Financial and Estate Planning
- Lucky fan Christian Lopez “gave” the $250,000 baseball he caught from Derek Jeter’s 3,000th hit back to Jeter. But he will most likely not face any gift tax implications. A 1998 IRS statement (issued during the homerun chase between Sammy Sosa and Mark McGwire) said that fans would not be subject to gift tax laws for catching and immediately returning a historic baseball. Gerry Beyer, Will Yankees Fan Be Subject To Gift Tax For Returning Jeter’s Ball?, Wills, Trusts & Estates Prof Blog, July 12, 2011.
- The number of large companies that automatically enroll new employees in their 401(k) plans grew from 24% in 2006 to about 57% today. But while over 85% of employees participate in 401(k) plans when auto-enrolled (compared to 67% of those in companies that do not auto-enroll), the amounts actually being saved decreased because the auto-enroll plans typically set default contribution rates at a low 3% (vs. 5-10% when individuals enroll themselves). Anne Tergesen, Automatic 401(k) Enrollment Depresses Overall Savings Rate, Smart Money: Encore Blog, July 8, 2011.
- The Government Accountability Office issued a report encouraging middle-income households (worth about $350,000) without pensions to purchase an inflation-adjusted immediate annuity. The government is concerned about the decline in defined benefit plans and studies suggesting that about half of those reaching retirement will run out of money. Margaret Collins, Delay Taking Social Security, Add Annuity To Survive Retirement, GAO Says, Bloomberg, July 1, 2011.
- Effective January 1, 2013, Ohio’s “estate tax” will be repealed. Chris Kick, Ohio Repeals Estate Tax, Farmers See Relief in Sight, Farm and Dairy, July 1, 2011.
- According to a Harris Interactive survey, only 55% of 401(k) participants are satisfied with their retirement benefits versus a 64% satisfaction rate among those with traditional pensions. Less than half of workers are satisfied with their health insurance (48%), vision insurance (46%), dental insurance (43%), and stock options (43%). Emily Brandon, Workers Unhappy With 401(k) Plans, U.S. News: Planning To Retire Blog, June 17, 2011.
- The two largest providers of reverse mortgages (accounting for 43% of the market), Wells Fargo and Bank of America, are no longer offering them. Tara Siegel Bernard, 2 Big Banks Exit Reverse Mortgage Business, N.Y. Times, June 17, 2011.
- The IRS automatically revoked the tax-exemptions for approximately 275,000 charities for failing to file annual tax forms. A list of the charities that had their exemption revoked can be found here: http://www.irs.gov/charities/article/0,,id=240099,00.html. These charities can reapply for the tax exemption at a reduced fee of $100. Stephanie Strom, I.R.S. Ends Exemptions For 275,000 Nonprofits, N.Y. Times, June 8, 2011.
Christopher W. Smith is an elder law attorney and elder mediator specializing in aging and special needs issues. He can be found at http://www.smithelderlaw.com and on Twitter @ElderPlanning. Christopher is licensed to practice law in Michigan and Indiana.
