San Diego Estate Planning Lawyer Blog

Published on: December 10, 2002

San Diego, California: Saving For College Can Be an Estate Planning Tool: Coverdell Education Savings Accounts

San Diego, California has many schools. In San Diego, there are public schools and private schools. The are schools in San Diego in the University of California San Diego system and also in the San Diego State system as well as the University of San Diego and other schools which are private.

As an estate planning tool in San Diego, for individuals who want more control over their investments, a Coverdell Education Savings Account (formerly called an “Education IRA”) may be an attractive alternative to a 529 plan. A contributor to a Coverdell account can choose investments and change them, depending on his or her investment strategy. Earnings are tax-free as long as they are used for qualified education expenses. The 2001 tax law also has improved this method of saving for elementary, secondary, and college education costs. Beginning January 1, 2002, the annual limit on contributions will increase from $500 to $2,000.

An increase in the phase-out income range for married taxpayers filing jointly will allow more taxpayers to contribute to a Coverdell account. For beneficiaries with special needs, rules stopping contributions when the beneficiary turns 18 and requiring that the account be emptied when he or she turns 30 have been removed. As with 529 plans, a contributor to a Coverdell account can claim an education tax credit, though not for the same educational expenses for which Coverdell account money was used.

Published on: December 5, 2002

San Diego, California: Saving For College Can Be an Estate Planning Tool: 529 Plans

by Scott C. Soady

Sa Diego, California has many different schools both public and private. The ever increasing tuition and fees in schools in San Diego, California has made the planning of the costs part of estate planning as many persons use their assets in their estate plan to pay for school for their children.

In San Diego, California, many financial institutions offer these types of 529 plans. Some financial institutions in San Diego which may provide these include the Bank of America, Wells Fargo, Washington Mutual and others.

The ever-rising cost of a college education has led to the creation of college savings plans that have been given various federal tax advantages. Among these are “529 plans,” named after the section of the Internal Revenue Code that sets forth requirements for favorable tax treatment of qualified state tuition programs. 529 plans vary from state to state with regard to investment options, contribution maximums, and state income tax treatment. One type of 529 plan allows taxpayers to purchase tuition credits for a designated beneficiary, thereby locking in today’s college costs. A second type allows the donor to contribute to an investment account to pay for a beneficiary’s higher education expenses, such as tuition and room and board.

Published on: December 1, 2002

San Diego: Under-Covered Automobile Insurance

by Scott C. Soady

In San Diego, California, there has never been mass public transportation as in other major cities. As such, in San Diego, most commuters rely on theirr automobiles. Given the high number of uninsured drivers in San Diego, it is important to make sure that you have both uninsured and underinsured coverage on your automobile. This has relevance in estate planning as all of your assets can be seized if you owe for medical bills or for other damages and your insurance does not cover. You need to report to the Department of Motor Vehicles if there is a personal injury in an accident or if the property damage meets the reporting requirements. Always make sure that the legal name of the vehicle is in the name of your living trust.

In one case, a woman called the insurance agency she had done business with for 10 years and told the agent she needed “full” automobile coverage. According to her, no one discussed what level of insurance would provide adequate protection. Instead, she was sold a policy that provided only the minimum amounts required by state law for uninsured and underinsured motorist coverage. The woman and her husband sued the insurance agency for negligence after their son was seriously injured when he was struck by an underinsured motorist and their expected damages exceeded their insurance coverage. The insurance agency, whose line of work is more used to criticism for overzealous selling, was instead in the position of being sued for not selling enough of its product. It is always advisable to contact the California Board of Insurance to make sure that the agent is licensed to sell the type of insurance you are purchasing.

Insurance agents are not personal financial counselors or risk managers for their customers. They generally fulfill their duty to the insured simply by providing the coverage requested by their customers, who typically know more about the extent of their assets and their ability to pay premiums. The agents do not have a duty to advise a client to obtain different or additional coverage. In this case, though, the court ruled that an exception to this no-duty rule arose because there was a “special relationship” between the insured and the insurance agent.

Published on: November 10, 2002

San Diego Padres: Case By Case: Broken Baseball Bats

by Scott C. Soady

San Diego, California has a major league baseball team called the San Diego Padres. At the stadium, not all areas are protected from either a foulr ball or a hit ball. As such, it is important to understand the below facts if you attend baseball games. To minimize risk of injury, it is advisable to sit in seats which are adequately screened. You can view these seats on the link provided by the website to the Padres above. This ruling does not include football games and there is also the San Diego Chargers which have their stadium in San Diego as well.

A state court has overturned a $1 million jury verdict for a young girl who was injured when part of a broken bat struck her as she sat in the stands at a major league baseball game. The girl was seated behind a net that extended down the third base line, but the bat fragment curved around the net and hit her.

The girl argued that baseball officials were negligent in not having more protective screening for spectators. However, most courts apply a more lenient “limited-duty” rule to America’s Pastime and this court was no exception. The majority of baseball fans prefer to be close to the action, with no protective screen that would block their view and prevent the possibility of catching a batted ball. Baseball teams reasonably accommodate this majority of their consumers, while providing protected seats behind home plate for those more concerned with safety. Under the limited-duty rule, when a stadium owner has made adequately screened seats available for all those desiring them, it has fulfilled its duty as a matter of law and it will not be liable for spectators injured by an object from the field.

Published on: November 5, 2002

San Diego: Small Business and Job Discrimination

by Scott C. Soady

San Diego, California is a state however San Diego small business owners must comply with federal law as well. Federal law is supreme over state law. In San Diego, small business owners must comply with all applicable federal laws.

The federal Equal Employment Opportunity Commission (EEOC) is responsible for enforcing the most widely applicable federal laws that prohibit discrimination in employment. The smallest of businesses are not subject to most of these statutes. Title I of the Americans with Disabilities Act (ADA), which prohibits employment discrimination against qualified individuals with disabilities, applies only to employers with 15 or more employees. The same is true for Title VII of the Civil Rights Act of 1964 (Title VII), which prohibits job discrimination based on race, color, religion, sex, and national origin. The threshold for coverage under the Age Discrimination in Employment Act (ADEA) is 20 or more employees. The Equal Pay Act, which is intended to prevent wage discrimination between men and women in substantially equal jobs in the same establishment, applies to most employers with at least one employee.

In calculating the number of employees for purposes of coverage of these statutes, all employees are counted, including part-time and temporary workers. Independent contractors are not included, but the distinction between such workers and employees is often difficult to draw without the advice of legal counsel. Situated between the businesses so small as to be excluded from coverage and the Fortune 500 are thousands of small businesses to whom the EEOC-enforced laws apply.

Procedures
Anyone believing that his or her employment rights have been violated because of the types of discrimination covered by the federal laws, or because of retaliation for opposing job discrimination, filing a charge, or participating in proceedings under those laws, may file a charge of discrimination with the EEOC. In most areas of the country, the charge must be filed within 300 days from the date of the alleged discrimination. The EEOC will notify the employer within 10 days of receiving a charge.

If a charge is eligible, the EEOC will give the parties an opportunity to take part in voluntary, confidential mediation to reach mutually agreeable solutions. If all parties agree to participate, neutral mediators will work with them to that end. In the event that mediation is unsuccessful, the charge is referred for investigation by the EEOC.

An EEOC investigation may involve a responsive statement from the employer, collection of documents by the EEOC, and visits and interviews by EEOC personnel. If the EEOC ultimately dismisses a charge, the charging party is notified and has 90 days to file a lawsuit. A finding by the EEOC of reasonable cause to believe that discrimination has occurred will lead to an invitation to the parties to enter into conciliation discussions. If they fail, the EEOC and/or the charging party may bring suit.
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Published on: November 1, 2002

San Diego Health Coverage Issues: COBRA

by Scott C. Soady

San Diego, California follows the federal law in regards to COBRA coverage. Below is an example of what can happen to an employee who is terminated from employment regarding continuation of health insurance. For many San Diegan’s, health insurance is not affordable and sometimes, due to medical issues and medical conditions, may not be obtainable. As such, COBRA coverage may be the only available coverage. At Law Office of Scott C. Soady, A Professional Corporation, we can advise you of your COBRA rights.

Shortly after he was fired from his job, Monty got married and left town for a three-week honeymoon. While he was away, his former employer sent him a notice about his right under a federal law, called COBRA for short, to elect to continue his health-care insurance coverage. COBRA requires that such a written notice be provided within 14 days of a termination from employment, but neither the statute nor regulations spell out what adequate notice entails.

In Monty’s case, he never got the notice, which was sent by certified mail, return receipt requested. When Monty went to the post office to claim the letter, postal workers could not find it. Eventually, the COBRA notice was found, but then it was returned to the sender with an erroneous indication that Monty never claimed it. By that time, Monty had begun a new job and was receiving treatment for a new medical condition. His new employer’s insurer denied coverage for this treatment as a preexisting condition. That left Monty without coverage for significant medical expenses.

Published on: October 5, 2002

San Diego Internet Domain Name Registration

by Scott C. Soady

San Diego, California has many companies which register their domain name. In our firm, Law Office of Scott C. Soady, A Professional Corporation we have registered the domain name of www.help411.com. This registration is very important since many companies, both big and small, market their website addresses and spend a lot of money and time on this. In addition, stationary and other marketing materials have the website address. It is critical to make certain that the registration process is complete.

In one case, a small partnership whose sole line of business appears to have been registration of hundreds of Internet domain names registered an Internet address name that was virtually identical to the name of a famous winery. When the winery got nowhere with demands that the domain name be released or transferred to it, it sued under the federal Anticybersquatting Consumer Protection Act (ACPA). Cybersquatting is the registration of a domain name of a well-known trademark by someone who does not hold the trademark but hopes to profit from selling the name back to the trademark owner.

Unfazed by the lawsuit, the partnership went on the offensive. On a website that used the name in dispute, the defendant published under the heading “Whiney Winery” a discussion of the lawsuit and an attack on the winery and corporations generally. This online response to being sued was the first and only time that the registrant of the disputed domain name actually used it.

Published on: October 1, 2002

San Diego Bank Account Distribution Post Death

by Scott C. Soady

An elderly doctor and his daughter opened a joint bank account, the money in which would go to the surviving account holder if the other one died. This is a case of the right of survivorship and should have been part of a revocable living trust and then would proceed by trust administration. Nine years later, when the doctor was in declining health, his wife asked to be added to the account so that she could pay bills. Based on the signatures of the doctor and his wife, but not the daughter, the bank added the wife to the account. Over a one-month period, the wife then wrote many checks on the account, totaling over $100,000. The biggest check, for $75,000, was written, cashed, and deposited to the wife’s own account on the very day her husband died.

The daughter sued the bank, claiming it was liable to her for recognizing a new party to the joint account without the consent of all parties to the account. A state supreme court sided with the bank. First, the documents that comprised the contract between the bank and the account holders included a statement that each owner was the agent of any other owners for purposes of endorsements, deposits, withdrawals, and conducting business for the account. This language was broad enough to give the doctor power to add his wife as a new party to the account without his daughter’s knowledge or consent. Second, a statute on joint accounts similarly made each party to an account the agent for other account holders, although the statute was silent on the method for adding a new party to an account. The bank had not breached its contract when it recognized the doctor’s wife as a new party to the account based solely on the doctor’s signature.

This decision highlights the pitfalls that can accompany joint bank accounts. Allowing each party to a joint account to exercise full authority over the account is flexible and convenient, but the cost of these advantages is loss of control. The exposure to this risk is widespread, as joint account contracts typically have language like that used in this case.

Published on: September 5, 2002

San Diego Estate Planning Strategies

by Scott C. Soady

In San Diego, California, when a person dies, the time to implement estate planning strategies has passed. It is important to meet with a local attorney in San Diego who can assist with this estate planning process. It is important to consider a revocable living trust when both spouses are competent and able to make decisions.

When an individual dies, there is the possibility that his or her estate will be subject to the federal estate tax. However, only estates exceeding a certain level in value are subject to this tax. That level is now set at $1 million for persons dying in the years 2002 and 2003. The current $1 million exclusion amount is based on what is called the “unified credit against estate tax.” In the case of an unmarried person’s death, the application of the unified credit is straightforward. In 2002 and 2003, an unmarried person can leave the $1 million exclusion amount tax-free to whomever he or she wishes. Similarly, each spouse of a married couple is entitled to leave the exclusion amount tax-free at his or her death. t

In the case of a married couple, estate planning steps can be taken to insure the maximum use of the unified credit. The typical situation is where each spouse (assuming, for purposes of the example, the death of the first spouse in 2002 or 2003) has an estate worth something less than the $1 million exclusion amount. If the husband’s estate is worth $750,000, for instance, and he dies first, his estate will escape the estate tax because its value is below the exclusion level, but the $1 million exclusion amount will not be fully used by his estate. The ideal would be to move assets from the wife’s estate to the husband’s estate so as to bring his estate to the $1 million level. This would allow the full use of the exclusion in the husband’s estate and would reduce the value of the wife’s estate so that, given the likely increase in the value of the wife’s assets following the husband’s death, the wife’s estate may be kept below the $1 million exclusion amount at her death.

Published on: September 1, 2002

San Diego Tax Credits For Historic Preservation

by Scott C. Soady

In San Diego, California and other states, the federal Government has been using tax incentives to help preserve historic buildings. San Diego has many historic buildings in the Gaslamp and other areas of San Diego. San Diego is known for its architectural style and buildings. The San Diego Historical Society is a good source of information and has a very informative website.

Originally, federal law allowed accelerated depreciation on rehabilitated buildings, but subsequent changes have made preservation and revitalization efforts even more attractive to taxpayers. Today, there is a general business credit equal to 20% of qualified rehabilitation expenses for a certified historic structure, or a 10% tax credit for the qualified rehabilitation of nonhistoric, nonresidential buildings first placed into service before 1936. Eligibility for the tax incentives is determined by the National Park Service. Tax credits are often more beneficial to taxpayers than deductions, since every dollar of a tax credit reduces the amount of income tax owed by one dollar.

The 20% credit for the rehabilitation of a certified historic structure applies to commercial, industrial, agricultural, rental, or residential properties, but not properties used exclusively as the owner’s private residence. A certified historic structure must be a building, as opposed to another type of structure. To have the required historic status, the building must be either listed individually in the National Register of Historic Places or located in a registered historic district and certified as being of historic significance to the district.