It’s Tax Season: Be on the Lookout for Tax Scammers

I just read about a taxpayer (in this case, we’re using the term loosely), whom we’ll call Victor. He has a good job, has raised three kids and put them all through college. He saves for retirement. His taxes are regularly withheld from his paycheck, so there are probably no big tax debts from which he is hiding. But he has not been current with the IRS for 30 years.

I do intend to file.” Yet it never quite happens

“I’ve often thought about why I do this,” he said. “I have theories, but none has helped me get past the fear of filing and doing it on time. I rationalize. I think I’m just a small guy and the IRS wouldn’t be interested in me.

Unlike Victor, most of us do file our annual taxes, but it’s generally with some trepidation

For the 37% of American workers who are employed as independent contractors, there is the uneasiness of wondering if they’ve claimed enough in their quarterly filings. No one wants a big surprise during tax season.

But there’s a bigger, more insidious surprise waiting for many unsuspecting taxpayers

The IRS calls them “ghosts”. They’re shady operators that the Internal Revenue Service (IRS) calls “ghosts”. Those who are certified to prepare tax returns for other people have a legally required 2019 Preparer Tax Identification Number (PTIN). Ghosts don’t have a PTIN and don’t sign the returns they work on, leaving their clients holding the bag for any filing falsehoods.

These ghosts are brazen, setting up shop in pop-up offices

• Ghosts set up shop around tax time in pop-up offices in malls. They pitch their services at community-gathering places such as churches or clubhouses.
• They lure customers with promises of big refunds, often predicating their fees on a percentage of the refund. Real tax preparers base their fees on their time, generally an agreed-upon rate per hour.
• They might invent income to falsely claim tax credits or fabricate deductions for business, education or medical expenses.

By the time the IRS catches on, the ghost will have vanished—with your fee

It’s your name on the return, and you’re liable. It may take some time for the IRS to catch up with you and your missing taxes. In the meantime, you will be accruing penalties and interest.

Some ghost preparers take the scam a step further, stealing refunds outright by routing them into their own bank accounts. Other tax prep fraudsters work online, sending phishing emails that appear to be from tax pros, or creating impostor websites that claim to prepare and e-file your return.

The Federal Trade Commission (FTC) warns:

“These websites looks legitimate,” but “they’re set up to collect personal information that can be used to commit fraud,” including identity theft.

Here are some red flags. Be very suspicious if your tax preparer:

• Asks for payment in cash.
• Has an excuse why you won’t receive a receipt.
• Bases fees on a percentage of the refund. Tax preparers base their fees on their time.
• Wants the refund deposited in his or her bank account. Ridiculous.
• Marks your return as “self-prepared” or affixes a business label rather than signing the form by name. A certified preparer will have a PTIN.

One more thing: IRS robocalls

Who hasn’t received an intimidating phone call that starts with “This is the IRS”. Hang up and report it—this is a robocall. Never return a phone call from someone claiming to be the IRS. The IRS never discusses personal tax issues through unsolicited emails, texts or over social media.

We look forward to assisting our clients with their uncontested legal matters

Taxes and Living Trusts are important parts of estate planning. Our Living Trust package includes a Power of Attorney and an Advance Healthcare Directive. We guide our clients through the process. We prepare the legal documents and file them with the courts. For most of our services, we charge one flat fee. We’re helpful, compassionate and affordable. Schedule an appointment today at one of our three Bay Area offices.

An Aid in Dying Update: More Available, Yet Few Will Choose It

On August 1, New Jersey became the eighth state to allow doctors to prescribe lethal medication to terminally ill patients who want to end their lives. On Sept. 15, Maine will become the ninth. By October 2019, 22% of Americans will live in states where residents with six months or fewer to live can determine how and when they will die. (Oregon, Washington, Vermont, Montana, California, Colorado, Hawaii, District of Columbia) Oregon was the first state to pass the Death with Dignity Act in 1997. More than 20 years later, opposition groups remain wary of potential abuse. Hospitals with religious affiliations may refuse to allow their physicians to perform the procedure. Yet opposition is softening as support grows. Aid in dying is more available, yet few will choose it.

A look back on the EOLOA in California

California passed the End of Life Option Act (EOLOA) in 2015. Jerry Brown signed it into law in 2016. Four years and it remains controversial and problematic. While the campaign for aid in dying (or death with dignity) continues to make gains across the country, supporters are increasingly concerned about what happens after these laws are passed—on both sides of the issue.

• Some fear that the law forces the dying to navigate an overly complicated process of requests and waiting periods.
• There are op-out provisions that allow doctors to decline to participate and health care systems to forbid their participation—even in places where aid in dying is legal. In areas where there is a shortage of doctors, it can be difficult to complete the necessary process within the prescribed timeframes.
• Those who oppose the legislation fear that it sets up a slippery slope for abuse.

The New Jersey bill had neared passage several times, but derailed in 2014 when Governor Chris Christie threatened a veto. Legislators passed the Aid in Dying for the Terminally Ill Act in 2019 and the governor signed it in April. Governor Janet Mills: “I do believe it is a right that should be protected by law–the right to make ultimate decisions.”

So what’s changed? All states are required to track usage and publish stats

Data show that whether a state has six months or 20 years of experience (Oregon, the pioneer in aid in dying), the proportion of deaths involving aid in dying (also known as physician-assisted suicide) remains tiny.

California’s 2017 data show that 632 people made the necessary two verbal requests to physicians, after which 241 doctors wrote prescriptions for 577 patients. This out of 269,000 deaths that year. The law shows no evidence of widespread abuse or misuse of the law. Attitudes within the medical community are changing. A number of national organizations and a dozen state medical societies have gone from opposing the law to taking neutral stances.

Despite Catholic organizations and other opponents, polls show broad support

In March, an aid-in-dying bill passed the Maryland House of Delegates but failed after a tie vote in the Senate. Opponents are attempting a ballot initiative to repeal Maine’s new law and pursuing a slow-moving court case to invalidate California’s. Yet public opinion polls consistently show broad support for aid in dying.

The small number of users suggests most Americans would not choose this option

There’s enough data from a number of states now to identify trending. The low numbers of users show that most users would not choose this option. However, it may also reflect difficulty in actually using these laws.

A recent survey of 270 California hospitals, published in JAMA Internal Medicine, found that 18 months after implementation of the state’s EOLOA, more than 60% — many of them religiously affiliated — forbade affiliated physicians to participate. Compassion & Choices is intensifying efforts to persuade local health care systems, doctors and hospices to agree to consider patients’ requests.

Laws drawing scrutiny; many believe they’re too difficult with too many safeguards

The model has been the first-in-the-nation Oregon law, which took effect in 1997. The law requires that a terminally ill patient:

• Sees two doctors.
• Makes two oral requests for a lethal prescription, plus one in writing.
• Waits 15 days.

For a terminally ill patient who perhaps lives in a rural area where doctors are scarce or even in an urban area where they’re booked up for weeks in advance, this can become challenging. A Kaiser Permanente study shows that at least a third of those who inquire about the aid in dying measure become too ill to complete the process or die before they qualify. Hawaii’s law took effect in January. It requires a 20-day wait, and they’ve an additional mental-health consultation requirement.

Dementia, testamentary capacity and Aid in Dying

• Rural areas face physician shortages, and Compassion & Choices has urged that nurse-practitioners and physician assistants be allowed to provide aid in dying in states where they can legally write prescriptions.
• One legislator has introduced several bills that would permit those in the early stages of dementia and other neurodegenerative diseases to use aid in dying, securing prescriptions theycould then use later as their illnesses progressed. “You could make the request when you were cognitively able to do it,” he said.
• Yet every existing state law bars that. Those requesting aid in dying must be able to show mental capacity; dementia patients will have lost that ability by the time they’re within six months of dying.

The support for aid in dying continues to gain momentum. The fact that very few people are actually using this measure may be tamping down the fears of those historically opposed to the measure.

Many of our clients are seniors who come in to our offices to create their Living Trusts

The result is numerous conversations on a wide range of topics related to health, healthcare and end-of-life planning. California Document Preparers assists our clients in the preparation of their Trusts, which include a Power of Attorney and Advance Healthcare Directive. Most are surprised at how easy it is. Schedule an appointment today by contacting us at one of our three Bay Area offices. Our dedicated team is helpful, compassionate and affordable.

Increasing Number of Millennials Creating Living Trusts

While many people still think Living Trusts are reserved for the elderly, a growing number of millennials are creating comprehensive estate plans these days, and there’s a range of socioeconomic drivers.

• Tech-worker wealth. No surprise here: This trend is most prevalent in tech-centric areas like Silicon Valley, where many young startup workers are making millions of dollars before their 30th birthdays. Investing and creating an estate plan are part of the dialog and the culture.
• Terrorism/tragedy. The trend is also strong in cities like New York. The tragedy of 9/11 was a big wakeup call. Subsequent terrorist attacks have made us all feel vulnerable, and many young people feel the need to protect themselves and their families with long-range planning.
• Deaths of iconic figures. The deaths of entertainment figures like George Michael and Prince hit home with a generation that grew up with their music.
• Family responsibilities. Those millennials who marry, have children and buy a home are hit with a big dose of adult reality and feel the need to protect their children and their assets.
• Committed relationships without marriage. Many young couples live together in committed relationships, but choose not to marry. A Living Trust, along with a Power of Attorney and Advance Healthcare Directive provide protections for partners if one becomes incapacitated or dies.
• Reliance for support. When there are other people who rely on millennials for support, and this needs to be detailed in a Will or Living Trust. For those who remain single, a Will or Trust will identify how their estates will be distributed among their designated heirs.
• Supporting causes. Millennials are a generation with a conscience. Many are driven by causes and want to ensure that their Wills or Trusts allocate money to a cause.
• Protecting wealth. Many smart millennials, especially those in the tech sector, have started their own successful businesses. Others work in the family business. A Trust can designate what happens to a small business if the owner dies or becomes incapacitated if a buy-sell agreement is not in place.

Despite this little uptick of millennials creating Living Trusts, 64% of the 18-and-over population did not have a Living Trust in 2016. An estimated 60% of Americans die without a Will or Living Trust, which means their families will be faced with Probate at a very difficult time. Probate can be time-consuming and expensive. If there are minor children, the state chooses guardians for them.

A few things to be thinking about as you prepare a Living Trust

• Update Trust with life events. Keep Trusts updated with births, deaths, divorces and significant investments. Anything that will affect the inheritances of those you love.
• Synch beneficiaries. Crosscheck the names of beneficiaries on brokerage accounts, 401(k) accounts and life insurance policies with those listed in a Will. The beneficiaries listed on financial accounts will override those on a Will or Living Trust.
• Save logins. Store login information to your digital assets, including passwords to banking and financial services sites, social media accounts, healthcare providers, etc. Spend some time compiling this list—most of us have online accounts for a wide range of services. Think about what information your family would need to access if something happened to you.
• Planning for pets. This is no longer an afterthought. Pet owners need to make arrangements for their pets. Give some thought to those who would love your pet the way you do and include them in your Trust. Some pet owners allocate a yearly allowance to offset the cost of pet care.
• Distributing valuables. If you have valuable collections or antiques, use precise wording and avoid vague terms like “my memorabilia” or “my antiques.” Be specific about these items and leave them to individuals. Don’t leave them to your heirs to divide among themselves—it can be a recipe for disaster. Note that these items don’t necessarily have to have great monetary value. Items with sentimental value have caused many family disputes.
• Informing family of location. Make sure your family knows that you have a Trust or Will and its location. We provide a bound hard copy and a soft copy. Many of our clients share the soft copy with their beneficiary designates and/or several family members. If something happens to you and if no one can find your Trust, it’s as if it didn’t exist. The result? Your family will have to go through Probate.

Our comprehensive Living Trust package includes a Power of Attorney and Advance Healthcare Directive. Contact us at one of our three Bay Area offices to schedule an appointment to create or update your Trust. We’re helpful, compassionate and affordable.

The Slippery Slope of Multiparty Bank Accounts

Mary had just turned 79 and was recovering from a heart attack and open-heart surgery—a major health event that had made her rethink her life. While Mary still lived alone in the family home, she got a lot of help from her adult children, who lived nearby. Her daughter Alice paid her bills, did her grocery shopping and took her to appointments. Mary decided to add Alice’s name to her checking account. It gave her peace of mind to know that if she became ill or incapacitated and could no longer sign checks, Alice would be able to seamlessly step in to pay bills and manage her affairs.

Alice’s name on her account gives her access to all of Mary’s money

Mary’s assets include her home and a checking account with a significant amount of money. By adding Alice’s name to this account, Mary was giving Alice access to virtually all of her money. Mary was grateful for Alice’s help, but she was also close to her son, Bill, whom she counted on for help with her yard and household repairs. Did Mary realize that this wasn’t just a convenient solution: she was giving all of her money to Alice, exclusive of Bill.

Mary’s son Bill: Concerned that all of the money will go to Alice

Not surprisingly, Mary’s son Bill’s reaction was less than enthusiastic. “Giving anyone access to all of your money, unchecked, sounds unwise. What happens when you die? Will Alice get all the money left in your account? Her name is on the account, and everything will default to her.”

Mary reassured Bill that Alice would share whatever was left in the account with him, that access to her account was only for the purpose of taking care of Mary’s expenses. The reality? She had no way of knowing if Alice would share the remaining account balance with her brother. Bill suggested creating two accounts, one for household expenses and the other for savings, giving Alice access only to the smaller checking account, but Mary liked the simplicity of keeping all of the money in one account.

A mother, a daughter and two bank accounts help jointly

In another case, two bank accounts were held jointly by a mother and daughter, and the decedent’s son disputed their ownership. At the time of the mother’s death, the accounts held nearly $500,000. The daughter saw the mother five-six times a week and was responsible for scheduling and overseeing her mother’s medical care, hospital transportation and other matters. The mother opened the joint accounts so it would be easier for her daughter to help. The daughter testified in a lower court that her mother asked her to meet at a bank to open the accounts and that she signed a signature card that gave her complete access to both accounts. The daughter testified that her mother informed her that the money in the accounts was for her use.

Funds belonged to daughter by Right of Survivorship

The son claimed the funds that remained in those accounts after the decedent’s death were intended to pass to several Trusts established by his parents during their lifetime. However, the court could find no evidence of such intent and ruled that the funds belonged to the daughter by Right of Survivorship.

Right of Survivorship: A joint account passes to the surviving account owner

• According to the California Court of Appeal, unless there is clear and conclusive evidence to the contrary, ownership of a joint bank account passes—as a matter of law–to the surviving account owner by Right of Survivorship.
• In both of these case studies, the money defaults to the daughters by Right of Survivorship. Regardless of intent, giving their daughters access to their accounts means that when these women die, their daughters will inherit all of the cash in these accounts.

Joint bank accounts are often used when planning for incapacity

In both of these cases, the families established joint checking accounts to help care for a parent. They provide easy access to money for incidental expenses, healthcare payments and emergencies. But as our case studies demonstrate, when there are other family members and potential inheritances involved, there is room for conflict.

Multiparty accounts may seem like a good solution for incapacity planning, but there are better solutions:

• Create a smaller joint account linked to a larger account in the name of the Trust. This provides the necessary liquidity, but since it is linked to the Trust account, there is no right of survivorship.
• Open an account in the name of the Trust, with both parties listed as co-trustees. This ensures that upon the parent’s death, the funds remain in the Trust.
• Establish a Payable Upon Death (POD) account. The account owners—in our cases, both mothers–designate who should receive any money that remains in the account upon their deaths.
• Insert “in trust for” to the account title. This would clearly indicate the purpose of the account and the intended beneficiaries.

Contact California Document Preparersat one of our three Bay Area offices today to create a Living Trust. A Trust is a much better way to plan for incapacity of your loved ones. Our dedicated team is helpful, compassionate and affordable.

California Document Preparers Creates Special Needs Trusts

California Document Preparers helps our clients create Living Trust packages that include a Will, Power of Attorney, Advance Healthcare Directive, and other important supporting documents. Many of our clients comment on how comprehensive our package is—it includes a section to list healthcare providers, accountants, insurance carriers and financial advisers as well as medications and logins to digital accounts. We encourage people to think carefully about what information their children or loved ones would need if they were suddenly incapacitated so that care can continue seamlessly.

But what if one of your children or dependents has a disability, receiving Medi-Cal or Social Security?

If you want to leave money or property to a loved one with a disability, it’s important to plan ahead to avoid jeopardizing his/her Supplemental Security Income (SSI) and Medi-Cal benefits. Instead of leaving property directly to your loved one, you will need to set up a Special Needs Trust and leave property to your special needs beneficiary though this Trust.

Special Needs Trust requires a Trustee to administer it

Along with the Special Needs Trust, you will need to identify someone to serve as a Trustee; this person will have complete discretion over the Trust property and will be in charge of spending money on your loved one's behalf. The Trustee can’t distribute money directly to your loved one, which could jeopardize SSI and Medi-Cal eligibility. Rather, the Trustee can spend the Trust’s assets to buy necessary products and services that contribute to quality of life, including personal care attendants, vacations, home furnishings, medical/dental expenses, education, recreation, vehicles and physical rehabilitation. Since your loved one will have no control over the money, SSI and Medi-Cal administrators will ignore the trust property for program eligibility purposes.

Finalizing and funding the Trust

During your lifetime, the Special Needs provisions are merely a section of your Revocable Living Trust, and it is only created upon your death.  Once that happens, the part of your estate that you allocated for your special needs beneficiary is segregated from the rest of your estate and held for the special needs beneficiary’s benefit. At that point, the trust will receive a tax ID number, and is funded through the portion of your estate you allocated for it. 

It can also be funded through other people’s Wills and Living Trusts, or through beneficiary designations and other estate planning tools. Virtually any type of property can be held in a Special Needs Trust, including real estate, stocks, collections, a business, patents or jewelry. But because the primary purpose of a special needs trust is to use money to pay for items that aren’t provided by SSI or Medi-Cal, Special Needs Trusts typically give the Trustee the authority to sell tangible items (cars or jewelry, for example) to raise cash.

The Special Needs Trust ends when it is no longer needed, generally at the beneficiary's death or when the funds have been spent.

If you have questions about a Special Needs Living Trust or a standard Living Trust, visit or call one of our three Bay Area offices: Dublin, 925.479.9600; Oakland, 510.452.2320; or Walnut Creek, 925. 407.1010. We’re here to help.