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NOTES
and Updates - FALL 2003
"There
is a harmony in Autumn, and a luster
in its sky."
Governor Gray Davis found a way to bring more money into the California budget without "raising taxes." His 2003 Budget Act, signed into law on August 2, 2003, raised court fees dramatically! In addition, there are add-ons by each county to pay for such things as court reporters. Fees for probates, some trust petitions and conservatorships have seen the greatest increases. The filing fee for a conservatorship in Santa Clara County is now $249.50, with an initial (required) investigation fee of $740.00. The fees for probate actions and some trust actions are now set up on a sliding scale, depending upon the size of the estate. For estates valued at less than $250,000.00, the filing fee in Santa Clara County will be $249.50, but as estate size increases, so does the filing fee. Estates valued between $750,000.00 and $1,000,000.00, for instance, will pay $596.00 in filing fees, and estates over $3,500,000.00 will pay $3,500.00 plus 0.2% of any amount over $3,500,000.00. Don't forget that these fees are in addition to publication costs (which now run on the average $350.00), appraisal fees and, of course, attorney and executor fees. Given the substantial increase in fees, we have to wonder about equal access to the courts and the problems advancing such fees can pose to those who are least able to afford them. Federal Law Changes IRS Regulations Final regulations for required distributions from retirement plans were published by the IRS on April 17, 2002. These regulations took effect for distributions beginning on January 1, 2003. While these new regulations are considered a vast improvement over the previous 2001 and 1987 proposed regulations, there still remain traps for the unwary. Simply naming a beneficiary on the form your plan administrator places before you is no longer enough. Specific rules are now in place in order to qualify the beneficiary you have named as a "designated beneficiary" to gain the best income tax advantages under the plan. Failure to understand these complex rules can create unfortunate income tax results for your beneficiaries. In our client seminar on November 13th, we will be explaining the rules and the outcome of naming different persons, trusts and charities as your beneficiary. We hope you will join us to learn more about this very important topic. new Laws/Client Alerts New Tax Scams Tax scams seem to be part and parcel of American life these days. One of the most recently conceived scams is aimed directly at family members of military personnel. It involves unscrupulous (and apparently unpatriotic) con artists who telephone unsuspecting parents, spouses and other relations of service men and women for the purpose of misrepresenting themselves as IRS agents. The devious callers indicate that all relatives of individuals serving in the Armed Forces are entitled to a $4,000 tax refund based on that service. A credit card number is then requested to supposedly cover a $42 fee for postage, but the caller in fact uses the number to make numerous unauthorized purchases. The IRS warns that no matter how convincing these callers may sound, genuine IRS employees do not ask for credit card numbers or request fees for payment of a refund. A second scheme features an e-mail that appears to be from the IRS and includes links to a rather convincing replica of an IRS Internet web page asking for personal and financial information. Of course, identity theft is the object, so it is important to remember that the IRS does not solicit sensitive personal or financial data by e-mail. In a third trick, swindlers mail out fictitious bank correspondence by mail, enclosing phony IRS forms in an attempt to obtain personal data. Don't be fooled! Again, genuine IRS forms will rarely ask for sensitive personal and financial information, except in very special circumstances. The Treasury Inspector General for Tax Administration is reviewing all three frauds and requests that taxpayers who encounter any of these scams contact TIGTA by calling 1-800-366-4484, faxing a complaint to 202-927-7018, or writing to PO Box 589, Ben Franklin Station, Washington, D.C. 20044. New Nigerian Money Con Small business owners are being victimized in large numbers by a new variation on the Nigerian money cons that have been so prevalent in recent years. In this version, an overseas buyer indicates that because it is hard to send money from a Third World country, he will need some minor assistance from the business owner. He goes on to explain that he has a friend in the United States who owes him money, and that his friend has agreed to send a check to cover the cost of purchase. Of course, no matter what the product, the check received is always more than the purchase price. The retailer is then asked to bank the check, keeping the money owed him for merchandise and refunding the balance to his Third World purchaser. Here's the catch: The original check sent to the victim is fraudulent, but the forgery is so expert that it takes weeks for the retailer's bank to identify it. Once the identification is made, the bank debits the victim's account for the full amount of the bad check. By then, he has already "refunded" money to the con artist, usually thousands of dollars, and is left without recourse. Susan Grant, Director of the National Fraud Information Center/Internet Fraud Watch in Washington D.C. offers this advice: "If the buyer is asking you to wire some of the money back to them, it's a scam. Don't do it! There is no reason for someone to pay you in a way that requires you to wire money back to them." The CARE program was created by the California Public Utilities Commission to help consumers pay their energy bills. Those who qualify will receive a 20% discount off their gas and electricity bills each month. To qualify, the total yearly income for a household of one or two must be $22,600 or less; and, for a household of three, it must be $26,600 or less. To get a CARE application, call your gas or electric company at the phone number on your bill or call Pacific Gas and Electric Company at 866-743-2273. We spend a lot of time covering the topic of Elder Fraud, and our ongoing concern is a direct result of the size and severity of this problem in our society. Did you know that identity theft of the elderly went up over 200% between 2000 and 2001 and continues to rise each year? Are you aware that 25% of the elder fraud cases prosecuted involve perpetrators who are complete strangers to their aging victims? These criminals are responsible for telemarketing scams, home repair scams, annuity scams, e-mail scams, sweetheart scams, and more. In fact, there appears to be no limit to their cunning and corruption. Identifying these and other scams can be difficult, and the elderly are particularly vulnerable. After all, con artists are by definition persuasive, and they are usually quite skilled at what they do. While pretending to be concerned and well-meaning, they prey upon emotions and manipulate their prey into making decisions which are not in their best interest. Fortunately, most fraudulent schemes do utilize some rather predictable gimmicks which can help a potential victim identify them in advance and avoid being duped. They are as follows:
There are also seven warning flags family members can watch for which might indicate their elderly relative is being defrauded: 1. Frequent calls during family visits from callers offering money-making opportunities or seeking donations. In the event you suspect your elderly relative is being taken advantage of by an unscrupulous scam artist, show empathy rather than blame. Let your loved one know he is not alone in being fooled by these individuals, and help him find ways to protect himself. Underscore the criminal nature of elder fraud, and explain the swindler's true motivation. Suggest a change of phone number, and use "do not solicit" lists where available. Remember, forewarned is forearmed, and you can empower your elder to protect himself against the growing epidemic of elder fraud. back to top |
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