The super-rich here in the U.S. with assets worldwide are sitting on needles and pins. Supposedly, we are to be told any day about the details of the pact made between the IRS and UBS. However, the "meat" of the deal varies widely depending on the source.

From the desk of Jeanne M. Kerkstra, Esq., CPA of Chuhak & Tecson, P.C.

Your work probably starts in the early morning hours and most likely does not end until the late evening. When are you expected to get to your personal issues? What if you don't?

On January 1, 2008, the new Illinois Employee Classification Act took effect. The Act is intended to address the practice of misclassifying employees as independent contractors.

A dollar-for-dollar discount for capital gains ("CG") tax liability was allowed by the Court of Appeals for the 11th Circuit in valuing a decedent's interest in a closely-held corporation, thereby reducing the gross estate by over $3,000,000. (Estate of Jelke v. Commissioner, 11th Cir., No. 05-15549 11/15/07) Added to this CG discount were discounts for lack of control and lack of marketability of the interest. The Court of Appeals agreed with the estate's assumption that all of the decedent's entity interest would be sold after his death, using the date of death as the valuation date.

Believe it or not, a good deal of your financial destiny is in your own hands. You don't get a lot of satisfaction financially or otherwise from griping at your accountant around April 15 when you are signing your tax returns and sending that payment to the IRS. Now is the time for action.

- Have you set up retirement plans maximizing the benefits for you?

- Are you taking advantage of medical reimbursement plans, where available?

- Do you want to make gifts to your children thereby providing them with a valuable lesson while at the same time remaining in control?

- Do you have the proper structure in place to reduce your exposure to creditor attack?

There are a myriad of steps that you could take to improve and protect your bottom line. Don't resign yourself to just complaining about your tax situation on April 15, 2008.

Act now! Give me a call and let's talk strategy.

If you wish to discuss these issues in more detail, please contact Jeanne M. Kerkstra at jkerkstra@chuhak.com or 312-855-4337.

Dear Readers:

I have had the pleasure of speaking at several societies over the past few years. Most recently, my colleague, Lindsey Paige Markus, and I had the opportunity to present to the Chicago Society of Plastic Surgeons on estate planning and asset protection. The response from our presentation has been tremendous. Our role as attorneys is to advise, counsel, and most importantly to educate our clients on the many tools available to make smarter business and legal decisions. This week's Viewpoint was inspired from inquiries made by attendees at our presentation and we wanted to make this information available to everyone.

Jeanne M. Kerkstra, Esq., CPA

The Department of Homeland Security (DHS) is not so subtly shifting the burden on employers to confirm employees are legal. Previously if an employee's social security number didn't make the DHS' records, "no-match letters" were used for informational purposes. Now they are deemed as an employer having constructive knowledge that something may be wrong. Employers cannot ignore a "no-match letter" and must follow specific steps outlined in the DHS fact sheet. With possible civil and criminal actions, the stakes are higher. Make sure your employees are in line before the DHS puts your company on the line. Give me a call for all your employment law questions.

If you wish to discuss these issues in more detail, please contact Jeanne M. Kerkstra at jkerkstra@chuhak.com or 312-855-4337.

When an entrepreneur first starts a business, the focus is only on delivering a top-notch product in a timely fashion and keeping one's head above water financially. When you're lucky enough to have a financial success on your hands, you're burdened with the administrative headaches and costs. Growth is definitely a dual-edged sword: it's good for business but makes it more difficult to monitor both work to be done to pay the bills and worker issues. However, lack of monitoring or inadequate monitoring can lead to very costly legal matters for companies in all industries.

Earlier this month a judge in California ordered an ex-husband to continue paying alimony to his ex-wife even though she was in a registered domestic partnership with another woman and using the other woman's last name. California matrimonial laws dictate that alimony ceases when a former spouse remarries. However, California currently bans same-sex marriages. Consequently, a person does not possess the same property rights under California's domestic partnership law as he or she would under California's matrimonial laws.

Tax shelters have been around since the enactment of the Internal Revenue Code. It is a misconception to believe that all tax shelters are illegal. Even the IRS would have to acknowledge that there is a significant, if not overwhelming, number of tax shelters that are legitimate, creative and rightfully save the taxpayer money. However, those are not the ones that we read about.

Paris Hilton's current dilemma screams to her parents "estate planning." Her parents certainly should be embarrassed that they are pleading to California Governor Arnold Schwarzenegger for a pardon of their daughter's 45-day sentence for failing to comply with the plea agreement in her drunk driving case. Apparently, part of the agreement was that within a certain time frame she was to sign up for certain education classes. She did not comply and, consequently, has until the beginning of June to start her jail time or that sentence will be doubled.

Actor Richard Gere has found himself in hot water. Hollywood star Richard Gere kissed Bollywood star Shilpa Shetty at an AIDS campaign event in India in April. An Indian court last week ordered Mr. Gere's arrest saying that the kiss was an obscene act committed in public. Mr. Gere can serve three months in jail, be fined, or both. Conflicts in culture is not a matter to be taken lightly.

Picture this as an example in your client's Employee Handbook as to what not to do at work [this is a real-life situation actually playing out at the World Bank]:

For Illinois residents, your estate plan is not complete if you do not have an Appointment of Agent to Control Disposition of Remains. Alternatively, if you have not heard of this form, your estate plan may be out of date.

As an attorney, I thought that at first blush there are a lot of similarities between the idea behind a non-compete for physicians as in Mohanty1 and Dowd.2 However, it is not as straightforward as it may initially appear.

Forbes Magazine recently ranked the top 20 richest women in entertainment. Everyone knows who hit the top spot. But, look at the others: (10) Jennifer Aniston; (9) Jennifer Lopez; (8) Julia Roberts; (7) Janet Jackson; (6) Mariah Carey; (5) Celine Dion; (4) Madonna; (3) Martha Stewart; (2) J.K. Rohling. It's interesting to note who's married and more interesting, as a tax attorney, where they were domiciled when they got married. Generally speaking, in community property states, each spouse is entitled to one-half of all of the property acquired during the marriage. It's fun to note that the community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. The remaining states are separate property states where, generally, the separate property of each spouse is not included in the property division.

Ring out the old, ring in the new. The more things change, the more things remain the same.

- The annual exclusion for gifts remains at $12,000. Note that for the calendar year 2007, the first $125,000 (up from $120,000) of gifts to a spouse who is not a citizen of the United States are excluded from taxable gifts.

Last week actress Ellen Barkin symbolically and financially closed a chapter in her life. Christie's, the auction house, sold 106 pieces of jewelry, including her wedding ring, which she received from her ex-husband Ron Perelman, billionaire Revlon magnate, during their 6-year marriage. The haul fetched a whopping $20 million plus. The jewelry almost equaled her marriage settlement. Although she seemed to do well, her ex did better. When they got married, Ron was worth about $3 billion. He was worth double that 6 years later. But Ellen didn't get half of the $3 billion increase because she signed a prenup. (Contrast this with Paul McCartney's divorce ending a 4-year marriage in which there was no prenup. The press is reporting that his ex may walk away with about a quarter of a billion dollars).

Have a Property Agreement (call it whatever you like except a "Cohabitation Agreement"). If you are part of an unmarried couple, make it your mantra to "Have a Property Agreement".

A decedent's Individual Retirement Account ("IRA") is includable in his gross estate solely because he failed to make an irrevocable election as to the form of this retirement benefit. Sherill v. U.S., No. 2:04-CV-509 (N.D. IN 1/27/06).

Marshall v. Marshall: A case that is now before the U.S. Supreme Court. Probably even the man in the street can tell you a little about what is going on in this case. For the U.S. Supreme Court Justices, it is merely a matter of a jurisdictional issue. However, to the Plaintiff, Anna Nicole Smith (a/k/a Vickie Lynn Marshall), it could be worth a significant share of her deceased husbands (J. Howard Marshall) $1.6 billion estate.

As the story goes, the former topless dancer was in her mid-20's when she met her soon-to-be husband, who was approaching 90. He had been married a couple of times before, and even had a previous mistress who was also a topless dancer. The previous wives and topless dancer had predeceased him. After a short courtship, the two got hitched. About a year later, the husband passed away.

It has now been over 11 years, and the fight continues over the husbands estate. It is a battle between the widow and the widow's former stepson, 67-year old E. Pierce Marshall. Allegations abound. Was there undue influence by the wife to obtain an inheritance? Was there deception and destruction of legal documents by the stepson to prevent the wife from taking under the Will? A lot of money is at stake here.

Marshall v. Marshall shows that an estate plan is a dynamic creature; it is not cast in stone. Wills are drafted and are meant to be reviewed on a periodic basis, especially at life altering events such as the birth of children and marriage. Over time, it is necessary to review the choices made. Are the guardians who were chosen to care for minor children still the right choices? Are the executors still the reliable parties for said duties? Do you seek to disinherit children or spouses, and can you? These are questions that should be discussed with your attorney.

The Bottom Line

Estate planning documents, such as Wills, are not dusty old documents to be placed in desk drawers and forgotten. They are dynamic. They need to be reviewed on a consistent and periodic basis. Also, they need to be stored in a secure place, such as your attorney's office, away from prying eyes (and hands).

If you wish to discuss these issues in more detail, please contact Jeanne M. Kerkstra at jkerkstra@chuhak.com or 312-855-4337.

You have signed off on your Will, revocable trust, Powers of Attorney, and perhaps an irrevocable trust. You feel a sense of accomplishment now that your estate plan is done. Years later, your loved ones receive the fruits of your labor as the beneficiaries of your planning. Unfortunately, you left them with a burden in the form of $8,000 in unnecessary costs to probate your estate.

Estate planning which involves trust documents is not complete until the trusts are funded. If this step is overlooked, the trust you signed is a meaningless stack of paper. The number one reason for executing a living trust (a/k/a a revocable trust) is to avoid the probate process, and you will not have met this goal if you do not have your assets transferred into the name of your living trust.

The average cost to probate an estate begins at $1,500, according to statistics published by the American Association of Retired Persons. If your Will is contested, this cost increases significantly. In Illinois, assets in excess of $100,000 which do not automatically pass per beneficiary designation require probate. Just the filing fees to probate an estate in Cook County are conservatively $500. Why even leave this amount for your heirs to pay, when properly completing your estate planning would avoid this cost? Working with your brokers and attorneys to transfer your assets into your living trust is time well spent, and leaves the money your living trust beneficiaries will not have to spend on probate in their grateful hands.

The Bottom Line

Funding your living trust is a crucial step in your estate planning. The trust documents supporting your estate plan which have been drafted and executed should not be considered complete until such trusts have been funded.

If you wish to discuss these issues in more detail, please contact Jill McNamara at jmcnamara@chuhak.com or 312-855-6408.