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What Is A Trust Accounting?

Uncategorized Mar 16, 2020

California law requires a trustee to account to the beneficiaries at least annually.  The beneficiaries who are entitled to the accounting are the beneficiaries who are entitled to the income and principal during the accounting period.  The trustee who established the trust (the settlor) does not have a duty to account to the beneficiaries.

The trust document can alter the trustee's duty to account to the beneficiaries.  Whether you are a trustee or a beneficiary, it is important to review any provisions related to accounting to the beneficiaries.  Even if a trust document states the trustee does not have a duty to account, this is not absolute.  The beneficiaries can always petition the court to request the court order the trustee to provide an accounting.  If the beneficiaries believe the trustee has mishandled funds it is imperative to request a trust accounting as soon as possible.

A trust accounting is part of the trustee's regular duties.  An...

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The Power of Attorney Is Taking All The Money. What Can I Do?

Uncategorized Mar 16, 2020

A power of attorney is a document allowing one person to make financial decisions for someone else who is unable to manage their own finances due to age, frail health or incapacity.  A Power of Attorney allows a significant amount of control over the finances of an elderly individual.  Because of the wide range of control over finances the power of attorney allows, there is also the potential for significant abuse to occur.

Power of attorney abuse does occur.  It is most likely targeted at the elderly who are unable to defend themselves due to their frail health (mental and/or physical).  The power of attorney document generally provides a wide range of authority to access funds, make financial decisions and control over personal and real property.  Power of attorney abuse occurs when the agent steals funds while claiming it is for the benefit of the elder.  

The power of attorney imposes a duty on the agent.  Those duties, in part,  include...

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When Are Quarterly Taxes Due in 2019?

Uncategorized Apr 16, 2019

If you have earned money that does not have taxes withheld when you are paid, you will probably need to pay quarterly tax payments.  An example is a real estate agent does not have taxes withheld when a property is sold.  The real estate agent will need to make estimated tax payments every quarter to cover their annual federal income taxes.

For the income earned in January, February and March, the estimated tax payment is due April 15, 2019.  This is the same day income taxes are due for tax year 2018.

For the income earned in April, May and June, the estimated tax payment is due June 17, 2019.  For the income earned in July, August and September, the estimated tax payment is due on September 16, 2019.  For the income earned in October, November and December, the estimated tax payment is due January 15, 2020.

If the proper amount of estimated tax payments are made, no federal income taxes will be owed on April 15, 2020.  

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What You Must Know When Responding To IRS Notice CP2000

When you receive Internal Revenue Service Notice CP2000, you wonder what has gone wrong.  Notice CP2000 is not an audit.  Notice CP2000 simply lets you know there appears to be a mismatch between the income reported on your return and the income information reported to the IRS.  

When you respond to the IRS notice you want to ensure your rights are preserved.  Notice CP2000 comes with a response form attached.  It is really easy to give away some rights when you respond unless you understand the pitfalls.  Before you simply check the box, take the time to read further.

Preserve Your Right to Dispute Your Penalties

Even if you agree you forgot to claim some income, do you agree with the penalties that are being proposed?  The IRS almost automatically adds accuracy and negligence penalties to your CP2000 Notice.  This is 20% of the tax the IRS’s tax assessment proposing and can be significant.  If you believed you made a mistake that...

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I Received IRS Notice CP2000. What Do I Do?

You received the Internal Revenue Service (IRS) Notice CP2000 because there was a discrepancy between what you reported to the Internal Revenue Service and what was reported to the Internal Revenue Service by third parties.  The IRS receives information from third parties about the amount of income you receive.  Your employer informs the IRS the amount of wages that are paid to you when your employer files your W-2 form.  If you are an independent contractor, the IRS receives Form 1099 which reflects the income you received.  If you sold a house during the year, the amount of the sale is reported on Form 1099-S.  If it appears there was income that was reported to the IRS but not reported on your tax return, the IRS will mail a Notice CP2000.

IRS Notice CP2000 outlines the discrepancy and additional taxes, penalties and interest you may owe for the missing income.  Notice CP2000 is not an audit.  It merely lets you know your file has been red...

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The IRS Just Levied My Bank Account. What Should I Do?

irs bank levy Mar 11, 2019

I received a call from a taxpayer that his bank account had been drained and his rent check had bounced.  He was surprised as he had just been paid and there should have been plenty of money to cover all of his bills.  He was sure the bank had made a mistake.  When he contacted the bank, they informed him the Internal Revenue Service had issued a levy and the bank would be sending his money to the Internal Revenue Service.  He was in a panic when he called our office.  He had just been paid and without those funds, he did not know how he would be able to get to work, feed himself or his family or pay any of the monthly expenses.  Like many taxpayers, he was living paycheck to paycheck and did not have any savings.  The levy issued to the taxpayer wiped out and left him destitute.  A bank levy is financially devastating and immediate action is required.

When a taxpayer is aware of the levy, it is important to obtain a copy of the levy from the...

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Can I Submit An Offer To The IRS For Pennies On The Dollar?

offer in compromise Feb 25, 2019

You owe the Internal Revenue Service money.  Every day you are scared that today the IRS will drain your bank account and you breathe a sign of relief every day this does not happen.  You are not sleeping as the weight of your tax problems keep you up at night.  Every time you go to the mailbox and see a letter from the IRS, your chest tightens and you are too scared to open it.  On the radio you hear an add offering to resolve your problems for “pennies on the dollar” and you are wondering if it is too good to be true.  

The simple answer is yes.  Many of my clients when I meet them for the first time have heard of these type of scam services.  The client incorrectly believes I can pick up the phone and offer the IRS significantly less than what is owed (perhaps ten cents on the dollar) and this will resolve his or her IRS tax liability.    Unfortunately, it does not work this way.  

The IRS has a special department,...

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My Father Passed Away. Am I Supposed To Receive A Copy Of His Will?

will Feb 24, 2019

Your father passed away.  In the middle of your grief, you begin to question what comes next.  You know he had a will because you remember telling you he had one.  You contact various family members and you find your brother has a copy and refuses to provide a  copy to you. 

Your brother states he is the executor and he is in control.  You again ask him for a copy of your father's will.  He again refuses.  What can you do?

As an heir at law you are entitled to a copy of the will.  It does not matter if you are disinherited or not mentioned in the will.  The will should be lodged with the Court within 30 days of your father's death.  It should be lodged in the county which he resided.  If he lived in Santa Clara County at the time of his death, the will should be lodged in Santa Clara County.  If your father only had a will, there should also be a petition to begin probate filed with the Court as well.  Check...

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10 Things California Trust Beneficiaries Must Know

Uncategorized Feb 23, 2019

If you are a trust beneficiary in California, you are the only person who can protect your rights under the trust.  Here are 10 things you must know to protect your rights as the beneficiary.

1. Know Your Trust

Read your trust as many times as you need to thoroughly understand it.  If you do not understand the trust, consult with an attorney.  The trust is what determines your rights and what you are entitled to receive.

2. Know What You Are Entitled To

Understand what you are entitled to and when you are to receive your distribution. Not all beneficial interests are the same.  Are you entitled to income, principle or both?  Are you the beneficiary of a specific gift or a residual beneficiary?

3. Ask for Information in Writing

As a beneficiary you are entitled to information regarding the trust assets and the status of the trust administration from the trustee.  You are entitled to bank statements, receipts, invoices and any other information...

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Top 10 Things California Successor Trustees Must Do

Uncategorized Jan 29, 2019

If you have been named a successor trustee of a California trust, it can be daunting.  What are your duties?  What is expected of you?  What do you do first?  How do you administer a trust? These are all great questions.  Get a copy of the trust so you know what you are administrating.  To help you out, we have compiled a list of 10 things to do for a successor trustee of a California trust.  

1. Know Your Trust

Read the trust thoroughly.  As a successor trustee, you need to understand the trust so you know what you are administering.  Not all beneficiaries are treated equally.  Some beneficiaries are entitled to distributions earlier than others.  As the trustee, you must know what is owed to the beneficiaries and how the trust works.  If you do not understand the terms of the trust or how to administer the trust, consult with an attorney.

2. Understand Your Duties and Responsibilities

In addition to the duties and...

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