For many people, the end of the year tends to sneak up on us in a whirlwind of winter weather activity, family gatherings, and holiday festivities. However, even as 2018 draws to a close, it’s not too late to think about your year-end taxes, and engage in estate & income tax planning opportunities. At Fraser Trebilcock, our tax attorneys have made sure you don’t have to start your preparations from scratch, with a two-part checklist of year-end tax considerations you should make before 2019.
Certain employers that provide paid leave under the Family and Medical Leave Act (“FMLA”) may be eligible to receive a general business tax credit for tax years beginning in 2018 and 2019. While the FMLA provides certain job-protected leave, it does not require such leave to be paid. The new law incentivizes employers to provide wage replacement. Continue reading Tax Reform Offers New Incentive for Employers Providing Paid FMLA Leave
The Internal Revenue Service (“IRS”) has extended the deadline for 2017 Information Reporting by employers (and other entities) to individuals under Internal Revenue Code sections 6055 and 6056 by 30 days. Continue reading Client Alert: Delay of Deadline to Furnish Forms 1095-B and 1095-C to Individuals
For more than 30 years, Fraser Trebilcock attorney Gary Rogers has handled automobile negligence litigation. Recently, he has litigated a number of claims arising out of what you might think would be a rather safe driving maneuver – turning right on a red light, after determining there is no oncoming traffic. Continue reading Drivers Beware: A Seemingly Safe and Legal Driving Maneuver Could Come with Potentially Life-Changing Hazards
What does it mean to “own” something? Owning something means different things to different people. Owning something suggests a sense of full control over something. It also implies being able to enjoy the benefits of it and be responsible for something, together with the consequences or damages to it or by it. Recently, however, the Court of Appeals in The Joanne L. Evangelista Revocable Trust v City of Farmington Hills, Court of Appeals (Dkt. No. 334263 issued November 14, 2017), examined what it means for a veteran to “own” their home for purposes of a property tax exemption.
Michigan allows a generous 100% property tax exemption for disabled veterans who meet a handful of requirements, including that they “own” their home. Michael Evangelista served in the United States Army during Vietnam and was honorably discharged in 1971. The Veterans Administration rated Michael 100% disabled. Both Michael and his wife lived at their home in Farmington Hills, Michigan. The legal title to their property was held by his wife’s revocable trust.
The Court in Evangelista reasoned that the disabled veteran’s exemption requires that the property in question be “owned and used as a homestead” by the disabled veteran. A homestead (re: principal residence) must be owned and occupied by an owner. An “owner” is the holder of legal title, or if a land contract is in place, by the most recent land contract vendee/buyer (embracing the concept that an “owner” in this situation is the one who enjoys all of the benefits and is responsible for the burdens of ownership without naked legal title). There was no dispute in this case that the trust, not Michael, held legal title to the property. The Court ruled that because Michael was not an “owner” of the property, he was not entitled to the exemption.
The appeals court also rejected the veteran’s claim that he was an equitable co-owner of the property by virtue of his marriage to his wife (who he contended “owns” the property through her trust). Having conveyed his complete interest in the property to the trust in 1998, and the trustee having the sole ability to convey or dispose of trust property, the appeals court said it was difficult to see what interest the veteran possessed in the property, equitable or otherwise. The appeals court also said that to the extent the State Tax Commission’s Transfer of Ownership Guidelines imply that the ownership requirement can be satisfied by the situation where a disabled veteran holds no legal title and is at most a contingent future beneficiary of the trust that holds title, such an implication is contrary to the plain language of the statute.
Transferring property to a revocable trust has a number of advantages for elderly and disabled couples. For example, as couples age, become ill and unable to properly manage their finances and property, a spouse can remain as trustee or another trustee can be selected to manage and protect their home and other assets. Revocable trusts give couples these benefits as well as the benefit of avoiding probate of the home.
Given the value of the property tax exemption for disabled veterans, they and their advisors should carefully consider how the title to the veteran’s principal residence should be held for estate planning purposes and eligibility to claim Michigan’s generous property tax exemption.
Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.
Chair of Fraser Trebilcock’s Trusts and Estates Department, attorney Marlaine C. Teahan is a Fellow of the American College of Trust and Estate Counsel, and is the Chair of the Probate and Estate Planning Section of the State Bar of Michigan. For help with revocable trust planning or to answer any questions regarding this recent case, contact Marlaine at 517-377-0869 or mteahan@fraserlawfirm.com.
As proposals for national tax reform topped headlines Thursday, state and national experts came together to give us insight into what things will look like in Michigan.
The IRS has just released its 2018 annual inflation adjustments, in which it announced that the dollar limitation under Code section 125 on voluntary employee salary reductions for contribution to health flexible spending arrangements (health FSAs) is increasing to $2,650. Previously the limitation was $2,600. The authority for this increase can be found in Rev. Proc. 2017-58: https://www.irs.gov/pub/irs-drop/rp-17-58.pdf. This link takes you to the IRS annual inflation adjustments for more than 50 tax provisions. Another item to note is that the qualified transportation fringe benefit increases to $260.
Although open enrollment season is about to be in full swing for most, employers should ensure that their salary reduction agreements and related enrollment materials are updated to reflect this increase. Additionally, employers will want to review their Code section 125 cafeteria plan documents to ensure these also allow for such an increase.
Moreover, as previously advised, earlier this year in Rev. Proc. 2017-37, the IRS released the HSA limits for 2018. Specifically, IRS Revenue Procedure 2017-37 provides the adjusted limits for contributions to a Health Savings Account (“HSA”) as determined under Section 223 of the Internal Revenue Code, as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2018.
Plans and related documentation, including employee communications, should be updated to reflect these new limits.
As always, please keep in mind that participation in a health FSA will result in HSA ineligibility, unless the health FSA is limited to:
This blog serves solely as a general summary of the Medicare Part D disclosure requirements, and does not constitute legal advice. If you have questions regarding the application of this fee to your plans, contact an attorney at Fraser Trebilcock.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.
Yesterday, October 12, 2017, President Trump issued an Executive Order entitled “Promoting Healthcare Choice and Competition Across the United States” (the “Order”). Also on October 12, 2017, the Department of Health and Human Services released a statement that the cost-sharing reduction payments authorized by section 1401 of the Patient Protection and Affordable Care Act (“subsidies”) will be discontinued immediately (the “HHS Statement”).
The Order articles a “policy of the executive branch, to the extent consistent with law, to facilitate the purchase of insurance across State lines and the development and operation of a healthcare system that provides high-quality care at affordable prices for American people.” To meet this policy goal, President Trump announced that his administration will prioritize three areas of law in the new future: (1) Association Health Plans (“AHPs”); (2) Short-term, Limited-Duration Insurance (STLDI); and (3) Health Reimbursement Arrangements (“HRAs”).
To the extent consistent with law, the Order relevantly announces that government rules and guidelines should expand the availability of and access to PPACA insurance alternatives, including AHPs, STLDI, and HRAs. To effectuate this goal, the Order relevantly indicates:
“Sec. 2. Expanded Access to Association Health Plans. Within 60 days of the date of this order, the Secretary of Labor shall consider proposing regulations or revising guidance, consistent with law, to expand access to health coverage by allowing more employers to form AHPs. To the extent permitted by law and supported by sound policy, the Secretary should consider expanding the conditions that satisfy the commonality of-interest requirements under current Department of Labor advisory opinions interpreting the definition of an “employer” under section 3(5) of the Employee Retirement Income Security Act of 1974. The Secretary of Labor should also consider ways to promote AHP formation on the basis of common geography or industry.”
“Sec. 3. Expanded Availability of Short-Term, Limited Duration Insurance. Within 60 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, consistent with law, to expand the availability of STLDI. To the extent permitted by law and supported by sound policy, the Secretaries should consider allowing such insurance to cover longer periods and be renewed by the consumer.”
“Sec. 4. Expanded Availability and Permitted Use of Health Reimbursement Arrangements. Within 120 days of the date of this order, the Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”
At this point is time, no changes to the law have occurred; this Executive Order merely indicates the President’s intent to make changes to the current regulatory structure in the near future. A copy of the Order is available at: www.whitehouse.gov/the-press-office/2017/10/12/presidential-executive-order-promoting-healthcare-choice-and-competition
The HHS Statement indicates that its decision to immediately discontinue subsidies is based on a legal opinion issued by the Attorney General. A copy of the HHS Statement and the Attorney General opinion letter are available at: www.hhs.gov/about/news/2017/10/12/trump-administration-takes-action-abide-law-constitution-discontinue-csr-payments.html
We will keep you apprised of future developments in this regard.
Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.
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Advance planning is essential when merging businesses. One critical aspect of this planning involves consideration of employee benefits issues when structuring the merger or acquisition.
Continue reading Workshop Wrap-Up: Employee Benefits Aspects of Mergers & Acquisitions
