Estate Planning News: April 2014
Plan. Preserve. Protect.
A Quarterly Compilation of Important Estate Planning News
In This Issue
"Interesting" Tax Facts
What To Do With Your Tax Refund
Philip Seymour Hoffman's Estate
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R & R
A "Just For Fun" Column
For each quarterly newsletter, a member of our staff will share a recent trip, experience, restaurant, movie, etc., that provided them with some much needed Rest and Relaxation. We hope that this column gives you something enjoyable to read in addition to our extremely important, yet sometimes not always "fun", Estate Planning News. 

Team ProBotz


Kids of all ages love Legos! Combine Legos and robotics and you come up with an amazing program called FIRST LEGO League (FLL).  My son, Justin has participated in FLL for the past 4 years as a member of the Dublin Robotics League.  His team called themselves ProBotz and was coached by my husband, Dan.


FLL is an international competition for kids age 9-14.  Each year in September a new challenge is released.  The challenge this year was called Nature's Fury.  Justin's team designed and programmed an autonomous robot (using the LEGO MINDSTORMS robot set) to score points on a thematic playing surface.  They also researched tornados as their "nature's fury" and designed a quad rotor that utilized thermal imaging to quickly find victims in need of help after a tornado or any other natural disaster. 


Team ProBotz had an extremely successful year.  They competed at a district competition in Newark and were one of six teams invited to compete at a regional competition held in Dublin.  At the regional competition, ProBotz was one of four teams invited to compete at the state competition held in Dayton.  ProBotz placed 3rd out of 36 teams in the robot performance game at this year's state competition.   


In addition to building a robot and researching a project, FLL teaches participants that friendly competition and mutual gain are not separate goals, and that helping one another is the foundation of teamwork.

This is a "sport for the mind" by melding science, technology, engineering and math principles in a fun, competitive environment.  There is also a Junior FLL program for kids age 6-9.


For more information, visit:  


R&R by: Meredith A. Monroe


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  Dear Friend of Resch and Root,

Welcome to our second quarter eNewsletter. As we enter into the spring season, we look forward to sunnier days with warmer temperatures and flowers starting to bloom. Unfortunately for some, this is also the time of year when the Internal Revenue Service looks forward to your taxes being filed. To help ease you through this tax season, we have included an article below on "interesting" tax facts. For those of you that will be receiving a refund this year, listed below you will find a few helpful tips on how to spend your income tax refund wisely. We have also taken a look at the costly errors the late actor Philip Seymour Hoffman's estate plan included.
As always, feel free to share with us any of your ideas on upcoming eNewsletter issues or questions on any topics that were discussed.
F. David Resch  
William K. Root
"Interesting" Tax Facts


Tax day is not a fun day. So rather than calling these "Fun Facts," we are calling them "Interesting."   Amaze your friends with these nuggets of U. S. tax history.


First Income Tax in American History: Technically, the first tax was authorized in 1861 when Congress passed the Revenue Act of 1861 to help pay expenses of the Civil War. However it was never put into effect. The Revenue Act of 1862 was put in force and was "progressive" meaning that different rates were applied to different income groups: 3% for individuals earning between $800 and $10, 000 and 5% on incomes over $10,000. This act established the Commissioner of Internal Revenue.


Current Income Tax System: We chose to be taxed. The 16thAmendment, ratified in 1913, allows for the imposition of federal income tax. Like all amendments 2/3 of the State legislatures had to approve it. Back in 1913 the U.S. only had 48 states, (no Alaska, Hawaii, both added in 1959). Of the 48 then existing States, all but Connecticut, Rhode Island, Utah, Virginia, Florida, and Pennsylvania ratified the amendment.


Income Tax Withholding: The Revenue Act of 1943 required employers to withhold taxes from paychecks. The significance is described by one legal historian as follows: "it helped create a taxpaying culture, getting Americans "used to" regular deductions from their paychecks. In short, the introduction of withholding "ensured the status of the income tax as a major and massive revenue source."


April 15 Tax Day: March 1 was the original filing deadline from 1913 to 1918. In 1918 Congress pushed the date to March 15. It remained there until 1954 when the date was moved to April 15. The reason for this push can be explained by the Governments desire to hold onto money longer. "As the income tax applied to more of the middle class, the government had to issue more refunds. "Pushing the deadline back gives the government more time to hold on to the money," says Ed McCaffery, a University of Southern California law professor.

The Plan that Slogans Built: The Revenue Act of 1943

Why is Tax Day April 15?

What To Do With Your Tax Refund

This time of year many blogs and articles are written advising you how to spend your income tax refund wisely. I thought it would be worth while to mention a few.


1. Why Do I Have A Refund? - I suggest that action step number one should be to review your withholdings to determine why you have placed money with the government as an interest free advance for a year. You should consult with your tax advisor concerning the proper tax withholdings and make adjustments. You may want to place the savings from each paychecks reduced tax withholding into a savings account for emergency funds that would pay some interest to you.


2. Pay down debts - Many advisors suggest that we should take the opportunity to pay off credit cards or make an extra payment on your mortgage. I suggest you examine the interest rates being charged to you and pay down the higher charged debts first.


3. Open an IRA - You can always establish an IRA to save for retirement. Depending upon your Adjusted Gross Income, you may be able to open a Roth IRA which could provide to you a completely income tax free savings on all earnings and withdrawals provided you manage it wisely.


4. Make an improvement to your home - There are a number of minor home improvements you can make that are small, but do add value. Replace pull chain lights with light switches. Paint rooms or entrance ways to your home, add color accents to rooms. Install wireless speakers to bring music to rooms that you were unable to access with wired systems.


5. Give it away - This is probably my favorite suggestion. This refund money is money that you have been able to "do without". Why not give it to support a charitable cause of your choice. In addition to receiving an income tax deduction on your taxes for the current year, you will feel the satisfaction of sharing with others your good fortune.

 Philip Seymour Hoffman's Estate Plan Included Costly Errors

On February 2, 2014, Philip Seymour Hoffman passed away leaving behind three children and an estate worth nearly $35 million.  Most people would assume that due to his having three children and a large amount of wealth, Mr. Hoffman's estate plans would be up to date and immaculately drafted.  Unfortunately, such an assumption would be wrong.


Mr. Hoffman executed a Will on October 7, 2004,  leaving his entire estate to Marianne O'Donnell, the mother of Mr. Hoffman's son, Cooper.  According to the Will, Mr. Hoffman's son, Cooper, only received a trust if Ms. O'Donnell disclaimed any assets left to her.  If a trust was created, then such would be used for Cooper's education and support until reaching the age of 25, at which time he would receive outright one-half of his trust, with the remaining one-half being distributed to him upon attaining the age of 30. So what are some of the issues with his Will?  


First, Mr. Hoffman's estate is subject to federal and New York estate taxes.  By leaving it all to Ms. O'Donnell, the assets remaining after payment of such estate taxes will again be subject to federal and state estate taxes upon her death.  Had Mr. Hoffman taken advantage of generation-skipping transfer tax exemptions and other planning strategies, he could have left a large sum of money that would not have been subject to estate taxes for several generations.  


Second, Mr. Hoffman never updated his estate plan to reflect the fact that two additional children, Tallulah and Willa, were born after his Will was signed.  If Ms. O'Donnell does disclaim any assets left to her in order to fund a trust for Cooper, then additional legal fees and complications may arise in establishing similar trusts for his daughters. 


Finally, Mr. Hoffman wanted his son to live in or visit Chicago, New York and San Francisco several times a year in order to partake in their culture.  Had a properly drafted trust been established for his children, funds could have been made available specifically to encourage and facilitate Mr. Hoffman's instructions.  Unfortunately, Mr. Hoffman's instructions are merely unenforceable wishes.


Estate planning mistakes can happen to anyone, and care should be taken to update your estate plans when things in your life change.  The best way to find out whether your estate plan needs to be updated is to contact us and let us know what is going on so that we can discuss with you whether any such updates are required.   


About Resch and Root, LLC


With over seventy years of combined experience, we have learned to listen.

We are attorneys and counselors at law specializing in Estate Planning and tax minimization.

Upon learning and understanding your needs, we craft solutions that accomplish your family's personal and financial planning goals. With our insights, knowledge and understanding, our experienced attorneys and staff will guide you through what for many can be a sensitive process. Our comfortable environment allows you to feel at ease while discussing these important decisions. Invite us to take care of your family while preserving your legacy. At Resch and Root, we are committed to providing you with the best gift of all. Peace of mind.