Archive for the ‘Political’ Category


Bob Marley reminds us that “Everything is going to be all right.” “Don’t worry about a thing.” 

If you like, listen to THREE LITTLE BIRDS as you read this blog post.

As I prepare for my 25th year (a whole quarter century) of tax preparation and consulting, it is easy to look back and see that not much has changed over the years. You can pretty much deduct the same items on Schedule A as you could in 1988 when I started. And, tax freedom day is and remains sometime in May each year for most higher income tax clients of our firm.

Flat tax proposals… well, they fell flat to date and most likely the flat tax talk you hear right now is just a ploy to try to get nominated or elected. I do agree, simplification would be nice. But, so would a private firm in charge of collecting taxes away from the slothfulness we find in a government-owned and run operation. 

ersPerhaps letting a company like Fed EX or UPS run the I.R.S. (changing of course the acronym to E.R.S. – External Revenue Service).  In fact, we are used to seeing a brown truck roll up to our home. An E.R.S. version would roll up and collect your weekly “tax” money and give the employers a break!

Far fetched or crazy?  Yes, it is. But, so is the current system. However, changing it drastically would spell disaster in this country. Especially if charitable donations were no longer deductible. All those good, well-heeled clients I see that give a lot of both money and goods (used stuff) to charities keep this country going and helps so much the people who depend on agencies, churches and other non-profit companies for welfare to help them “exist” during these tough times.

Of course, charitable education gifts including help with college costs is another massive charitable effort that must not be hampered by overly aggressive legislators trying to put additional feathers in their caps!

All I’m saying is let a private “for profit” firm run the I.R…I mean E.R.S. – and efficiency would improve. And with efficiency, we could get down to simplification.

But, this blog entry isn’t meant to talk about actual taxes you pay or don’t pay, how well the IRS is run, etc.  It is meant to talk about how satisfied you are now with your current method of tax preparation?

Just in time for tax season this year, Market Tools Blog conducted a new survey in the United States that gauged satisfaction levels among individuals who filed their 2010 federal income taxes as of April 1st, 2011.

The main question only dealt with satisfaction of HOW the survey participants  were with the experience. The highest percent of the filers used an unpaid individual preparer (friend or family member) and 77% reported being “extremely satisfied”.  Now, I want to discuss that just a little.

This first survey result says if you want to be happiest, you’re going to have to take your shoe box of expense receipts and income slips to your Uncle “Bob” or your buddies you snow ski with and force them to learn everything they can on taxes, so you  can be the happiest! (Tongue in cheek here)

Well, don’t despair if you don’t have a relative or friend who is super sharp on taxes and likes to work for free. (My kids are so lucky I do their returns for a penny each year!) The next category down for “Satisfaction” level will cost you a tax preparation fee, but you will be almost as happy as you would be in this first category. Few are lucky to have someone “slave” over their tax situation this year for free, and remarkably –be able to get it right. After all, you don’t want the I.R.S. audit boys showing up at your door in a couple of years to “enforce” wrongful deductions ol’ Uncle Bob shouldn’t have taken!

According to the survey, you only drop 2% in your satisfaction level by MD_Anderson_Looks_For_Every_Deductionusing someone like me. Professionals like me will scour over your tax papers to find every legitimate deduction and come up with a  strategy for the future, so you can pay less tax and keep more of your own hard-earned money. The survey reports that 75% of filers who worked with a paid individual preparer such as an accountant or CPA were “extremely satisfied” with the experience. I guess giving up the tax preparation fee to the professional tax preparer is mostly offset again by knowing that the return was done right and the filer was treated with respect. (not waiting in a crowded office with sweaty people all around you, eating smelly fast food burgers and fries)

Next up in satisfaction levels, was the DIY’s out there in tax land. You are younger and just doing your returns by yourself online or by downloading free (or cheap) software to get the deed done each year. This means (I hope) you have a good handle on tax law and rules – not just a good handle on how to run a computer. If this describes you, congrats!  However, DIY mistakes are becoming legendary.

Take for example, using a scroll mouse. You can be entering W-2 info and sneeze and if you don’t go back and look, your scroll mouse might have entered a wrong code. You might sneeze and tell the I.R.S. you are “dead” now. Worse, you could make a number mistake that could enter you into the system (we only know that DIY mistakes in multiple tax years could get you audited), and the I.R.S. might just pull your file for a closer look later. Two years later is the norm, enough time to be sure  that the penalty and interest on wrongful refunds earns a good rate of return for the government! 

A_Bad_DIY_Tax_DayBut, that isn’t the main reason to consider letting a paid tax professional prepare your 2011 tax returns. The main reason may be the actual survey results!  DIY’s using tax software were just 69% “extremely satisfied” followed by DIY’s preparing their returns online, who reported an even lower 66% satisfaction rate. Maybe, that “doubt’ feeling a DIY has doing their own taxes is the reason. They just don’t know for sure if they can trust themselves, the software they used, or the “guided” instructions that tried to tell them how to do it. And, like any do-it-yourself project you may attempt, something can always go wrong! 

The lowest level in the survey respondents was from those poor souls who visited a tax preparation chain last year to get their 2010 taxes prepared. Only 64% reported being “extremely satisfied” with their experience. And, had full disclosure handouts been provided to them at the door to read before they started, I don’t think that percentage would be anywhere near that high.

For example, H&R Block, obviously the largest tax preparation chain, has some skeletons in the closet you won’t be apprised of if you used them last year. Probably, nobody in their tax office told you:

1. Their broker/dealer (H&R Block Financial Advisors, Inc.) was charged with bond fraud by the N.A.S.D. (now FINRA) over their sales of Enron Corporation bonds just weeks before the company did the Humpty Dumpty. Some of the brokers had claimed they were “safe” right up until the end.

2. The N.A.S.D. also fined them $500,000 for enabling a hedge fund customer  to use deception in market timing of mutual funds. Multiple employees of the firm were involved in the scheme.

3. They announced in August 2005 that they had overstated their earnings for 2003 and 2004 by $91.1 million dollars. They claimed “insufficient resources” to identify and report complex transactions in its corporate tax accounting.

4. In 2006, they admitted in a quarterly result, that they miscalculated their 2005 and 2004 state income taxes, stating they owed $32 million in back taxes. (Their stock price immediately fell 8.5% in one day over that goof!)

5. California sued them in 2006 over their refund anticipation business. The suit by the California Attorney General claimed that H&R Block(head?) charged annualized rates on RAL’s exceeding 500%, after including their fees! The AG said the company falsely portrays the nature of the loans, advertising “cash, cold, green, in your hand, out the door.”

6. New York sued them in 2006 in connection with the sales of the H&R Block Express IRA. The allegations by then AG, Eliot Spitzer (I know, he had a bad habit or too of his own) stated in the allegations that the IRA product earned less interest than the fees paid by the customers to obtain one! The complaint accused them of fraudulent business practices, deceptive acts and practices, fraud and breach of fiduciary duty.

Want more? Well, when they entered the mortgage business, you can only imagine how that one turned out. Just read the 2009 annual report. Pay special attention to pages 12-15, listing the “problems” the company board faced by the time the annual report issued in 2010. Without embellishing the “truth” of the kind of characters that run H&R Block companies – IT WILL BEND YOUR EAR!!!

Even their chairman, Richard Breeden had enough and stepped down last April 18th…

Though the fancy commercials running on television right now would have you think they are the best choice this year – one must seriously stop and ask this question: DO I WANT TO ASSOCIATE WITH A COMPANY LIKE THIS? If you want a higher level of satisfaction, I suggest you don’t…even if you were to use their “Premium” office accountants that are supposed to be the cream of the crop. One visit to THIS SITE may kill that idea!

The second largest chain, Jackson Hewitt would have been treating the customers with more respect last year if they had disclosed the following facts by April 1, 2011:                                                             

We are heading for bankruptcy. (filed 5/24/11)  Though we can tell you how to get the biggest refund – we can’t run our own business on the current business model and went broke! And, we also want to tell you that we will be pushing refund anticipation loans on you again this year, in spite of the fact that we face a class action lawsuit claiming we “bilked” consumers with short-term, high-interest refund anticipation loans. ($1.1 million was later set aside to settle the claims)

And, fresh out of bankruptcy and in 2800 Wal-Mart’s for the 2012 season, one would hope that Jackson Hewitt would tone down the marketing of “big refunds” and “big loans”.  That isn’t happening at all. According to Reuters last December, the last bank (Republic Bancorp) that will still do business with them to fund the loans is backing them one last time this season. It is their last year allowed since they agreed with the Federal Deposit Insurance Corp to stop funding them by 2013. Believe it or not, that was agreed to in order to settle a lawsuit filed against the bank also by the F.D.I.C.

Do you want all your personal identification information left with people like this?

Again, though the fancy commercials running on television right now would have you think they are the best choice this year – one must seriously stop and ask this question: DO I WANT TO ASSOCIATE WITH A COMPANY LIKE THIS? If you want a higher level of satisfaction, I suggest you don’t…

The third largest tax preparation chain, Liberty Tax Service, is a spin-off of Jackson Hewitt. Being fairly new, they haven’t had a chance to get in as much trouble as the two BIG DOGS! And to be fair, west coast reviews I read are favorable so far.

READ MORE ABOUT THE TOP THREE TAX PREP CHAINS — HERE

The final survey results reported that about 1/2 of you reading this (and are employed) are unhappy with your job and thinking of looking around. Yet, the survey also reported that only about a quarter of employers have any system in place to gauge employee satisfaction levels and hopefully, improve them so they don’t go through bodies needlessly.

Lastly, I would like to say that for the last 24 years, I have had to compete with the big dogs. But, when clients leave them and come to me, they become loyal, long-term clients. My online testimonials show I know how to stay out of trouble, do a good job for the client year after year, and grow old with my tax clients! I’m 99% satisfied with the broad income tax clientele I have maintained all these years. And, I would bet my loyal clients would rate their level of “extreme satisfaction” higher than any of these survey results.

We are taking new Arizona as well as national clients this year to grow our practice. We need you to take a step in faith to experience a REAL TAX MAN who will never forget who he serves.

It’s tax time, but don’t

worry about a thing.*

Just call me at:

1-800-782-2806

if you have any questions or would like immediate tax service.

(Such as to get those W-2’s or 1099’s out the door before the deadline)

M.D. Anderson, Accountant, AZCLDP

* Unless you are going back to those “Big Dog” chains who will never tell you how much trouble they get into. Or where you may be heading by using their services. (SEE BELOW)

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Make no mistake, events in this country as well as around the world would have you believe that the American dream, (admired and copied by almost all civilized nations on earth) – is about to end.

People are hoarding high silver and gold content coins for future trade potential. Multiple U.S. minted coins bear value far exceeding their marked face amounts. Silver and Gold are being hoarded in homes around America in many forms. Along with silver coins and gold coins, jewelry containing high content precious metals or precious stones are also being hoarded now. Even bullion bars are being hidden away in “assumed to be safe” places. Americans have placed them in hollowed out table legs, or sacked and buried their treasures in secret back yard hiding spots. Others trust the bank and have placed items of value in bank deposit boxes for future use and access.

Good American ingenuity has flourished lately since some have used extra creativity and hidden their “real value” assets under floor boards, inside walls, in attics, inside lamps or other hollowed out items in their home. Some have even sewn a few precious coins into multiple pieces of their own clothing for safe keeping! Perhaps if your Uncle’s Wooden Duck decoy in his office feels a little heavy – it may be because it contains a core of solid gold coins!

Yes, as war rages on and homeowners continue to be driven from their homes, and the economy continues to deteriorate, dollar devaluation will continue on as well until a proper monetary standard is established in our country. Until then, Americans have good reason to keep hoarding and hiding whatever items of value they can find and hide for the future. They fear their paper dollars will devalue down and down – perhaps to literally no value.

US_First_1862_Legal_Tender_DollarTherefore, the issuance of the first “standard” paper currency – the U.S. $1 bill issued this year, 1862, is welcomed by all citizens and merchants. This new legal Tender Note with a portrait of Salmon P. Chase, the Treasury Secretary under our beloved President Abraham Lincoln, sets the stage for sensible banking and currency systems for the future of our great country. As our war of the states continues on, we trust God for deliverance from what some deem “The End of the World” as we know it.

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O.K. this blog entry was meant to trick you into thinking I was talking about modern times. I apologize for that. The lesson to learn is that history does repeat. By profiling the economic environment 139 years ago, were you fooled into thinking I was talking about now? It is all to prove a point which I stated clearly, the end of the world as we know it… has happened over and over in our country.

The first pilgrims had to feel it was the end of their world that first winter when supplies ran low, disease ran high, and starvation and survival permeated their lives on a daily basis. It wasn’t the Indians they met that caused the greatest risk. It was surviving the brave new world they came unprepared to survive. They had left the higher comforts of their English homes for what soon became a living hell hole in early America! But, they persevered to become the strongest country on earth.  

Years later, colonists had to feel the wounds of the British involvement and tax scourge put upon them by King George. Physical survival was less of a problem. But economic survival was a problem that needed a solution. The King’s tax on their tea and everything else you can imagine (sound familiar?) was not fair and highly conflicted with the principals their founding pilgrim relatives established in the new America.

As the first patriots of our land rose up to fight back for what is fair, the founders of the Declaration of Independence not only felt the end of the world was near in their attempts to fight the Brits – they knew their lives would end if they were captured or if they were defeated in their quest to free our country once and for all from British influence and rule.   

And, we must not forget that before modern medicine discoveries, disease and plagues hit our country in a way that is unspeakable and unthinkable in modern times. No TV movie can properly portray the ravages of disease our citizens have endured in the past and many have fallen from those medical plagues.

Add in violent weather death and destruction for many affected over the centuries right up to last month’s horrid tornados – and you soon realize again, even weather has caused surviving families and loved ones to feel the end of the world has come upon them.

Lastly, the economic challenges that hit this country started long before the great depression. But, that period of American history personifies the worst economic situation to date for our land. Some investors took their own lives when stock investments continued to deteriorate between 1929-1933 to a point that their holdings were wiped out. Many were so highly leveraged, they were wiped out completely in just days of lowering stock prices. (Does that sound familiar too?)

Others, trusting the banks too much, succeeded in losing their idea of “safe money” when the bank failed to open one day. And their former Safe Deposit boxes containing their assumed things of value were confiscated or lost because of the debacle. There was no government insurance to protect them.

The price of foolishness took it’s toll then for those who did not know how to avoid losing most or all of their savings or fortunes in the stock market or in their uninsured bank deposits and safety boxes. So, this leads us up to the events that have taken place the last 3 years. We continue to seeWill_Guards_Again_Block_You_From_Entering_Your_Bank deterioration of purchasing power or receive full rebound recovery from lost stock market fortunes gone from the great stock market collapse of 2008.

For many, again, the world as they knew it ended with much lower values they were counting on for retirement income. Some bond and stock holding were marked to zero value overnight. (And were name brand, blue chip companies!) 

Now, older men and women too broke to retire compete for minimum wage jobs and against  our young kids and grandkids who like to work at places such as Wal-Mart to make extra spending money!

Sadly, some don’t know the world as we knew it has cracked. The year “2008” may very well go down in history books as our new “1929” – the gateway to another great depression. It very likely is the beginning year of a row of bad years. Many bad years…

Of course this is my personal opinion, but it is formulated with a lot of provable facts. I think there are more than enough reasons to feel this way. Let me give you one of them — FDIC insurance protects your money in the bank, isn’t that right? I find this highly problematic when the President of the United States now constantly tells us on national television broadcasts that “defaults” are just a month away if we don’t do what he wants to do in raising the debt limit.

So how good is your F.D.I.C. insured bank account my friend if that happens?

For this very reason, hearing the President of our great country tell us that we can’t pay our bills and obligations anymore unless we authorize more debt — just scares me to death! We now know we can never pay back all that debt. To just extend the “high” we are still on in this country from overspending, a few more months or a few more years — is nothing less than pure insanity.

So is defaulting on our obligations. But if more debt eventually leads to default anyway, why wait?  Maybe we should get our punishment over with so we can help rebuild a better world for our children and grandchildren.

America survived it’s multi eventful “down years”, it’s historic bad past, in every way I have already described. One way or the other, those that went through the “end of the world as we know it” before us, came out stronger, smarter and more seasoned. They learned how to endure a hard economic, medical, or act of God (weather) event quite well.

They were forced to go through bad times and came out wiser. It’s true, some paid the ultimate cost and gave the ultimate sacrifice in losing their lives during numerous hard times, one example is teh attack on Pearl Harbor. 

As the song says, “some gave all.” But that same song also says, “all gave some”. What have you done lately to help turn this country around? (I pose the question for myself first and that is why this blog entry is being added) 

Fortunetly, survivors carried on for us in the past. Medicines and education formulated to lower death rates from catastrophic disease. Education and high tech gadgets now help us run to safety when damaging and destructive weather strikes.

We get warnings our forefathers didn’t have a chance to receive.  The Internet delivers email and nedws every day telling you it is time to take action to help this country survive and keep our sovereignty. I have heard the message loud and clear. Have you?

Sadly, it appears nobody in Washington learned to balance the checkbook lately, and that is why we are heading for another “end of the world” event soon. But, it too will pass if we dig down and figure out a way to survive the bad times coming.

Just who is giving you a warning that the economic times you are used to and so accustomed to in this country – are about to end? 

Well, that answer is coming fom a lot of smart and educated economic advisors telling you to protect your purchasing power and prepare for hard times coming.

Will they come? Or is this all a dream? 

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”  — Opening paragraph of A Tale of Two Cities.

Because economic storm clouds hover over us all, rich and poor, and those in-between, and now extend to a worldwide dark veil on the entire planet, I suggest you invoke history to see how the French peasantry survived the demoralization put upon them by French aristocracy. The wrath of the revolution that followed put most of those aristocrats in their place.

America is the beginning stage of an economic lesson that puts us in the principal’s office while the principal is warming up his strokes about to be parlayed unto our behinds with a very big paddle! We let the system guide our own overspending. Buying things we didn’t really need on credit was dumb, and I too learned that lesson. Yes, I too stayed indebted for years ignoring high interest rates in lieu of affordable, (mostly interest only) monthly payments. Then one day about seven years ago, I woke up and got out of debt.

The first blow is about to begin and everyone in this country will feel the full force and magnitude of bad economic times coming. We can delay the whacks waiting for us or we can stand up and take the whacks one by one until it ends.

Some of you can still take steps to avoid the pain of suffering or at least reduce it, by protecting your purchasing power with alternative monetary precious metals coinage or bullion, storing water and food and medical supplies, and coming up with multiple strategies to stay safe if our world soon becomes similar to the  mob mess we watch on CNN or Fox News.

Some have guns and perhaps the most precious metal of all – lead –for those guns to protect what they have built and their very lives, or their families. It is still legal to own and bear arms. Don’t let that change or your world will be rocked in ways you won’t believe friends!

Will our world as we now know it, soon end here in America?  I honestly don’t know the answer. I hope not. But, I also honestly feel that if we keep doing insane things to try to prop up a terminal economic system, our suffering will be even longer and harder by waiting longer for the economic system to fail. Unless drastic changes take place in limiting spending and reducing debt, it is terminal! 

And, this is why our corporate firm now sells gold and silver and other precious metals for discriminating financial consulting clients throughout the world, not just here in America. We offer professional financial advisory as agent with a top name firm we trust for product. And, we also will soon be offering again, the other “hard asset” many are snatching up now. REAL ESTATE!

Each citizen has to decide if these alternative “hard asset” investment vehicles belong in their investment portfolios. (or economic survival plans). You just won’t know until you take a closer look. The time to do that is now!

Call us toll free at 1-800-782-2806 if you would like to learn more about holding precious metals, or to place an instant or delayed order to buy.

I close by saying that I have not given up on America. As a patriot, I am for anything that can help our country get off our knees and back on our economic feet. But I also must admit until we ask God above for help on a daily basis while we are on our economic knees, healing and help from the father may not come. Our currency still says we trust in God. Don’t let them take that phrase off our buildings, money and other American icons. The day we do that, we will be in real trouble!!!   God Bless!

M.D. Anderson, AZCLDP, President

Financial Strategies, Inc. (An Arizona Based Financial Consulting Firm)

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NOW, I WANT TO LIGHTEN THE MOOD AND RE-ASSURE YOU THAT THERE IS LIFE AFTER THE END OF THE WORLD:

R.E.M. sings live: It’s The End of The World As We Know It (And I Feel Fine!)

 


Dont Trust the Ball HolderIn other words, the old law from 2001 still kicks in again in 2013 with a $1,000,000 estate exemption limit per spouse, and that is based on having the proper legal documents that actually properly use the double exemption of both spouse’s to exempt the first $2,000,000, starting January 1st, 2013!  Just as the one year exemption is a “play” that most likely won’t be used from the government play book any time soon. (2010 estate owners that died, now have their choice to elect “unlimited” status regarding estate tax, but restrictions on tax “basis” on appreciated assets, or $5,000,000 estate tax exemptions with better tax treatment of appreciated assets) This two-year special “deal” everyone is frothing about as a great law, will pass by too very quickly. And with all the stuff that is due to hit the fan in the next two years, most likely is on the back burner again in Washington, and the burner is on “off”.  Hopefully, all of you reading this will still be here in two years. But surviving the next two years means the party is also over for big exemption amounts. That is without a needed amendment to make the temporary provisions regarding the estate tax – permanent. And, with cuts everywhere from national down to city governments — just how willing will Congress be willing to extend big breaks to the “rich” in a few years?

The law that alters previous laws by amendment, and  in a last-minute  political “band-aid” session last December, was meant to avoid the fact that we need more to count on as estate planners trying to do the best job for our clients. Even the official authenticated entry of H.R. 4853 in the GPO: Begun and held at the City of Washington on Tuesday, the fifth of January, two thousand tenmay be the Omen to warn us – temporary law can’t be taken serious. The bill was first introduced in the House March 16th, 2010. I know it’s easy to write the wrong year early in January. But, the official registrar can’t get the year right?  

I’m not the only one that feels the way I do about our temporary estate laws. Howard M. Zaritsky, a Rapidan, Va. estate planning expert who advises other lawyers in the field, says he’s telling practitioners not to base estate plans on portability until it become permanent. I quote his quote from Forbes magazine: “Congress has shown propensity for surprising us with both bad decisions and good ones, and you just cannot plan on Congress doing the expected or the right thing.”

This time around, the sunset clause comes back and is identical to the one  we thought would hit us in 2011. The only difference is that they moved the chains two years in advance, and raised the prior exempt estate limit of $3,500,000 (that applied only to 2009 deaths) to a temporary $ 5,000,000 exempt limit for 2011 and 2012 deaths only.

If you can plan on certain death, (I’m sorry to hear that), the only positive in your situation is that your terminal medical condition will allow the majority if not all of your estate to pass to your heirs tax-free now. That is unless you have more money than Howard Hughes did. The tax rate was lowered in this temporary amended law, to a flat 35% for the assets over $ 5,000,000. In 2013, the chains revert back to the $1,000,000 yard line, a huge penalty! 

And as I have said in a prior 2010 blog entry, the risk of having your children “help” you use the temporary law (obviously only a child demented) by the deadline will also come back December, 2012. Forget about predictions of the end of the world (it won’t happen) in December 2012. If you are still here and have really greedy dastardly heirs (or that demented child aforementioned), then be careful where they take you or of being isolated too much that last month when these higher limits apply and then suddenly run out at midnight. Seriously! One must wonder with these sudden “drops” in taxable estate assets programmed into the estate tax laws — is Stephen King secretly consulting with Congress?

Now, if you are married, the same marital exemption applies to your spouse in the amount of $5,000,000. That gives up to 10 million exempt assets if you can check out of life’s hotel, together before the midnight deadline I have already quoted.(I hope you understand I am not serious on this point) 

 The second most important portion of the 2010 law, at first glance, would appear to be a great new law provision. But, it won’t be around long enough, without further legislation, to help most families. Unlike any past estate tax law in this country, it gives a new “portability” feature we never had before.

Starting this year and through 2012, any unused portion of your $ 5,000,000 valued estate exemption on the first death you don’t use, will now carry forward to your spouse who dies last, as long as he or she also dies by December 31st, 11:59:59 PM. In other words, the odds are against you — to orchestrate joint deaths in such a tight time sequence, to ever trust these new provisions will be of much help for you. (Joint accidental deaths would be most likely)

You could compare it to the spousal rollover rules that apply to IRA accounts between married couples. The taxation of the funds is delayed until the second death if “rolled over” into the surviving spouses’ name at death – but never is the tax eliminated.

Though the portability clause is forward thinking, nothing guarantees in the current law you will ever get to use it even if something happened to you in the next two years. Your spouse too has to use it or lose it!  And, if your lawyer tells you to count on it, please give me a call as I have some ocean front property here in Arizona I would like to sell too!  Any financial advisor telling you to ditch your bypass trust setup needs to be recorded and documented for later use, just in case I am right. (Lucy pulls the football) 

Also, if your trusted legal advisor also is “sure” the portability clause in this patched up new law will be around as long as you are, kindly ask for a signed and notarized statement with proof of bond or errors and omissions insurance in force, as no one can make that guarantee!

The bottom line: Do you see Lucy pretty well itching to pull the football on you when you really do die?  I am afraid Lucy is the government and do you really trust Congress to do everything in the future, in your best interests? 

Thank goodness, the new law did permanently fix a problem with last years’ stepped up tax basis valuation rules. New provisions now reverse the damage from last year’s alternative capital asset valuation law that would have failed to allow full stepped up basis on appreciated capital assets over certain limits.  (when the federal estate tax was on a one year hiatus and a one year alternative law applied to taxation of appreciated capital estate assets)  So, there was some good from the previous bad law, that did came out of last month’s session. 

I am sure CPA’s and other estate accountants will enjoy all the fees the alternative capital appreciation tax laws caused in trying to properly value estate assets for future deaths of surviving spouses, when they lost their spouse last year. Some heir’s were facing eventual capital gains taxation on any assets over $1,300,000, until the change was made.

Also, assuming I convince some to keep their estate splitting strategies (kind of automatic in community property states), and also keep the bypass trusts in force, the improper use of A/B or A/B/C funding is a constant problem with the wrong formulas and wording.  

I have noticed this year after year, from the many wills and trusts I have read through when clients hire my certified legal document services. Trust and will provisions can quickly became out of date with lame solutions coming out of Washington lately. And, if you can’t guarantee your use of these short two-year provisions, (meaning your death/s are not imminent), then you better review and find out what your legal documents really say. 

The use of wording such as “the maximum current exempt assets”  that will pass federal estate tax-free, in your current estate plan documents could render your original plan to split the estate at the first death (if married), useless. No bypass funding will take place if you don’t write a concise funding formula, if one of you passes away in the next two years. Then, you could expose the kids or heirs to the tax rates and low limits that applied a decade ago! 

Lucy could slip that ball out on you at the last minute, when you kick the bucket (football) and you could fall down hard with a screwed up estate plan mess, and a big tax bill! Anything valued then over $1,000,000 and a starting 41% tax rate will give your kids a great appreciation of wishing they had written an estate plan that though complicated, covered the contingencies so many legal advisors gloss over. (failed trusts are great income generation vehicles for law firms)

As soon as January 1, 2013, there could be hell to pay for not listening to the experts now calling for “caution” in over-reliance on these new provisions. It takes cerebral work, to get it right for the future. (which is now less than two years away I must remind you of).  A custom convertible trust option should be created that allows any estate to properly be funded with as many tax saving or deferral sub-trusts (that is those A or A/B or A/B/C letters you may now have in your current trust), so that the law at the time of your death is applied and the solution necessary then to avoid or pay the lowest estate tax then, is properly applied and used.

It is not work for simple trust writers or simple thinkers. But, it is obtainable if you find a smart lawyer or estate document service with extreme knowledge and experience in these matters. With intelligent thinking and design, your outdated trust provisions can be fixed and corrected to allow the best chance to win the estate planning game.

Lastly, there are some opportunities in the new law, such as the ability to use your lifetime credits (gift and estate) to just give away a major portion of your estate direct to your kids or your other heirs. In other words, if you have $5,000,000 each, just liquidate and write out checks over the next two years to your beneficiaries. This way, you can be completely entertained in watching them spend your hard-earned money while you are still alive!

Seriously, bypass trusts protect heirs from themselves, bad marriages, lawsuits, and that Uncle you have and don’t trust… I think his name is SamNow is the time to look at the playbook again, and dig out your documents for a review. If you need some help here in Arizona, please give me a call, or send me an e-mail, if you want the proper wording in your amended (or new) revocable living trust. 

Lucy (Washington) still holds the estate tax football that will be used for your final game in life. Be aware and plan accordingly, for a sudden “pull” of the ball, at the last minute. It’s almost a sure fact! Smart moves can be made now, to anticipate Lucy and any future “bad” law coming next. The whistle is blowing….Let’s Play ball!

M.D. Anderson, AZCLDP 

Read More About It: Planning For A Disappearing Estate Tax Break by Deborah L. Jacobs / Forbes. com

Now, enjoy Lucy tricking Charlie Brown one more time…


Lets Dance Crazy

CLICK ON PICTURE FOR THE D.C. DANCE REVIEW!

I know, the house cleaning already started with the last election. But, I’m talking term limits, not just new blood. You get them both going in this country and recruit some kind of Julian Assange type guy (but without the illegal part) to track progress online, daily, of each of our new elected politicians while kicking the rears of the old guys (the permanents) at the same time. Then you have something that makes more sense.

I personally would love to have the job of hollering “don’t let the door hit your you know what” as they are forced out under term limit law we need so desperately. I’m talking a little more rotation here like the way it was when George Washington was still around as our first Pres. Take a couple years off of farming the farm, do your duty, then LEAVE! Sure, we may see more Slurpee’s and a few guys wearing those stocking caps, or even a youngster letting his pants “hang” a little low by bringing the average age down to a 20’s to 60’s range versus the 50’s to 90’s range we have now. Different generations have different cultural backgrounds some will have to adjust to. But, it would be better I am sure of it.

Instead, I’ve watched some come in when I was young, and now that I am middle aged, they are still there! I really don’t want to watch C-Span with all those wheel chairs and breathing devices for the senior political muggy mucks who decided long ago that once elected, they would die in office. Please, resign and check into a nursing home or go back to the farm… or back home if you can still remember where that is, BEFORE it is time to “buy the farm”. Just the savings alone on the free health care our elected officials get would be mind numbing if we could cover them at young or middle age, not as old geezers hanging on by a thread up until their last breath (still in office).

Leave them in there just long enough to sustain “ideas” into “action” and then kick them out. We have plenty of inventive, creative, forward thinking citizens to step in and carry on the torch of any good program started. And, to get rid of programs that are not fair, or were born out of favoritism or bribes to pay back a certain group or person who helped someone get elected. Which brings up the money. Set the same ground rules for the political seasons of pre-election advertising. Let it fit the budget of just about anyone, not just those who already have millions in the bank. That is not fair because only the “rich” get elected. And because they stay in office for decades, they just get richer with special interest group payoffs, endorsements, speaking engagements and so on.

Could term limits cause questionable law, temporary fixes, cancellation of programs that work, or just plain general chaos?

Well, probably not any worse then the “crazy” we NOW HAVE!  And there is one more reason to throw the permanent politicians out of office. They quit listening to us. They ignore the “pulse” of the country. We the people are not being properly heard anymore. Why don’t you send your “old” politician a new set of hearing aid batteries. Maybe they will get the hint if thousands do that.

M.D. Anderson


There are basically three types of people. Those who make things happen, those who watch things happen, and those who don’t know what is happening. Don’t let a financial “Checkmate” take away what you work so hard to accumulate or save.

It’s Time to Avoid Financial Checkmate!

Simply, if the politicians in Washington would turn off the “stupid” sign on their foreheads for just a few days they could actually think about the right way to turn around the debt problem of the country.

They could first think about killing the health care bill before this mammoth train wreck hits grand central station. And all the other stupid spending bills passed lately that pretty well guarantee the country will go broke.

Just like a reset of your computer where you actually roll back the programs and commands in your startup files so you can find a “good” start up software routine that works prior to the virus or malware that hit the computer (if you’re lucky), what’s wrong with a roll back?

I won’t say how many years we have to go back to, but isn’t it pretty clear that just a few weeks ago, the country was on a spending spree like a drunken sailor who just got paid and was put on leave? And now, suddenly after the little incident off the coast of California, we have a very sober President who just froze federal wages and actually seems genuinely interested in a solution?

O.K., I don’t expect you to understand that the government most likely lied about what that trail was coming out of the coastal waters in November, but there are plenty of high qualified military people telling us on the internet it wasn’t an airplane. The biggest bet is it was a warning shot, a Chinese missile (from analysis of the trail) fired from a sub, all at the same time our leader was over there schmoozing the Chinese President – to calm him down about our countries spending. The satire skits on Saturday night Live, may be more realistic then you might think.

What’s at stake? Everything!

If we default on our obligations, if even the Chinese no longer want to buy our bonds, the “full faith and credit” of the United States government is at stake. And that means your FDIC insurance may, for the first time in history, become at least — a partial problem to collect on. Perhaps temporarily, but if a run on a major bank takes place as is predicted from Wikileaks “leaks” of what is coming, it might be wise to find out which banks are in the most trouble. Of course, the usual suspects can not be ignored from past troubles…

So, by now, you must be wondering – What does this political rant have to do with the title? The answer again, is everything!

The people that make things happen are trying to bring this country back. They are the movers and the shakers opening up new stores, employing new workers, and trusting their own wisdom and business sense that the best days are still ahead — not lost behind in a dream memory sequence that will never return. Yes, they are the ones with the most faith in capital markets and structures, especially as we see the other side of the coin fail miserably in Europe and elsewhere. They are the ones still balancing their checkbooks and teaching their children to do the same. They are still teaching their offspring that hard work and faith will pay off and lying around expecting handouts for free is a more of a curse, not a benefit or a blessing.

So then, we have the middle type of people. There are many more citizens in the middle and they are just fine and thankful for being right where they are. They feel secure for the most part, because they watch others “move and shake” while they passively and carefully continue to play it safe. They are not overly aggressive, but by no means, are they lazy. They just don’t take risks very often. “Watching” is their expertise. They have great second hand experience. Therefore, “doing” and “making things happen” with these folks – is a rare event for the most part.

Lastly, we come to the bottom of the list of three types of people. And economically, the majority resides in this group. They are the poorest. Not their choice, but because of circumstances, bad decisions, heritage, or just bad luck. Most reside in this group against their will. But, they are too busy surviving in life to know how to move up the ladder. These folks can’t make things happen like the first group, because if they could, they would move up! And, because “life” consumes their time and energy fully, they don’t have time or the ability to even “watch” what is happening for the most part. Survival is paramount. Knowledge and information doesn’t have much use to them.

And this is where the average blogger would expect the question – Which are you? Well, you can ask that question of yourself if you want. You can, but that isn’t my point. You see, we all run up and down the grid of three types of people. At times, we don’t care about being active so we go passive. And sometimes, we let ourselves fall down into that last comfortable position to where we don’t really know what is happening… and we don’t really care. Yet, once there, we find a trapdoor locked and can no longer find the key to get out!

Maybe this blog article is your wake up call. It is time to rise up and be all you can be, if you can move. Can you read and study and learn to move up? Libraries are still free are they not? Can you run for office? Who says you can’t? Are you fulfilling your life plan or goals? If not, why not? Did some person or circumstance beat you down? If so, who won? You or them?

It’s time we all shoot our best shot. Rise up and balance our checkbooks. Get out of debt. Create opportunity for ourselves and others. Be all we can be. And let’s not forget that others could use a hand to pull them up too. Let’s give our time and our money to help others. And lend a hand. In return, it is universally known that the “return” will be more than what you expended.

As the holiday season comes upon us, this also not ignore or forget about the one who holds the world in his hand and is concerned about each of us and who also directs us to help our fellow man. (and women and children) Do you have something you don’t need? Why not have a special garage sale this month and mark the price down to “free”? When word gets around, you most likely will have a clean garage quickly!

Or maybe you reach out and agree to donate your time or money to a new event or program that needs your help. Whether for a day or a whole year, make one new commitment for the New Year to do something completely new for another person or organization that could use your help.

A year from now, if we all reach out to be “better” individually, it could make a difference for the trouble the country is now in financially. And, it may catch on. Let’s not wait for another 9/11 event to be nice to each other. If the citizens can do more and be more in the New Year, maybe Congress can get the memo too. Being better is a good thing and the reward could be in a way you won’t imagine. Volunteer time or money and don’t expect a thing back. But, if rewards in any way or fashion come back to you, don’t be surprised either!

Lastly, the checkmate. If we don’t get smarter, more agressive, nicer, better…. we face Checkmate and it isn’t going to be pretty. Just tune in to TV news in Europe to see America’s future. Before the year ends, let’s make some moves to protect ourselves from financial ruin. If you need some help to do that, just ask for it.

Happy Hanukkah & Merry Christmas!

Enjoy a Video…