Hunt & Associates, PC

Estate Planning Checklist

Charles Ford — Thu, 11 Aug 2016 23:30:48 +0000

The words “estate planning” can evoke a wide variety of reactions. To some folks, the words are an unpleasant reminder of death’s inevitability, triggering anxiety and the all too understandable tendency to avoid the subject altogether. To others, those of a perhaps more sanguine disposition, the subject might merit consideration but only by “people with money”; i.e., not them. Still others, who have taken prudence to heart and already made a will, the subject may evoke an attitude of “been there, done that” and be of no further concern. All of these attitudes, while understandable, are shortsighted at best and could leave your loved ones in a very undesirable position should you die unexpectedly.

Any professional estate planner can recite for you the importance of having such a plan and the reasons for updating it every few years. In our experience, however, most people prefer to form their own conclusions after a period of self-reflection rather than being told by some well-meaning professional as to what they ought to do. So, rather than our telling you how important an estate plan can be, we suggest you ask yourself just a few short questions on the subject by completing a brief questionnaire for that purpose. You can review the questionnaire on your own or, better yet, with your spouse or partner. As you consider your responses, we recommend you give some thought as to what you would want your loved ones to do in the event you are no longer with them and what you need to do now in order to prepare them for such a possibility.

ABLE Accounts Can Be a Game Changer for People with Disabilities

Charles Ford — Thu, 04 Aug 2016 16:11:33 +0000

We have previously told you about recently enacted federal legislation, the Achieving a Better Life Experience Act of 2014 (the “ABLE Act”), which allows persons with disabilities to establish tax favored savings accounts which can be used to pay for expenses related to their disabilities.

A recent article highlights the dilemma faced by people with disabilities who can be disqualified from government benefit programs on which they rely, such as Medicaid or Supplemental Security Income, if they accumulate more than just a few thousand dollars through part time employment or by accepting cash from family or friends. As the article illustrates, ABLE accounts provide a way around this dilemma.

While only a handful of states have actually begun offering ABLE accounts, some of those states allow nonresidents to participate in their programs. ABLE accounts can make it easier for people with disabilities to accumulate a financial nest egg for the future without compromising their eligibility for the government programs on which they rely.

For additional in depth information, please see our previous blog posts: “ABLE Accounts: A New Savings Account for People with Disabilities” dated Jan 15, 2015; and, “Almost ABLE: An Update on Savings Accounts for People with Disabilities” dated July 16, 2015.

You May Not Be Guilty but We’ll Keep You in Prison

Lawrence Hunt — Wed, 03 Aug 2016 18:35:32 +0000

In a recent case the Oregon Court of Appeals held that just because it appeared that the petitioner was not actually guilty of the crimes to which he pled guilty, there was no reason to let him out of prison before he had served his full term.

In the case, Hardin v. Popoff, 279 Or App 290 (2016), the petitioner had pled guilty in 2007 to four counts of encouraging child sexual abuse based on allegations that he had possessed or controlled images of child pornography because there was evidence that he had viewed, but not knowingly stored or saved such images on his computer. In 2011 the Oregon Supreme Court decided that merely viewing an image of child pornography on the internet did not constitute the crime of possession or control of images of child pornography. Shortly after that decision, petitioner filed for post-conviction relief claiming that he could not have known that the courts would rule that his conduct did not constitute a crime when he pled guilty.

The Court of Appeals affirmed the Circuit Court decision in 2014 that the petitioner should have challenged the charges against him before pleading guilty or within two years of his conviction. Even though the Supreme Court’s ruling in 2011 was “new law”, the courts held that his claim was barred by the two-year statute of limitations on post-conviction relief petitions.

In other words, you might not be guilty but we’ll keep you in prison because we can. All in all, the holdings of both the trial and appellate courts seem patently unjust. The fact that the petitioner has spent five years litigating whether he should remain in prison for conduct which was not criminal does not reflect well on the attorneys for the state or on the courts.

For the Best Price, Steal It!

Lawrence Hunt — Tue, 02 Aug 2016 21:14:42 +0000

We’re all familiar with those signs in retail shops selling fragile items that say, “If you break it, you buy it.” No one protests that rule or insists on a discount to the wholesale price the store paid to acquire the item it was selling. After all, when the item was broken the store not only lost what it had paid for the broken item, but also for its overhead, display, promotion of that item, compensation of employees and its anticipated profit from the ultimate retail sale to a customer.

Everyone implicitly acknowledges that the retail price fairly compensates the retail seller for its loss of a broken item of inventory. Everyone, that is, except for the Oregon Supreme Court.

That Court has now announced its decision in State v. Islam, 359 Or. 796 (2016) that Oregon courts should disregard the common sense proposition that when someone steals or breaks goods that are for sale at retail, the retail price is presumptively the measure of all of the seller’s economic damages. Instead, the Oregon Supreme Court has held that a thief convicted of stealing goods from a retail store should presumptively only pay the store’s wholesale cost to buy the items the thief has stolen and kept. Court said that the victim is not entitled to any additional damages unless it takes the time and makes the effort to produce evidence that its damages exceeded its wholesale cost.

In short, the Court has decided to put the burden on the victim to prove its economic damages exceeding its wholesale cost of the stolen product from any theft. The thief, who intentionally steals the goods, will thus often get a greater discount than seems fair and a far better price than someone who inadvertently breaks the same item in the store.

You Can’t Kill the Cow to Get More Milk – Oregon’s Measure 97 and the Destructive Impulse to Over Tax

Lawrence Hunt — Wed, 27 Jul 2016 21:33:57 +0000

Winston Churchill described the art of intelligent taxation as knowing how to keep the cow healthy and alive so as to maximize its milk production. The prime directive of good policy is to not kill the cow. If the cow dies, there’s no more milk. Without the milk of tax income, government can’t live. In Oregon the cow’s health, if not its life, is now in peril.

Unfortunately, government’s insatiable appetite often tempts it to forget the cow’s wellbeing and to focus only on taking as much milk as it can see at the moment, even if the effort is more than the cow can survive. Public employee unions and their affiliates are promoting an initiative proposal on November’s general elections ballot, Measure 97, to enact a 2.5% gross receipts tax against all Oregon companies with more than $25 million in annual sales.

If the measure passes, any corporation making more than $25 million per year in sales will pay 2.5% of its total sales in tax over and above what it already pays in other state and local taxes. It may be the largest such tax in the Nation. Although the proponents claim that the proceeds from this tax might be used to advance a multitude of seemingly worthwhile programs, there are no restrictions on how those proceeds are spent.

Emily Powell, owner of Powell’s Books in Portland, explains in a recent interview with the Portland Tribune how this tax threatens her business and other businesses in Oregon and how, at best, it will seriously damage, if it does not kill, her business.

Ms. Powell points out in the interview that, even though styled a tax on business income, the gross receipts tax will increase the cost of living for every Oregonian who pays for electricity, phone, food, clothes, books, and other daily living expenses in the state. As she also notes, passage of the measure would almost certainly cause Powell’s, like many other employers, to reduce the number of employees and to constrict the level of service they offer.

In other words, it’s another instance of the old truism that businesses don’t pay taxes, people pay taxes. The businesses that pay the tax will pass the tax along to their customers who will then pay more to purchase goods and services to pay the tax. Yet those individuals who ultimately pay this “corporate tax” will have less to pay for the goods and services which businesses sell and so will purchase less so sales of goods and services will decline. There will also be fewer workers in the private sector earning money to buy goods from private businesses and also fewer workers in the private sector to support the continuously growing number of public employees who will be looking to this tax for income and benefits.

In short, any additional income the state might receive from enactment of Measure 97 could well seriously injure if not kill the tax revenue which now supports all of the state and local governments. Measure 97 thus threatens to hurt if not kill the cow that gives our government the milk it feeds on. As Churchill noted, that is not a good idea.

New Rules Will Entitle Many “White Collar” Workers to Overtime Pay

Charles Ford — Tue, 19 Jul 2016 17:14:05 +0000

The U.S. Department of Labor (DOL) has issued new rules governing overtime pay which will automatically extend eligibility for overtime pay to an estimated 4.2 million workers. Under the new rules, which will take effect on December 1, 2016, most salaried workers earning less than $913.00 a week ($47,476.00 annually) will be entitled to collect overtime pay. This newly prescribed salary level is more than double the current amount ($455.00 per week or $23,660.00 per year) at which workers generally are considered exempt from the overtime rules.

A brief summary of the Fair Labor Standards Act (FLSA) is useful in understanding what is going on here. The FLSA mandates that employers pay their employees at least the federal minimum wage (currently $7.25 per hour) for all hours worked and overtime pay at the rate of 1.5 times their regular rate of pay for all hours worked in excess of 40 in a work week. Certain categories of employees are exempted from coverage under the Act, including doctors, lawyers and teachers. In addition, the FLSA exempts from coverage employees who are engaged in an “executive, administrative or professional capacity”. Such workers have been historically referred to as “white collar workers”. The Act itself, however, does not define the terms “executive”, “administrative” or “professional”, leaving it to the DOL to issue regulations defining the scope of these exemptions.

The current DOL rules require that an employee meet each of the following three tests in order to fall within the white collar exemption: (1) he/she is paid a predetermined and fixed salary that is not subject to reduction for the quality or quantity of work performed (the “salary basis test”); (2) the amount of the employee’s salary meets a minimum specified amount (the “salary level test”); and, (3) the employee’s duties involved executive, administrative or professional duties, as defined in the DOL’s regulations (the “duties test”). The recently issued rules impact the second of those tests, the “salary level test”.

So, beginning December 1, when the new rules take effect, most of the white collar workers earning less than the “standard salary level” of $913.00 per week will be entitled to overtime for hours worked in excess of 40 in a given work week. That will be the case regardless of whether these employees meet the other two tests for the white collar exemption. This standard salary level was determined in accordance with the 40^th percentile of earnings of full time salaried workers in the lowest wage region in the country, currently the South. The standard salary level will hereafter be subject to adjustment every three years, again, by reference to the 40^th percentile of full time salaried workers in whatever is then the lowest wage region in the country.

Employers will be allowed to use non-discretionary bonuses and incentive payments (such as commissions) to satisfy up to ten percent of the standard salary level, provided these payments are made on a quarterly or more frequent basis.

Lastly, the new regulations also impact those who are considered to be “highly compensated employees” (HCE) under the Act. Currently, employees whose annual earnings are $100,000.00 or more are generally exempt from the overtime rules, even if they don’t meet the “duties test.” When the new rules go into effect, the applicable dollar amount to qualify as an HCE will increase to $134,004.00.

The DOL estimates that approximately 4.2 million workers who are currently considered exempt under the FLSA will become entitled to overtime in the first year of implementation of these new rules. That number is expected to swell to more than 5 million workers within ten years of implementation. An additional 65,000 HCEs are estimated as being eligible for overtime in the first year following the rules change, with 200,000 being affected within ten years.

Clearly, many employers will be impacted by these changes and employers are well advised to become knowledgeable to how these new rules will affect their payroll practices.

Our Slowing Roads – The War against Our Cars

Lawrence Hunt — Tue, 28 Jun 2016 17:45:56 +0000

Have you ever wondered why the streets and roads seem increasingly clogged, the traffic more and more congested? Did you ever wonder if the City just doesn’t want to ever fix the potholes no matter how much money it has to spend on art, bike paths, employee perks and bridges for every means of travel except the cars we actually use most? In fact, streets and roads are regularly redesigned to impede the flow of auto traffic even along the most vital thoroughfares.

As John Charles of the Cascade Policy Institute briefly explains here, those who know what’s best for us are doing what they can to nudge us out of our vehicles through a quiet campaign of subtle obstruction for which they’ve found plenty of money.

Strangely, it’s considered somehow “progressive” to promote walking, a means of human movement older than recorded history, and bicycles, a 19^th Century technology, at the cost of the still improving automobile which is both economically and socially fundamental to our way of life.

Oregon: One State, Two Minimum Wage Rates

Lawrence Hunt — Tue, 28 Jun 2016 17:28:56 +0000

Beginning July 1, 2016 Oregon has two different minimum wage rates depending on where in the state an employee works. Here is the link to the Oregon Bureau of Labor and Industries (“BOLI”) summary of which minimum wage rate must be paid where in Oregon.

Protect Yourself with a Power of Attorney

Charles Ford — Thu, 16 Jun 2016 21:09:16 +0000

Most people probably associate the words “guardian” and “conservator” with individuals who are appointed by a court to assist someone else who is, for any number of reasons, incapable of managing life on his or her own. Indeed, we have established court proceedings in which a judge can appoint a guardian to oversee and protect the wellbeing of a minor or an adult who is incapacitated because of some physical, mental or emotional disability. Likewise, a judge is empowered to appoint a conservator to preserve and maintain the financial resources of someone who is or has become incapable of managing such resources on his or her own. Guardianships and conservatorships are types of protective proceedings; i.e., they are designed to allow a court appointed fiduciary to protect the interests of one who is unable to do so himself.

A recent and disturbing story in the news, however, illustrates how an appointed guardian/conservator can abuse her authority and wreak havoc in the lives of those she promised to protect. This happened when a local court, on the recommendation of state and federal agencies, appointed a guardian/conservator for almost two dozen disabled military veterans. Over the course of several years, this fiduciary diverted more than $100,000.00 to herself; money which was earmarked for the use and benefit of those veterans. Eventually, a few years after her appointment, this miscreant received her comeuppance and was sentenced to prison and ordered to make restitution, but only after leaving wreckage in the lives of those veterans and their families.

Sadly, the fact that a court appoints a conservator or guardian and thereafter requires periodic reports of his/her activities is no guarantee that the interests of the protected person are being safeguarded. So, you might ask, how does a vulnerable individual protect oneself against the proverbial wolf in sheep’s clothing? A well designed power of attorney (“POA”) can provide you more protection than even the most well intentioned judge. You can accomplish that by designing your own “incapacity plan” in which you designate someone else (your “agent” or “attorney in fact”) to act on your behalf, should you become incapacitated, in accordance with specific instructions that you prescribe. A POA can be as general or specific as you make it. It is flexible; it can take effect immediately or, if you choose, only upon the occurrence of some future event. In the latter case, the POA is sometimes referred to as a “springing Power of Attorney”. You can revoke or revise your POA at any time.

With a family member or trusted friend acting on your behalf under a well-designed POA, your interests can be protected without having to incur the costs and suffer the delays of a guardianship or conservatorship proceeding. Your incapacity will remain a private fact and not be a matter of the public record. Your attorney-in-fact will likely be more attuned to acting in accordance with your stated wishes than a judge who has never met you and is unable to devote the necessary time to ascertain what you would want done during your incapacity.

Protect yourself with your own incapacity plan by means of a durable power of attorney. It should be included as part of your overall estate plan.

When the Government’s Production of “Laws” Exceeds Its Ability to Digest Know What It Has Produced

Lawrence Hunt — Mon, 13 Jun 2016 18:21:46 +0000

Congress often delegates its legislative authority to administrative agencies which exercise that authority to revise, interpret and define legislation. The increasing volume of such administration has caused one federal circuit court to note that even the government agencies were apparently incapable of knowing what their own “law” is.

One recent case the appellate court panel noted took the court,

“. . . to a strange world where the government itself – the very ‘expert’ agency responsible for promulgating the ‘law’ no less – seems unable to keep pace with its own frenetic lawmaking. A world Madison worried about long ago, a world in which the laws are ‘so voluminous they cannot be read’ and constitutional norms of due process, fair notice, and even the separation of powers seem very much at stake.”

Not surprisingly, the case, Caring Hearts Personal Home Services, Inc. v. Burwell, 2016 U.S. App LEXIS 9790 (10^th Cir. May 31, 2016), concerned Medicare services supplied by a provider in 2008 which likely complied with the applicable rules and regulations then in effect. Instead, the Centers for Medicare & Medicaid Services sought to apply much more stringent regulations that the agency had only adopted several years later.

Eugene Volokh’s discussion of the case is here.