Monday, September 26, 2016

What Happens If I Die Without a Will?

Most people don’t really think about making a will until they reach retirement age, and even then, many put it off until it’s too late. But if you were to die without a will, have you ever thought about what would happen to your assets? Who would take care of your minor children? How necessary is a will, anyway?

If you die without a will, you’re said to have died intestate. Without a legally binding will to tell the world what you want done with your property, we have to guess. But a court can’t simply take statements from your family and friends about what they think you would have written in a will if you had one, based on your values and priorities. Instead, we have a set of laws that apply the same values and priorities to anyone who dies without a will. These are the laws of intestacy.

What happens to my property?

For example, suppose you have a girlfriend you love like a wife and a best friend you love like a brother, but you have a bad relationship with your family. If you wrote a will, you’d probably leave most of your property to your girlfriend and a special gift or two to your best friend. If you die without a will, however, the laws of intestacy decide where your property goes, and the laws of intestacy assume you want to give your property to your blood relatives. In Idaho, all your property would go to your parents. If your parents were not living, then your property would go to your parents’ other children (your siblings).

Think about the blended family, with the couple who each want to leave their property to their separate children. Under the Idaho laws of intestacy, the spouse would inherit one half of the dead spouse’s separate property and all of the “community property” (everything acquired or earned during the marriage except gifts or inheritance). What if a parent in this couple wanted to treat all of the children as his or her own? Without a will (and without legally adopting the children), the property would go only to the parent’s spouse and own biological children.

Or what about a couple who are living together but not married? Idaho doesn’t recognize common law marriages after 1995. So if someone in one of these types of relationships dies without a will, their partner can’t inherit. The law sees them as unmarried, so all the property would go to blood relatives. In fact, if a couple is married, it doesn’t matter how close they are. Even if the couple has separated, the spouse would take all of the community property and half of the dead spouse’s separate property without a will. If there are no children or living parents, then the spouse would take the entire estate.

Many people want (or need) to treat different children differently. Whether wealthy or poor, close or estranged, gifted or disabled, the laws of intestacy give each of your children the same equal share of your property. And that’s only if they’re your biological or legally adopted child. Even if you raised the child, without that legal relationship, the child will inherit nothing.

If you make a will, however, you can decide exactly who gets your assets when you die. You could leave everything to your neighbor and disinherit your entire family if you so choose. That’s the beauty of the will—it lets you keep control of your assets even after your death. 

What happens to my children?

If only one of the children’s parents dies, then the surviving parent continues to care for them. But if all parents are dead or otherwise disqualified as parents, it gets more complicated. The court can appoint legal guardians for children whose parents have died, but the process can be long, expensive, and messy. There could be many people angling for guardianship of your children when you die. Idaho law permits any family member or any “person interested in the welfare of the minor” to apply to the court for appointment as guardian. If a child is fourteen or older, then even the child may appoint someone to act as guardian.

Once the applications have been made, the court has to choose the guardian that would be in the best interests of the children. As you might guess, arguing over which applicant is best for the children can be complicated and emotional. Meanwhile, the court might have to appoint a temporary guardian, and choosing that guardian can take time. And the court may very well appoint a guardian ad litem for the children to work with the attorney hired to represent the children’s interests in court.

This is usually not what the parents would want for their children. If you make a will, you can designate a guardian for your children in the event of your death. As long as the person(s) you designate accept the appointment as guardian, and as long as they are not unfit to care for children, then the court will follow the will. Even if someone else could prove they would be a better guardian, the court will follow your wishes as expressed in your will.

Don’t wait to make your will. Talk to an estate planning attorney today about taking control of your assets and providing for your children. 

Joseph D. Fairbank at 8:38 AM No Comments | Post a Comment
Estate Planning
Wednesday, September 21, 2016

FSMA Requirements Seminar & Lunch

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Friday, September 9, 2016

Weight a Minute

You’ve just harvested your potatoes and are hauling them to a processing facility when you see a weigh station up ahead. Then it dawns on you that you have no idea how much weight you're pulling.  This scenario happened to a client who found out the hard way that the State of Idaho takes its weight restrictions seriously.

Historically, the maximum weight limits on all Idaho highways has been 80,000 lbs. without an excess weight permit and 105,500 lbs. with an excess weight permit.  As of July 1, 2016 Idaho allows trucks weighing up to 129,000 on some roads.

These weight restrictions are based on the number of axles and tire size. Steer axles must not exceed the manufacturer’s load rating, single axle limits are 20,000 lbs. and the tandem axle limit is 37,800 lbs. when the GVW does not exceed 79,000. There are some industry specific exemptions including logging, aggregate materials and certain agriculture products, so be sure to check with the Idaho Department of Transportation ("IDT") to find out if you qualify. IDT has adopted a weight formula that provides a table of limits based on the number of axles and spacing of tires.

The maximum width of a vehicle in Idaho is 8 ½ feet and the maximum height is 14 feet. The typical maximum length is 75 feet, but can be increased to 97 feet for certain saddlemount combinations. Overlegal permits can be obtained if your load exceeds these limitations. IDT’s website has more information on the law.

What happens if you don’t follow the law? Idaho Code § 49-1013 has a list of penalties based on the weight your vehicle is over the limit. These range from a flat penalty of $5 for being 1,000 lbs. or less over the limit to $0.30 per pound when more than 20,000 lbs. over the limit. In addition, exceeding the weight limits by more than 4,000 lbs. is a misdemeanor.

If you’re unsure of your truck's weight go get weighed at a certified scale before heading onto the open road.  Know your weight, and know the law. 
Lance J. Schuster at 10:04 AM No Comments | Post a Comment
Monday, August 8, 2016

The Five Smartest Ways to Use IRAs (in estate planning)

One- Streeeeeeeeetch it Out

      The benefit of putting your retirement savings into a traditional IRA (as opposed to an ordinary savings or brokerage account) is that you can contribute your earnings pre-tax. Yes, you will have to pay income taxes on the money eventually. But the longer the money is invested in the account, the longer you put off paying the taxes. That means you can invest that money you would have paid taxes on, earning more money over time. And it means that when you do eventually have to pay the taxes, you might very well be in a lower tax bracket than when you’re at the height of your earning power. You can wait all the way until you turn 70½, when you have to start taking mandatory distributions. But even then, if you take the minimum required distributions, you can leave the rest of your money in there even longer, stretching out that tax benefit.

      So when you’re thinking about dipping into your IRA to buy that Corvette, think again. If you take the money out before you have to, you give up the benefits of putting off those taxes as long as possible. And if you’re younger than 59½ you’ll also have to pay a 10% early withdrawal penalty on top of the income taxes.

      The stretching concept also applies to someone who inherits your IRA after you die. If you leave your IRA to someone younger than you are, they’ll have a better chance to stretch out the tax deferral over time, maximizing the benefits of the IRA.


Two- Give it All to the Wife

      When you fill out the beneficiary designation form provided by your IRA account administrator, you can name anyone to receive the funds in your IRA when you die. You can give your hard-earned pre-tax cash to your kids, your brother, your favorite elementary school teacher—anyone you want. But if you’re smart, you’ll probably give your IRA to your spouse.

      When you die, your IRA will change to an “inherited IRA.” That means that whoever inherits the account will immediately have to start taking mandatory distributions that grow larger over the course of his or her life. And the payments get locked into that beneficiary’s life expectancy. That means that if you leave your IRA to your sister, and she dies and leaves your IRA to her kids, the IRA will still be making mandatory distributions over your sister’s life expectancy, even though it’s her younger kids who own it now. This is true for anyone who inherits your IRA, young or old.

      Anyone, that is, except your spouse.

      Your spouse can treat your IRA not as an “inherited IRA,” but as his or her own IRA. Your husband can roll it over and keep it until he turns 70½ just like you could. And when he leaves the IRA to your daughter, the IRA will make distributions according to your daughter’s life expectancy, not your husband’s. Making your spouse the beneficiary of your IRA is like getting a free extension on the tax benefits. And besides, you were going to leave most of your property to your spouse anyway, right?


Three- Give your Taxes to Charity

      Many people want to give to charitable organizations when they die. You might have a favorite charity, educational institution, hospital, or church that you want to support. You can’t take it with you, so you may as well do some good with it, right? If you do plan to give to a qualified charity, the smartest thing to give them is your IRA. A traditional IRA (not a Roth IRA) is composed of pre-tax income. By holding the funds in your IRA you can put off paying taxes on any of it until you turn 70½, but you still have to pay income taxes on every dollar you pull out.

      The great thing about charities, however, is that they are exempt from incomet taxes. Smart planners who want to give to a charity give from their IRAs, because the charities can take all the money and not pay a dime in taxes. For example, suppose you have an IRA worth $500,000 and other investments worth $500,000. Congratulations—you’re a millionaire. You could give your investments to your church and your IRA to your son. The church would get $500,000 but your son would get an account worth much less after he’s paid taxes on it, especially if he decides to withdraw it all at once, rather than stretching it out (see above). However, if you’re smart, you’ll give the investments to your son and the IRA to the church. The church still gets no less than $500,000 because the church pays no income taxes, and your son gets $500,000 in investments he can spend right away.

      It’s very smart to give your IRA to a charity, but be careful. It only works if your charity qualifies as tax-exempt by the IRS. And you want to give the whole account directly to the charity, taxes and all, rather than making taxable distributions to yourself and then giving the money to the charity.


Four- Split it Up

      If you want to leave your IRA to more than one person, or to a trust for the benefit of more than one person (more on that in a minute), then you should split up the account. If you don’t do it carefully, then an IRA left to John and his son John Jr. will use John’s life expectancy for both beneficiaries. The way the IRS regulates inherited IRAs, you have to take bigger distributions the closer you are to death (which according to the IRS is age 85). Since John is older, his life expectancy is shorter than Junior’s, so John’s mandatory distributions will be bigger. That means fewer funds stay in the IRA tax-deferred, and the tax benefit to John Junior is reduced.

      However, if you intentionally split the IRA into two accounts at death, one for John and one for John Junior, the separate accounting rule allows them to each use their own life expectancy for required minimum distributions. So John Junior can take substantially smaller distributions than his father, leading to overall tax savings for the family. A smart planner makes sure the account gets split between multiple beneficiaries to maximize tax savings. 


Five- Use a Trust

      Sometimes it’s smartest to leave everything to your spouse. But a lot of the time, it makes more sense to use a special, qualifying trust. It’s no wonder every professional estate planner makes a ton of trusts for clients—trusts are usually the most versatile and cost-effective way to plan where and how your wealth will be distributed when you die. It’s no different when planning where to leave your IRA.       Normally, it’s not a good idea to leave your IRA to a company, as opposed to a person. The two exceptions to this rule of thumb are charities (discussed above) and qualifying trusts. As long as your trust meets certain technical qualifications to qualify as a “conduit trust,” you can leave your IRA to your turst, the trust itself is ignored for tax purposes, and your IRA passes to whomever you designate in your trust. That way, your trust doesn’t pay income taxes.       So why is it sometimes smarter to leave your IRA to a trust than to the people you want to receive it? Three reasons:

  1. Creditor protection. If your beneficiaries have debts, a trust can protect the IRA from their creditors. Even in bankruptcy, where IRAs are usually protected, inherited IRAs are not. A trust can keep the money safe.

  2. Family complications. If you leave your IRA to your spouse and your spouse gets remarried to Jacque the pool boy, there’s nothing to stop Jacque and his kids from getting your IRA. A trust can be designed to keep the funds in your family, even if your spouse’s situation changes.  

  3. Simplicity. If you’re smart, you’re already setting up a trust to govern how your wealth is to be distributed, so why wouldn’t you want your IRA handled in the same way, as part of the same plan?

        Whenever you are planning for your future and finances, it is important to have the help of competent professionals. Contact an attorney for personalized advice and documents to get the most out of your IRA. 


Joseph D. Fairbank at 2:03 PM No Comments | Post a Comment
Estate Planning
Wednesday, July 27, 2016

Beard St. Clair Gaffney Welcomes Joseph D. Fairbank

Beard St. Clair Gaffney is pleased to announce the addition of associate Joseph D. Fairbank. Joseph’s practice focuses on estate planning and business formation and succession. A native of southwestern Montana, Joseph earned his bachelor’s degree in English from Brigham Young University in 2010. He then attended the prestigious University of Virginia School of Law. In law school, he served on two law journals, the Virginia Tax Review and the Virginia Criminal Law Journal. Joseph began his legal career in southwestern Montana, working in a general practice setting with some emphasis in Montana water law.

Staff at 9:58 AM No Comments | Post a Comment
Friday, July 15, 2016

Another fun year participating in EITC's Great Race for Education

A great cause and a lot of fun! Thanks to our runners Michael Brown, Jarin Hammer, Julie Stomper, and Paul Graslie for your heroic efforts. Also, a big thanks to our team captains Greg Calder and Kurt Krupp.
Staff at 9:08 AM No Comments | Post a Comment
Friday, July 1, 2016

Be Sure to Know Your GMOs

There has been a lot of news lately on genetically modified organisms (GMOs), but what exactly are GMOs?
The USDA defines genetic modification as the "production of heritable improvements in plants or animals for specific uses." In short, genetic engineering transfers specific traits, or genes, from one organism into another.
How extensive are GMOs in farming? Soybeans provide a good example. In 1997, herbicide-tolerant soybeans were planted on 17 percent of acreage. That figure has jumped to 94 percent in 2015.
The potato industry is following suit. J.R. Simplot hopes to have a variety resistant to the Irish potato famine pathogen ready for commercial production by 2017.
Many wonder, with such explosive growth what is the government doing to ensure these crops are safe?
Genetically modified crops fall under the offices of the USDA, EPA and FDA. These agencies have shared responsibility to make sure crops are safe. The USDA's Animal and Plant Health Inspection Service tests to make sure GMO crops do not pose a "plant pest risk" to the environment through field trials and certification programs. The EPA's Biopesticides and Pollution Prevention Division checks to make sure that pesticide resistant plants are tested and fall within tolerance limits. The FDA then tests the food or feed to make sure it is safe for human and animal consumption.
The state of Idaho also places restrictions on GMO crops entering the state. The Idaho Department of Agriculture maintains a database of USDA-approved GMO crops that have entered the state. The law requires that people wishing to bring GMO crops into the state to first obtain a permit.
Botton line, Idaho farmers are using GMOs to compete in today's market. Check the law and obtain a permit before bringing new GMOs into the state.
Lance J. Schuster at 12:26 PM No Comments | Post a Comment
Friday, June 10, 2016

What To Do With a Neighbor's Tree

The neighbor's tree branches come across the property line. The suckers from their poplars are coming through the lawn. Their leaves seem to fall in your yard, but not theirs. What is a landowner to do?
Idaho adopted the common law of England when it became a state. The common law is that part of English law derived from judicial precedent, rather than statutes.
Under the common law, a property owner could cut off at the property line the limbs of a tree that are on a neighboring property. If the roots of a tree penetrate neighboring land the neighbor may dig them out. However, a property owner has no duty to prevent the limbs or roots of a tree from crossing over onto an adjoining property.
When trees are located on the boundary between adjoining property owners, they are treated as being jointly owned by the property owners. If the adjoining property owners cannot agree on the trees, a property owner may still bring a nuisance action if the trees constitute a threat or pose a potential harm.
For example, a tree on a common boundary whose roots exert sufficient pressure on a home's basement walls to push the walls inward may be entitled to remove the tree at their own expense since it is a nuisance. Lemon v. Curington, 78 Idaho 522 (1957).
As for the leaves - you get to rake them whether they are yours or the neighbors!
Lance J. Schuster at 11:11 AM No Comments | Post a Comment
Friday, May 6, 2016

Coming up: The Transport Rule

Almost all food that we buy in the grocery store is transported either by truck or rail.  The Food Safety Modernization Act (FSMA) will soon require that vehicles and transporation equipment be suitable and cleanable to assure the safe transport of food. 

This new transport rule applies to shippers, receivers, loaders and carriers who transport food in the United States by truck or rail.  It also applies to shippers in other countries who ship food to the United States.  The transport rule establishes requirements for vehicles and transportation equipment, transportation operations, records, training and waivers.

Measures that must be taken to assure the safe transport of food include adequate temperature controls, preventing contamination of ready-to-eat food from touching raw food, protection of food from contamination by non-food items in the same load or previous loads, and protection of food from cross-contact with food allergens.

Shippers, receivers, loaders and carriers will require training in sanitary transportaiton practices, and documentation of the training. 

Transportation activities performed by a farm are excluded by the transport rule.  In other words, transporting grain from the farm in a truck, or live animals to a sale, will not reuiqre compliance with the transport rule.   However, farms are still subject to other rules that prohibit the holding of human food under insanitary conditions.

Companies that ship food, or carriers of food, should be aware that the entire food chain is changing with an emphasis on avoiding hazards that may lead to unsafe food.

Lance J. Schuster at 11:08 AM No Comments | Post a Comment
Friday, April 1, 2016

Pink Diesel: For Farm Use Only

We have come a long ways from the days when our grandfathers used horsedrawn plows and wagons.  We still rely on horsepower to get our farming done, but it is the motorized horses that plow the ground, harvest the wheat, and bale the alfalfa.  Most of our tractors, combines, and swathers are powered by diesel engines.

Under the law unlicensed farm vehicles that are not used on public roads may use dyed diesel, also known as farm diesel.  Dyed fuel is exempt from state and federal fuel taxes and is cheaper than diesel fuel purchased at most fuel stations.  (The state tax on diesel is 32 cents per gallon and the federal tax is 24.4 cents per gallon).

Dyed diesel fuel often looks pink or red due to the added dye used to distinguish it from regular diesel fuel.

It is illegal to used dyed diesel fuel in licensed trucks or automobiles that drive on public roads.  Since fuel taxes are used to build and maintain roads, illegal use of dyed fuel denies the government of taxes needed for roads.

It is a misdemeanor to improperly use dyed diesel fuel.  In addition to criminal penalties, there is a civil penalty of $250 for misusing dyed diesel.  A second offense will cost $500, and $1,000 for each offense thereafter. 

The Idaho legislature is currently considering increased enforcement actions to catch those who may be breaking the law.

Be aware of the law when fueling up your truck or tractor, and know when you can use pink diesel.


Lance J. Schuster at 11:04 AM No Comments | Post a Comment