com

 

October 31, 2013

Today the Internal Revenue Service (IRS) warned of an insidious, sophisticated telephone tax scam targeting consumers (immigrants and recent arrivals to the United States may be particularly besieged), throughout the United States.  The IRS described the fraudulent activities in Issue Number:  IR-2013-84 as follows:

“Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.”

The IRS further described the current tax scam as follows:

“Other characteristics of this scam include:

  • Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves.
  • Scammers may be able to recite the last four digits of a victim’s Social Security Number.
  • Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling.
  • Scammers sometimes send bogus IRS emails to some victims to support their bogus calls.
  • Victims hear background noise of other calls being conducted to mimic a call site.

After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.”

Immigrants are particularly vulnerable.  They are in a new land and may be very unfamiliar with the tax laws, tax collection practices and taxing policies of the federal, state and local government.  They may not even be familiar with all of the various taxing authorities.  Immigrants must be especially vigilant and on the alert for tax scams.  But they also must be aware that, in the United States, there are various governmental units who might be charged with assessing and collecting various types of legitimate taxes.  Every communication that may be received concerning a tax issue is not a scam.

Taxing authorities do not ask for personal information such as social security numbers, banking account information and other personal data over the phone, through social media or via tech messaging  or instant messaging or through electronic mail to taxpayers.   If you receive communications through these media you should immediately be on high tax alert.  It would be very unusual for either the federal, state or local government to ask for personal confidential information through these media.  Government correspondence will typically be mailed to you using the United States Postal Service.    The mail will typically be sent to your last known residential address or business address.  If the mail is received anywhere else or otherwise looks suspicious, be on high tax alert.  If you receive information requests through these types of media or other suspicious circumstances, you should be extremely careful.  Consider these guidelines:

DON’TS:

  1. Never give out personal information, such as, your social security number, or bank account details in response to telephone request, emails, texts or social media requests;
  2. Never agree to meet with the caller in person at the instruction of the caller;
  3. Never pay an alleged tax debt with cash at the instruction of the caller;
  4. Never wire transfer any money to the caller or by instruction of the caller;
  5. Never turn over anything else of value to the caller or anyone else as instructed by the caller;

DO’S:

  1. Contact  directly the federal, state or local governmental authorities and report the incident-
    1. Federal Tax Issues—call the IRS at 1-800-829-1040 or Treasury Inspector General for Tax Administration at 1-800-366-4484;
    2. State Tax Issues—  in Texas, call the Texas Comptroller’s Office at  1-800-252-5555 (Sales & Use Tax Issues) or 1-800-252-1381 for (Franchise Tax Issues);
    3. Local Tax Issues— call your city or county tax collector; in Dallas County call 1-214-653-7811.  Call the county tax office where you reside with any questions regarding local tax issues, such as, property taxes.

If you are still confused after contacting the federal, state or local governmental authorities or you just don’t know what to do, contact a tax attorney.  You might also be able to get some guidance from local non-profit organizations, churches and other institutions.  Some area law schools may have tax clinics available for immigrant taxpayers.

Bottom line, as an immigrant taxpayer in America, you do not have to suffer tax harassment in silence or under individual or community siege.  Reach out as we have outlined above to seek help when you suspect that you, your family or community are victims of tax scams.

This blog is written to inform and for educational purposes only.  It is not given as legal advice and does not create an attorney client relationship.  You should consult an attorney for any particular matter pertaining to your facts and circumstances.

COLEMAN JACKSON, P.C.

Immigration & Tax Law Firm

6060 North Central Expressway, Suite 443

Dallas, Texas 75206

Office Phone:  (214) 599-0431 (English)   (214) 599-0432 (Spanish)

Employee or Independent Contractor- Why does it Matter?

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Employee or Independent Contractor

Why Does Classification of Workers Matter?

Blog Written By:  Coleman Jackson, Esq. | www.cjacksonlaw.com | 214-599-0431 and Spanish 214-599-0432.

July 18, 2013

How should you make a determination?

How does the Internal Revenue Service make a determination?

Typically when Internal Revenue Service auditors examine a business for the purpose of determining worker classification, the Service will generally follow the United States Supreme Court’s 1947 decision in a case called, United States vs. Silk.

In the Silk case, the Court said that whether a worker is properly classified as an employee or independent contractor turns on all the facts and circumstances. The Court delineated 20 factors, which if a majority of the factors can be answered yes, then the Internal Revenue Service is more likely than not, will classify the worker as an employee. These 20 factors are as follows:

  1. Is the worker required to comply with instructions about when, where, and how the work is to be done?
  2. Is the worker provided training that would enable them to perform the job in a particular way?
  3. Must the worker perform the services personally?
  4. Is there a continuing relationship between the worker and the entity that hired the worker?
  5. Are the services provided by the worker an integral part of the business’ operations?
  6. Does the entity hire, supervise or pay assistants to help the worker on the job?
  7. Does the recipient of the worker’s services set the work schedules?
  8. Is the worker required to devote his or her full time to the person for whom he or she performs services?
  9. Is the services performed at the place of business of the entity or at specific places designated by the business?
  10. Does the recipient of the services direct the sequence in which the work must be done?
  11. Is the method of payment hourly, weekly or monthly as opposed to commission or by the job?
  12. Are business and/or traveling expenses reimbursed by the business to the worker?
  13. Are regular oral or written reports required to be submitted by the worker?
  14. Does the company furnish computers, work tools and supplies used by the worker?
  15. Has the worker failed to invest in equipment or facilities used to provide services?
  16. Does the arrangement put the worker in the position of realizing either a loss or profit on the work?
  17. Does the worker perform services exclusively for the entity rather than working for various other entities at the same time?
  18. Does the worker make the worker’s services available to the general public?
  19. Is the worker subject to dismissal for reasons other than nonperformance of contract specifications?
  20. Can the worker terminate the relationship without incurring a liability for failure to complete the assigned job?

Why does it matter how a worker is classified?

  1. The cost for misclassification of workers can be tremendous.
  2. First and foremost your employees could be erroneously carrying the burden of self-employment taxes.
  3. Misclassification of your workers means that you (the employer) are not paying your fair share of taxes and that may subject you to back taxes, interest and penalties. The Service wants the taxes to be paid by the proper party.  Noncompliant entities could be eligible for certain safe-harbor provisions of the Internal Revenue Code.
  4.  There are also certain State of Texas consequences for failing to properly classify workers.  Therefore proper classification of workers is both a federal and state tax law issue.  There could be civil and criminal consequences for failing to properly classify workers in the State of Texas.
  5.  It is important that immigrants pay their fair share of taxes.  It is also fair for immigrants to be properly classified as employees or independent contracts depending upon all the facts and circumstances.

Why Risk Being Caught – Act Now!

If you are a worker and don’t know how you should be classified, you should contact a tax attorney to discuss all the facts and circumstances of your particular situation because we only discuss general principals in this blog.

If you are an employer and want to do the right thing and avoid possible huge consequences in the future for misclassification of your workers, get legal representation to review your situation today.

COLEMAN JACKSON, P.C.

Professional Legal Services Corporation
Immigration & Tax Law Firm

6060 North Central Expressway
Suite 443
Dallas, Texas 75206.
Office Phone:  (214) 599-0431 | Email:  cj@cjacksonlaw.com | Firm Site:  www.cjacksonlaw.com