Author Archives: mcchesneydale

About mcchesneydale

Attorney at Law

What is an Employer Identification Number (EIN)?

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Author: Victoria Chan-Pablo

What is an EIN? An EIN, short for Employer Identification Number is a tax identification number you may apply for through the IRS website. An EIN generally needs to be issued for the administration of an estate for purposes of opening up an estate bank account. An EIN would also need to be obtained if you are establishing a business entity for purposes of tax filings and/or opening up bank account for the business.

The offices of McChesney & Dale can help you obtain your EIN. If you would prefer to file the application for an EIN yourself, the IRS has an online application available. Check out the IRS website for more information on EIN’s.

Flexibility of Bequests to Minors

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Author: Denise Martin

Maryland law provides great flexibility to individuals seeking to leave assets to minors or young adults after death. Generally, assets cannot be titled solely in a minor’s name, and further, many minors and young adults do not possess the fiscal responsibility to be entrusted with valuable assets. So what should a parent, aunt, uncle, grandparent or family friend seeking to pass assets to a minor upon their death do?

One option available is to include a simple bequest in a will or trust document to a minor under the Maryland Uniform Transfers to Minors Act (UTMA). Typically, a parent of the child serves as the custodian of the account until the child reaches age 21. However, that property typically becomes the minor child’s outright at age 21, which may be sooner than one would prefer.

Another, more flexible option available is the use of a trust established in one’s will (a “testamentary trust”) or other estate planning document, such as a revocable trust agreement. A trustee is appointed to oversee the trust on the child’s behalf and to make disbursements. The individual creating such a trust has the ability to determine at which age or ages the child should receive the asset outright. For instance, the trust creator may want to delay the minor’s receipt of the asset until age 25 or allow for graduated disbursements (e.g., 50% at age 25 and 50% at age 30). Others may wish to incentivize life achievements by limiting disbursements based on accomplishments, i.e., graduation from college. Limitations can also be placed on what disbursements may be used for, i.e., for educational purposes, for the purchase of a home, etc. The possible structure of such a trust is so flexible that the options are virtually limitless.

Estate Planning for Young Adults

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Author: Shameka Sterling

Estate planning, which includes wills, power of attorneys, living wills, etc., is a very important life process and helps families prepare for difficult or unexpected scenarios. These documents provide instructions to our family and the court as to what we want to happen in certain situations.

In general, young adults may think that estate planning is just for older or wealthy people. They do not understand that you do not have to have significant assets or be elderly to start preparing. They may not understand the importance of these documents because they do not know exactly what the documents are or what they mean.

While young adults may not think about estate planning, it is just as important for young adults, especially those who have children or may be heading off to college, to consider this issue as it is for their parents. As our lives get busier and more complicated, estate planning becomes increasingly important.

Last Will and Testament: A will states who will receive your assets, assume guardianship of your children or pets, and more. For example, if you have a treasured piece of jewelry or a prized model car collection that you wanted your sister to have, your will would provide for this.

General Durable Power of Attorney: A general durable power of attorney appoints someone you trust, such as a family member, to make financial and legal decisions on your behalf. This document can be used to allow the person you appoint to make these decisions in the event that you cannot make them on your own. It is not only for use in the event of your incapacitation. For example, if you travel for vacation or are away at college, this person can act on your behalf as your agent.

Living Will and Advance Medical Directive: A living will, or health care directive, lets you set specific medical wishes in a case where you may be alive but unable to speak for yourself. It allows you to specify your preference for any and all pain medications, life support, medical procedures, etc., if you fall terminally ill, into a vegetative state, or into a coma.

While it may be difficult to think about these topics, we cannot predict or control the future. Every family’s legal needs are important, but perhaps the most important step is starting the conversation. Speak with the young adults in your family about preparing their estate planning documents.

If you or any of your loved ones have any questions about the process of preparing or about the documents themselves, please give the attorneys at McChesney & Dale a call at (301) 805-6080.

Tax Planning with Respect to Disability Insurance

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Author: Charles F. Fuller

No one wants to become disabled, but when a disability arises that prevents you from working, the existence of disability insurance could provide you with an income stream during the period of disability. Often, people are provided short term and long term disability insurance coverage through their employment as part of their employee benefit package. Other times, people purchase individual disability insurance policies. Under either scenario, it is helpful to consider the tax effects of such disability coverage at the time that you obtain it and before you become disabled.

For individual policies where premiums are paid by the policyholder, the premiums are usually paid with after-tax dollars and therefore any disability benefits that you receive under the policy are not taxable for federal or state income tax purposes. This is rather straightforward and does not require much tax planning.

In situations in which an employee is provided disability coverage through employment, the employee should inquire with the employer regarding the tax consequences of this employee benefit should you be required to use it. In other words, you should ask your personnel or human resources department if there is a way to ensure that benefits you may receive as a result of disability under this policy can be received free of any income tax liability. Some employers have thought about this issue prior to implementing their employee benefit plan, while others have not. As a general rule, if the disability insurance premium is paid after being deducted from the employee’s paycheck (after tax dollars), any resulting disability benefits received should be free of tax. If the premium is paid with pre-tax dollars, either from a cafeteria plan[1] or deducted from your pay by your employer before taxes are deducted, any disability benefits received will most likely be taxable. If you have disability coverage, you should investigate now whether there is a way to ensure that your benefits would be free from income tax liability if you become disabled and receive benefits. It is important to investigate and plan for this contingency before you become disabled to determine if you can have greater resources (through tax-free disability benefits) should you become disabled.

[1] A cafeteria plan is an IRS-approved reimbursement plan which allows employees to contribute a certain amount of their gross income to one or more designated accounts before payroll taxes are computed. The account(s) can be used to pay for insurance premiums, medical and/or dependent care expenses not covered by insurance.

Trying to Write Your Own Will May Result in Undesired Consequences

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Author: Charles F. Fuller

Most of us put off estate planning because it deals with circumstances we do not wish to think about. However, failing to address how you wish your assets to be distributed upon your death could lead to unintended consequences. A recent case in our office provides a good example why you should not delay having a will prepared.

We were recently retained to represent clients who were named as beneficiaries in the will’s residuary clause, or the clause that disposes of the remaining estate property after the satisfaction of any specific bequests. The will was self-authored by the decedent, who was not an attorney. The residuary clause that left the majority of the decedent’s estate to our clients was incomplete and ambiguous. The will arguably left the residuary estate to both the decedent’s grandchildren and to our clients, who were friends of the decedent. Under Maryland law, the decedent’s closest heirs were his daughters, and the next closest heirs were his grandchildren. An earlier provision of the will specifically excluded his daughters from receiving anything under his will but did not reference his grandchildren.  As a result, the personal representative of the estate petitioned the probate court to instruct him how to distribute the proceeds of the residuary estate and litigation ensued. Ultimately, the case settled, with the residuary estate being split among the decedent’s friends and his grandchildren; the wishes of the decedent were not fully accomplished, and his estate had to pay thousands of dollars in attorney’s fees. Had the decedent sought counsel in preparing his will, an appropriate will could have been drafted to carry out his wishes and save the estate the expenses associated with litigation. Further, an experienced estate planning attorney would have advised the decedent how to properly and clearly exclude certain individuals from his will under Maryland law.

A will is an important and essential document for anyone who wishes to pass assets upon their death. It should be prepared by a competent attorney practicing in the field. When done properly, the will can distribute the individual’s assets to the people of his/her choice, in accordance with any terms and conditions that the assets may be subject to, and in an economically reasonable fashion. When wills are self-authored in a legally deficient manner, or not prepared at all, extensive litigation can follow and the likely result is that much of the assets intended to be passed onto the beneficiaries are expended on unnecessary litigation. In order to avoid undesired consequences and to ensure your assets pass only to those you want to receive them, give us a call.

2014 Holiday Food Drive

McChesney & Dale, P.C.

hosts its

3rd Annual Holiday Food Drive

food drive

 

Your donations made a difference last year, now we are asking you to help us fill our boxes once again.

The holiday season is here and McChesney & Dale is sponsoring its third annual food drive from November 12 – December 19, 2014. All donations will be provided to the Bowie Interfaith Food Pantry, which will package and distribute holiday baskets to families in need.

We welcome you to join us in putting a smile on someone’s face this year by making a donation. Donation boxes will be on the first floor of the Omni building, located at 4000 Mitchellville Road, Bowie, MD 20716. The following non-perishable items will be accepted:

(Donations are not limited to those listed but please be sure that donation items are not expired.)

 

  • Canned food items

-soups                          -vegetables/fruits

-sauces                         -fish/chicken

 

  • Boxed food items

-mashed potatoes        -cake/pie mix

-stuffing                      -hot cocoa/cider mix

 

  • Packaged food items

-marshmallows            -hot cereal packets

-pasta/rice                    -snacks

 

The Bowie Interfaith Food Pantry is located at 2614 Kenhill Drive, Suite 134, Bowie, MD 20715.

 

Thank you in advance for your participation. Happy Holidays!

 

Update IRS Instructions for Reporting Employee Health Coverage

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Author: Johanna Montero-Okon

On March 5, 2014, the Department of Treasure issued final regulations on employer health insurance coverage information reporting. The information reporting relates to health insurance coverage that is offered by certain employers, referred to as applicable large employers, and reporting is to be provided by each member of an applicable large employer. A few months later the Department issued additional guidance announcing their decision to extend transition relief to employers for 2014 for the annual information reporting.

Generally, Code Section 6055(a) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs, and other entity that provides Minimum Essential Coverage (MEC) to file annual returns reporting information for each individual to whom it was provided. An entity filing an information return reporting MEC must furnish a written statement to each individual on the return that shows the information that must be reported to the IRS. In addition, separate reporting requirements that apply to “applicable large employers” are provided under Code Section 6056. The final regulations provide general and alternative reporting methods to employers that are subject to the Code Sec. 6056 information reporting requirements. Large employers, those with at least 50 Full-time employees, are required to annually report to the IRS information on the health care coverage that they offer, or do not offer, to full-time employees and to furnish related statements to their full-time employees.

On July 24, 2014, the IRS released draft forms that employers may use to report on health coverage that they offer to their employees. Specifically, Forms 1094-C and 1095-C may be used by applicable large employers in compliance with Code Section 6056. The Purpose of the forms is for ALE’s to report offers of health coverage to, and enrollment in health coverage by, their employees. The forms are also used in determining whether an employer owes payments under the Employer Shared Responsibility Rules. Both forms must be filed with the IRS by February 28 if filing on paper, or March 31 if filing electronically, of the year following the calendar year to which the return relates.

Billing Announcement

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Author: Shameka Sterling

BILLING ANNOUNCEMENT: McChesney & Dale, P.C., now accepting credit card payments

In a continued effort to improve business with our clients and to provide more convenience, McChesney & Dale now accepts credit card payments.  All major credit cards are accepted and payments can be made in our office or by telephone.  If paying by telephone, we do offer the option of having your payment receipts sent to you by e-mail or by first class mail.

To make a credit card payment by phone, please call Shameka at (301) 805-6080.  We look forward to your continued business.

Long Term Disability Success Story, Post 1

 

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Author: Denise A. Martin

McChesney & Dale has advocated for many decades on behalf of short and long term disability claimants who have been denied benefits, both through the private administrative appeal process with the insurer and federal litigation.[1] The purpose of this blog is to share a recent success story of one of our clients. For privacy reasons, we will refer to the claimant as Jill.

Jill came to our office after years of struggling with debilitating illness. She had been diagnosed with Lyme disease almost a decade prior, but despite initial treatment with antibiotics, her symptoms continued to worsen over the years. Her symptoms became so severe that she had to begin working from home and ultimately ceased working entirely. She found a Lyme-literate physician and began an intensive antibiotic regimen and other treatments. Jill’s claim for long term disability benefits was denied by her insurance company, and she submitted an administrative appeal without the assistance of an attorney. This appeal was denied on the basis of lack of medical evidence of her disability.

Jill then retained the services of McChesney & Dale to assist her with a second administrative appeal to the insurance company. Of note, Jill’s Lyme disease resulted in significant cognitive impairments (brain fog, word-finding difficulty, impaired memory, etc.), and McChesney & Dale had her undergo a neuropsychological evaluation, which provided very helpful evidence of her cognitive difficulties. This was particularly important in light of the intellectually demanding aspects of her employment in the national security field. In a lengthy appeal letter to the insurer, McChesney & Dale’s attorneys highlighted the relevant medical evidence, brought in witness testimony of Jill’s severe symptoms and inability to perform even simple household tasks, attacked the arguments of the insurer and its peer review physicians (whose opinion the insurer had relied upon to deny the claim), and introduced legal evidence that the peer review physicians were not credible.

On the basis of the evidence introduced in the second administrative appeal, the insurer overturned its previous decision to deny Jill’s benefits and sent a large check for her retroactive benefits. Though Jill’s medical condition has unfortunately persisted, such that she remains out of work, she is able to make ends meet with the much-deserved disability benefits she is now receiving.

 

 

 

 

Disclaimer: This blog is meant only to provide information about the experience of our attorneys. It is not intended as a guarantee or prediction that the same or similar results can be obtained in other matters.

 

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[1] For more information about the long term disability appeal process, please see our Long Term Disability article.