The Importance of Designating a Beneficiary for a Thrift Savings Plan

Author: Charles F. Fuller

Recently, we were asked to assist a personal representative who was appointed to administer the estate of a deceased federal employee. The deceased federal employee was not married and did not have any surviving children. She had a Will that left her estate to her surviving sister. The employee had been advised to review her retirement and bank accounts and to name beneficiaries for those accounts. Unfortunately, the employee did not do this prior to her death. In fact, the deceased employee never designated a beneficiary for her Thrift Savings Plan (TSP) account. The personal representative attempted to have the TSP funds rolled over into an estate Individual Retirement Account (IRA) in order to avoid the immediate assessment of federal and state income taxes on those funds. Some TSP officials agreed that this was allowable. As the request was processed through the system, other TSP officials disagreed, and ultimately the TSP refused to roll the funds over into an estate IRA. The TSP determined that since the employee did not designate a beneficiary, only the employee’s estate was legally entitled to receive the proceeds from her TSP account. The TSP then sent a check to the personal representative made payable to the estate of the deceased employee, withholding a substantial amount of tax. The personal representative deposited the TSP check into the estate checking account. She then sought the advice of counsel.   Under the existing circumstances, it was determined that there was little, if any, likelihood of success if litigation was instituted against the TSP. As a result, the estate paid a significant portion of the TSP proceeds in federal and state income taxes.

What every federal employee should learn from the above situation is that they should review their TSP account periodically to ensure that they have designated a beneficiary to receive the proceeds of that account upon their death and further, to make sure the beneficiary designation is updated if necessary. The employee should designate a primary beneficiary and also designate a contingent beneficiary in the event the primary beneficiary predeceases the employee.

Advertisement

Flexibility of Bequests to Minors

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.

2014 Holiday Food Drive

McChesney & Dale, P.C.

hosts its

3^rd Annual Holiday 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!

 

Free Estate Planning Event in Bowie, MD

Author: Shameka Sterling

Free Estate Planning Event in Bowie, MD

 Are you a police officer, firefighter, paramedic, correction or probation officer? Are you in need of a will, advance medical directive (living will), or power of attorney?  If so, this is an event especially for you.

WHAT:           Wills for Heroes Event

WHO:             First responders: police officers, firefighters, paramedics, correction and probation officers from Federal, state, county, city and town departments and agencies

WHEN:           Saturday, September 27, 2014

WHY:             The Wills for Heroes Foundation is a non-profit organization that provides wills, advance medical directives or living wills, and powers of attorney to first responders, free of charge.  As a first responder, you dedicate your lives to helping and saving others.  This event provides an opportunity for you to ensure that your family’s legal affairs are in order before tragedy hits.

McChesney & Dale will be volunteering at this upcoming event.  To participate in this event or to learn about other upcoming events, contact the Wills for Heroes Foundation at (301) 945-9245.  For more information on the Wills for Heroes program, follow the link to their website: Wills for Heroes.

 

Please click here to return to McChesney & Dale.com

2014 Estate Planning Discount

Author: Shameka Sterling

McChesney & Dale Announces New Special Discount

McChesney & Dale, P.C., now offers a 10% discount on estate planning services for government and military employees. This discount is valid from 06/01/2014 to 12/31/2014 and will apply to all Maryland state and local government employees, as well as personnel of all branches of the U.S. military.

Preparation of estate planning documents now will free your family members from having to make tough choices for you in the future and also minimizes the risk of family conflict. McChesney & Dale can assist with the preparation of last will and testaments, powers of attorney, living will/advance medical directives, and trusts.

Call McChesney & Dale today for your estate planning needs; it’s never too early to get started! Please reference coupon code EP2014 during your initial consultation.

Discount Details:

10% off Estate Planning
Valid: 6/01/2014 – 12/31/2014
Coupon Code: EP2014

Police/Fire/EMS, Teachers, Federal Government Employees, MD State Employees, MD Local Employees (cities/counties within MD)

Army, Navy, Coast Guard, Marines, Air Force, Peace Corp

For more information on estate planning, follow the links below.

McChesney & Dale, P.C. Practice Areas

-OR-

McChesney & Dale, P.C. Estate Planning Articles

Federal and Maryland Wage Laws

By: William P. Dale

For the most part, individuals and employers entering into an employment relationship have a wide latitude in structuring their contractual relationship. But there are a number of federal and state laws that are designed to provide protection to workers in multiple circumstances. One such set of laws relates to the amount of wages that must be paid to an employee.

The federal Fair Labor Standards Act, which was enacted in 1938, was designed by Congress to protect “the minimum standard of living necessary for health, efficiency and general well-being of workers.” The Act contains two important substantive provisions affecting the wages of workers. First, it establishes a minimum wage for workers covered by the law, a rather well known provision of the statute. Second, it requires employers to pay time and a half hourly wages for overtime beyond a 40 hour work week. The Supreme Court has held that the employer has an affirmative duty to maintain accurate business records establishing the time during which an employee works.

There are certain exclusions from application of the law for executive, administrative and professional employees. And employers engaged in certain activities enumerated in the statute are not bound by the law either.

But, for employment relationships covered by the overtime law, the regulations and burdens of proof heavily favor employees. Among other pro-employee provisions of the statute is a liquidated damages provision requiring the employer to pay an amount equal to the unpaid overtime obligations in addition to payment of the required wages themselves. Furthermore, entities who may be held personally liable for making these payments include certain individuals who own the employer, or otherwise control the payroll process, and therefore the employee’s ability to recover is not limited to the company whose name appears on his paycheck.

The State of Maryland has also enacted similar overtime laws that operate in coordination with the Fair Labor Standards Act. Also, under Maryland state law an employee may obtain up to “treble damages” (triple damages) if forced to sue to recover unpaid wages.

These laws are designed to protect employees and ensure that they are compensated for their efforts, even in circumstances in which the employer seems to have an upper hand in the employment relationship. The issues involving wages and the Fair Labor Standards Act can become complex, and employers need to be aware of these laws in order to ensure that they are in compliance with the requirements. Employees need to be aware that they may have rights under these laws beyond simply what their employment agreement or oral employment understanding says.

2013 Holiday Food Drive

McChesney & Dale, P.C., is sponsoring its second annual food drive in its headquarters building (OMNI Professional Building, 4000 Mitchellville Road, Bowie, MD 20716) from December 2 to December 20, 2013. All donations will be made to the Bowie Interfaith Food Pantry who will package and distribute holiday baskets to families in need.

The following non-perishable items will be accepted:

(Note: Donations not limited to those listed)

• 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

• Please be sure donation items are not expired.

We welcome you to place non-perishable items in the boxes located in the lobby of the OMNI Professional Building.  The final collection of donated items will occur Friday, December 20, 2013, at 5 p.m.

* www.bowiefoodpantry.org

Use of a Special Needs Trust in Maryland

 

       

By: William P. Dale and Denise Martin

Estate planning provides many excellent tools for caring for loved ones who have a disability, one of which is the Supplemental Needs Trust. 

Digital Estate Planning

By: Denise Martin

Preparing for what happens to your digital assets and online identity after death is becoming increasingly important as a result of the widespread use of email, social media platforms, online banking and payment accounts, etc. 

Delinquent Maryland Taxpayers’ Driving Privileges Affected

By: Eric Wexler

Maryland drivers have recently started to experience the effects of a new law that makes it difficult for individuals and businesses with delinquent taxes to renew their drivers’ licenses and vehicle registrations.