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The Tax Cuts and Jobs Act is Finally Here, No More Do Overs

–Our friends at Marcum, LLP recently published a detailed article on the new tax plan.–

Highlights of key provisions include the following:

Individual Provisions

  • The act’s final version retains the seven overall tax brackets, but tax cuts are achieved by cutting the rates themselves. The final version cuts the top rate to 37% as follows:
Filing Status


Single Married Joint Married Separate

Head of Household


Up to $9,525 Up to $19,050 Up to $9,525 Up to $13,600
12% $9,525 to $38,700 $19,050 to $77,400 $9,525 to $38,700 $13,600 to $51,800
22% $38,700 to $82,500 $77,400 to $165,000 $38,700 to $82,500 $51,800 to $82,500
24% $82,500 to $157,500 $165,000 to $315,000 $82,500 to $157,500 $82,500 to $157,500
32% $157,500 to $200,000 $315,000 to $400,000 $157,500 to $200,000 $157,500 to $200,000
35% $200,000 to $500,000 $400,000 to $600,000 $200,000 to $300,000 $200,000 to $500,000
37% Over $500,000 Over $600,000 Over $300,000

Over $500,000

  • The standard deduction is increased to $24,000 for married taxpayers filing jointly; $18,000 for single filers with at least one qualifying child (Head of Household filers); and $12,000 for single filers and includes enhancements for the elderly and the blind.
    • Personal exemptions are repealed and merged in with the higher standard deduction.
    • The Child/Dependent Tax Credit will be $2,000 with $1,400 refundable. Modified income limits will make the credit available to more families and a $500 credit will be available for a non-child dependent.
  • The Kiddie tax is simplified by applying the trust and estate rates (reflected below) to the unearned income of a child.
  • The capital gain and dividend rates are maintained at 20%, plus the 3.8% surtax, where applicable.
  • The act retains a modified Individual Alternative Minimum Tax (AMT) as of 2018 and provides for increased exemptions and higher phase out limitations. The limits are indexed for inflation. The new law will change the impact of AMT and should reduce the number of affected taxpayers.
  • There are significant changes to itemized deductions. The “Pease” limitation, which previously limited up to 80% of most itemized deductions, has been repealed. Instead, most itemized deductions are either eliminated or modified, such as:
    • The deduction for non-business state and local income, sales and property taxes will be limited to $10,000 in aggregate ($5,000 for married taxpayers filing separately). This provision potentially harms taxpayers living in high income and property tax states. (As disclosed in our recent Tax Flash on December 18, a specific provision was added to the law to disallow a deduction for the prepayment of 2018 income taxes before the end of 2017.)
  • The deduction for medical expenses has been retained and will be enhanced. The act lowers the threshold for the deduction to 7.5% from 10% of adjusted gross income for tax years 2017 and 2018.
  • The act repeals all miscellaneous itemized deductions that were previously subject to the 2% floor. Miscellaneous deductions included investment fees, tax preparation expenses and unreimbursed employee business expenses. However, the deduction for investment interest expense remains unchanged.
  • The deduction for personal casualty and theft losses is repealed, except for losses resulting from federally declared disasters.
  • The adjusted gross income limit on cash contributions is increased from 50% to 60%.
  • 529 Savings Plans can be withdrawn tax-free if used for higher education expenses. The act now allows up to $10,000 per year to be used for elementary and high school tuition and funds to be used for private and religious schools.
  • The deduction for mortgage interest is subject to the following rules:
    • Interest on acquisition debt currently in existence can be deducted under current rules.
    • The $1 million debt limit is reduced to $750,000 for debt incurred after December 15, 2017, and will only include mortgage interest deduction on a principal residence and second residence.
    • Home equity interest will be nondeductible.
  • The final act includes a repeal of the Shared Responsibility Payment (Individual Mandate) under the Affordable Care Act after 2018.
  • While the above-the-line educator costs is not repealed, the act eliminates many tax credits and income exclusions, including:
    • Moving expenses other than those in Armed Forces.
    • Deduction or alimony payments effective for any divorce decree or separation agreement executed or modified after 2018.
    • Exclusion for employee achievement awards.
    • Elimination of the Deduction for Domestic Production Activities.
    • Credit for clinical testing expenses for certain drugs for rare diseases or conditions is reduced to 25%.
    • Rehabilitation credit is not completely repealed, but limited to 20% for certified historic structures and repealed for pre-1936 non-historic structures.
    • Disabled Access Credit.
    • Retain and simplified the Earned Income Tax Credit to improve efficiency.

Marcum Observations

All of the individual tax changes under the new law are generally effective beginning in 2018 and are temporary and expire after 2025. If Congress does not act at that time to extend these provisions, starting in 2026, the new provisions will lapse and the current rules will return.

Due to the changes described above, many taxpayers will no longer opt to itemize deductions. The beneficial tax rates on long-term capital gains and qualified dividends continue to apply.

High wage earners in high tax states will likely see higher tax bills. Conversely, a similar taxpayer residing in a low tax state will likely see a tax savings due to the lower top rate and the expanded 35% tax bracket.

Charitable gifts could be worth more in 2017 instead of 2018 due to the change in the rates.

Estate and Trust Provisions

Tax Rate Structure


Estate and Trusts
10% Up to $2,550
24% $2,550 to $9,150
35% $9,150 to $12,500
37% Over $12,500
  • Doubles the basic exclusion amount for gift and estate tax purposes from the current exclusion of $5.49 million in 2017, as indexed for inflation, to $11.2 million, which will be indexed for inflation.
  • Lowers the gift tax rate to a top rate of 35%.
  • Repeals the estate and generation-skipping transfer taxes, while retaining the stepped up basis rules, in 2024.

Marcum Observations

The new high exemption amount will effectively eliminate the estate tax for most people. The step-up in basis at death would continue to be in effect.

Business Provisions

  • Lower the top corporate tax rate from 35% to a flat 21% (the same flat rate applies to personal service corporations).
  • Eliminates the corporate alternative minimum tax.
  • The dividend received deductions will be reduced to 50% from the current 70% and 65% from the current 80%. This change is to account for the reduced corporate rate.
  • Allows immediate expensing of 100% of the cost of new investments in depreciable assets acquired after September 27, 2017, and before January 1, 2023. (The placed-in-service date will be extended for one year for property with a longer production period).
    • Unlike the present bonus depreciation rules, the asset does not have to be new property; however, it must be the business taxpayer’s first use of such property.
    • Qualified property does not include any property used in a real property trade or business.
  • Section 179 expensing is increased to $1 million for years 2018 to 2022. A phase-out of the Section 179 benefit will begin when the purchases exceed $2.5 million. (Qualified energy efficient heating and air conditioning property will be included as Section 179 property).
  • The Senate proposal to reduce the cost recovery periods of residential and non-residential property to 25 years was not adopted. These remain at 27.5 and 39 years, respectively. However the recovery period for qualified improvement property is set at 15 years. The separate definitions of qualified leasehold improvement, qualified restaurant and qualified retail improvement property are eliminated.
  • Caps will be placed on write offs of business use vehicles. The new caps will be $10,000 for the first year a vehicle is placed into service, (presently, $3,160).
  • Every business, regardless of form, would be subject to disallowance of a deduction for net interest expense in excess of 30% of the business’ adjusted taxable interest. Net interest expense is determined at the tax filer level (e.g., the partnership versus the partner). Adjusted taxable income is business taxable income without regard to business interest expense, business interest income, net operating losses, depreciation, amortization and depletion. Disallowed interest under this rule becomes an indefinite carryover as an attribute of the business (not its owners). Businesses with average gross receipts of $25 million or less would be exempt from the interest limitation rules. (There is also an election for real estate trade or businesses to elect out of this limitation, but the cost is that use of the Alternative Depreciation System is required).
  • Eliminate the deduction under Internal Revenue Code § 199 for domestic production (DPAD).
  • Net Operating Losses (NOLs) would generally not be eligible for a carryback. However, any carryover can be used only to the extent of 80% of taxable income. This rule will apply to losses arising in tax years beginning after December 31, 2017. Additionally, the carryforward period will be indefinite.
  • Research and Development (R&D) costs are subject to potential change. While the R&D credit is retained; for tax years 2022 and later, R&D expenses will not be subject to immediate write-off, but will be subject to mandatory five year amortization (15 years for research outside of the US). On retirement, abandonment or disposition of property, the unamortized basis will continue to be written off over the balance of the amortization period.
  • After 2017, like-kind exchanges will apply only to real property, not held for sale, subject to a transition rule allowing for an exchange for personal property if there is a disposition of relinquished property or acquisition of replacement property by December 31, 2017.
  • No deduction will be allowed for entertainment, amusement or recreation activities facilities, or membership dues relating to such activities or other social purposes. However the current deduction for business meals (subject to the 50% limitation) will be retained.
  • Section 162(m) related to limitations on deductions for compensation to executives has been modified. The exception to the $1 million compensation limit for executives of publicly traded companies for commission and performance-based compensation, will be repealed effective for years beginning after December 31, 2017.
  • Corporations and partnerships with corporate partners with average gross receipts of up to $25 million (indexed for inflation) are allowed to use the cash method of accounting. Existing corporation that meet this gross receipts threshold can automatically change their accounting method.

Marcum Observations

A key element of tax reform was to change the corporate tax rate so as to make U.S. corporations more competitive with those in foreign jurisdictions. This is accomplished by setting a flat 21% rate for regular corporations for tax years beginning after 2017. The law provides no special rate for personal service corporations, which will now be subject to the same 21% corporate rate.

The corporate AMT is repealed. Corporations will be allowed to use certain tax benefits to effectively pay below the new 21% rate.

Based on the above summary, many current business benefits will face repeal, but the framework specifically retains the R&D Credit, the Work Opportunity Tax Credit, the New Markets Tax credit, a revised Rehabilitation Tax Credit and the Low Income Housing Tax Credit.

Pass Through Entity Taxes

  • An individual taxpayer may deduct 20% of domestic qualified business income from partnership, S corporation or sole proprietorship.
    • The amount of the deduction will be limited to the greater of:
      • 50% of W-2 wages paid by the business or;
      • The sum of 25% of W-2 wages paid by the business and 2.5% of business capital.
      • The wage limitation does not apply if taxable income is less than $157,500 (single) or $315,000 (joint) and applies fully if taxable income exceeds $207,000 (single) or $415,000 (joint).
    • Trusts and estates will qualify for this deduction.
    • The deduction is a post adjusted gross income item.
    • The deduction is not affected by whether the owner is passive or active.
    • For specific service businesses, such as those in accounting, law, consulting, and investing, but not engineering or architecture, the 20% deduction will apply only if the taxpayer’s taxable income is less than $157,500 (single) or $315,000 (joint). No deduction will be allowed if the taxable income exceeds $207,000 (single) or $415,000 (joint).
  • The act changes the long-term capital gains holding period for certain assets held in partnerships engaged in investment and real estate activities (carried interest). After 2017, a three year holding period is created for long-term capital gain treatment of gains for a carried interest (instead of the typical one year requirement).

Marcum Observations

The final bill generally follows he Senate’s approach to the taxation of pass-through entities (S corporations, partnerships or sole proprietorships) and creates a rather complicated deduction for “qualified business income” for tax years 2018 through 2025. The final bill clarifies that the deduction will not be taken in reaching adjusted gross income, though it is available to both itemizers and non-itemizers. In a positive change, the final bill permits this deduction to be used by owners of pass-through entities which are trusts or estates.

The act creates preferential treatment for certain pass through entities by basically permitting a non-itemized deduction of 20%. The reduced amount would then be subject to the new marginal rates. Owners of larger, more profitable, service businesses will likely not be eligible for this deduction.

International Tax Provisions

  • The new law adopts a participation exemption system that provides a 100% deduction for the foreign-source portion of dividends received from specified 10% owned foreign corporations by domestic corporations that are United States shareholders of those foreign corporations. No foreign tax credit or deduction is allowed for any taxes paid or accrued with respect to a dividend that qualifies for the 100% deduction.
  • The new law preserves the deemed dividend treatment for investment in U.S. property by controlled foreign corporations, including corporate shareholders that will be entitled to the 100% dividends received deduction.
  • The new law requires that for the last taxable year beginning before January 1, 2018, any U.S. shareholder of a foreign corporation that has at least one U.S. 10% shareholder must include in income its pro rata share of post-1986 accumulated earnings. The 10% U.S. shareholders must determine their deferred foreign income based on the greater of the aggregate post-1986 accumulated foreign earnings and profits as of November 9, 2017, or December 31, 2017, not reduced by distributions during the taxable year ending with or including the measurement date, unless such distributions were made to another specified foreign corporation.
    • The effective tax rates for the deemed repatriation of foreign earnings upon transition to the new participation exemption system are established at 15.5% (for cash and cash equivalents) and 8% (for other earnings).
    • U.S. shareholders subject to the repatriation tax may elect to pay the net tax liability in eight installments (8% in each of the first 5 years, 15% in year six, 20% in year 7, and 25% in year 8.
    • A special rule is provided for S corporations, allowing continued deferral of the transition tax liability, unless a specified “triggering event” occurs (e.g., loss of S status, liquidation, or transfer of shares).
  • The new law imposes a minimum tax on foreign earnings considered to be above a “routine” amount, termed global intangible low-tax income or “GILTI”. The tax is imposed on a current basis, at a full 21% rate, subject to a 50% deduction; additionally, the tax can be offset by a reduced (80%) foreign tax credit. As a result, an overall foreign effective tax rate of at least 13.125% generally will prevent the imposition of residual U.S. tax. The 50% GILTI deduction is reduced after 2025 from 50% to 37.5%.
  • The new law provides a deduction for certain foreign derived intangible income, a variation of the “innovation box” benefit provided by other countries, allowing a 37.5% deduction for income earned directly by U.S. taxpayers from serving foreign markets (foreign derived intangible income). The deduction will result in a 13.125% effective tax rate on foreign derived intangible income. The deduction is reduced after 2025 from 37.5 percent to 21.875%.
  • The new law does not include a permanent extension of the CFC look-through rule of section 954(c)(6). Thus, the look-through rule will remain a “tax extender” that will need to be renewed in order to prevent its expiration after 2019.
  • The new law adopts the Senate’s base erosion and anti-abuse tax (BEAT) approach by imposing a new minimum tax at a rate of 10%. The BEAT is applicable to a more limited subset of multinational groups and, generally is not applicable to cross-border purchases of inventory includible in cost of goods sold. In adopting the BEAT, the Congress rejected the controversial House proposal for an excise tax on certain payments to related foreign parties that would have required multinational groups subject to the provision to choose between the gross-basis excise tax and an election by the recipient of the payment to treat the amount as “effectively connected income” subject to US tax.
  • The new law provides an anti-hybrid rule denying deductions for interest and royalties paid to related foreign persons, where the payments either are not includible or are deductible in the hands of the recipient in its residence country.
  • The new law provides for the denial of a dividends received deduction for hybrid dividends received from a CFC, and treats hybrid dividends as Subpart F income if received by a CFC.
  • The new law provides changes to the definition of intangible property and expansions of the Internal Revenue Service’s ability to apply aggregation and “realistic alternatives” theories in connection with taxing the transfer of intangible property by a domestic corporation to a foreign corporation, and repeals the active trade or business exception for the outbound transfer of other assets to a foreign corporation.

Marcum Observations

The international provisions of the final bill move the United States towards a territorial system of taxation. The existing worldwide system is not entirely abandoned, as the new law provides for certain carryover provisions that allow the United States to tax certain categories of foreign earnings of U.S. companies. Specifically, the GILTI tax provisions and the minimum tax on intangible income continue to provide the U.S. with the ability to tax foreign earnings of U.S. companies.

The participation exemption provisions of the new law provide for the long overdue movement of the U.S. to align itself with the rest of the world in terms of allowing the tax-free repatriation of foreign earnings of domestic corporate subsidiaries. The participation exemption applies only to corporate shareholders of foreign corporations and as such, individual and pass-through shareholders of foreign corporations will continue to need to plan for the potential deferral of foreign earnings. Further, the transition tax on the mandatory, deemed repatriation of accumulated post-1986 earnings and profits will require analysis of pre-2018 reporting of foreign earnings. Taxpayers will also need to assess the short-term cash impact of the deemed repatriation provisions, as taxable income inclusions may result with respect to pre-2018 tax years.


The new law is likely to contain many technical glitches and will probably require technical corrections, fixes and adjustments to policies. Your Marcum Tax Advisor will keep you posted on any such revisions.

Source: Marcum, LLP


Diane Giordano
Partner, Tax & Business Services
Mark Chaves
International Tax Co-Leader
Michael D’Addio
Principal, Tax & Business Services

Julie Gross Gelfand
Director of Public Relations & Communications
Douglas Nakajima
International Tax Co-Leader
Jeffrey Winkleman
Partner-in-Charge, Corporate Taxation

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The 5 Golden Rules Of Lending Money To Your Adult Children

When you think about the price of having kids, the costs that come to mind may include things like child care, camp, braces and college tuition.

What probably doesn’t spring to mind are mortgages, car payments or personal loans.

The reality, however, is that your bank account will likely continue to be tapped long past the day your kids turn 21. According to a 2015 Pew Research Center report, six in 10 Americans with at least one adult child say they’ve provided their kids with some financial support within the past year.

And the dollar amounts they doled out were probably a bit steeper than $100 here or $500 there: A TD Ameritrade survey released in August found that parents supporting adult kids gave them an average of $10,000 over the past 12 months.

When dealing with an amount of that size, it’s very possible that parents expect to be paid back at some point. But entering into parent-child lending territory can be fraught with complications that could lead to big financial burdens and broken family ties.

So we rounded up some financial pros to provide tips on how to loan your adult children money in a way that helps minimize monetary strife and keep family drama at bay.

1. Only lend money you won’t miss.

Your child is just a few thousand dollars shy of a down payment on her dream home, and you’d really like to help her get into that three-bedroom Colonial. Before you reach for your checkbook, however, make sure it’s an amount you can stand to part with, rather than money you need for your own financial stability.

“The question I ask my clients [who are faced with lending to kids] is: ‘Are you willing to lose the money?’ If you can’t answer with a resounding yes, then I suggest you don’t loan the money,” says Tom Till, owner of APPS Financial Group, a financial advisory firm located near Houston.

And that advice doesn’t apply just to funds you use to pay your monthly bills; it’s also applicable to any money you’re setting aside for your future.

“If you don’t have enough in savings or retirement or haven’t reached your personal goals, then tell them you can’t help them at this time,” suggests Debbi King, a personal finance and life coach and author of “The ABC’s of Personal Finance: 26 Essential Keys to Winning With Your Money.” “Don’t mortgage your future and put it at risk.”

If you still get the pleading looks, explain your no in a way that shows why your financial stability can actually be a good thing for them. One client of Till’s used this approach to tell her daughter why she couldn’t lend her money for a home down payment: “She told her child that I had recommended against the loan because it would greatly affect her retirement income—even to the point where she might have to move in with the child at her new home.”

2. Be clear on how your kids will use the funds.

You think you’re lending your child money to help pay off a student loan, but you suddenly notice some sweet electronics and brand-new furniture popping up in his pad.

Coincidence? Perhaps not.

Consider that if your child is asking you for money, it may be a sign that he doesn’t have the firmest grasp on his finances to begin with. So if you’re not completely sure where those dollars are going, think about placing parameters on how you fork over the funds.

For starters, consider paying the lender directly, suggests ReKeithen Miller, a Certified Financial Planner™ with Palisades Hudson Financial Group who is based in Atlanta. “That way, the child can’t divert the funds for other purposes,” he says.

You could choose to disperse the loan in smaller amounts over time to help ensure that your child isn’t tempted to splurge with such a large amount, Miller adds. This also provides the option to refuse to release further funds if your child isn’t using them for their intended purpose.

Finally, if you feel your child needs to learn a serious money lesson, you can require that they get smarter about money management before you fork over any cash. “Parents have the option of making the loan conditional,” Miller says. “For example, if a child has issues with budgeting or credit card debt, you can require them to enroll in credit counseling before you agree to lend them the money.”

3. Set terms for late payments or defaults.

Your child likely has every intention of paying you back—but you can’t deposit good intentions in your bank account. To help keep your child accountable, lay out what happens if she is unable to pay you back in a timely manner.

“Treat [the situation] as if you were the bank giving the loan,” King says. “There have to be consequences, such as interest and fees for late payments and defaults, just like with a ‘real’ loan.”

There’s another potential benefit to charging interest: The IRS may be less likely to view your loan as a gift, says Miller, which means it won’t count toward your annual gift-tax exclusionamount. He suggests choosing an interest rate in line with the Applicable Federal Rate (AFR), an interest rate calculated by the IRS each month. Remember to consult with your tax advisor to be clear on how you report the interest to the IRS.

It’s also important to consider baking in how the payment terms might be adjusted if your family member’s financial circumstances change, either because of job loss or another income hardship. Could you, for example, reduce the payment amount temporarily, but raise the interest rate? Give them quarterly rather than monthly deadlines? Reduce the amount they’ll eventually inherit by the amount of the loan?

It may seem awkward at first, but not agreeing on those types of details up front only stands to heighten the tension later. King recalls one story about a colleague whose mother-in-law loaned her a few thousand dollars to buy a new car. They settled on a monthly repayment amount, but the colleague lost her job and was unable to make the payments. Even after finding a new job, the colleague was making much less and still couldn’t afford to the payments.

“She felt as if she were being judged by every purchase she made. She got the feeling that the mother-in-law was saying, ‘If you can afford that, you can pay me what you owe,’ ” King says. “And every time [her husband] sees his mom, he’s always waiting for her to bring it up—not knowing what to say if she does.”

4. Present a unified front.

Your child probably figured out pretty quickly that when Mom said no to cookies for breakfast, he might get a more favorable response from Dad.

That good-cop, bad-cop dynamic, however, can have much bigger consequences when you’re talking money. So before saying yes to a loan, make sure you and your spouse have agreed uponall of the loan terms. This will not only help avoid an argument later, but could also help protect one spouse in the unfortunate event that the other isn’t around to enforce the agreement.

“A common scenario I’ve seen is where Dad discusses the terms of the loan with the child without involving Mom. Dad dies without communicating the loan terms, and Mom is in a situation where she has to decide if her child is telling the truth—or trying to shirk responsibilities,” Miller says. Plus, “If Mom forgives one child’s debt, she may be obligated to do the same for the other children to avoid tension within the family—and she may not be in a financial position to do so.”

One other piece of advice? Consider getting input from a financial advisor, who may be able to help you and your spouse settle disagreements on loan terms, as well as help play bad cop to the kids, if necessary. “Inserting a third party into the mix may make the children more apt to abide by the terms of the agreement, since they know someone outside of the family is monitoring the situation,” Miller says.

5. Get *everything* in writing.

As with any other bank, the Bank of Mom and Dad should have a promissory note signed by both parties that lays out all of the loan terms, including the principal amount, the interest rate, the payment structure, and any other conditions you’re expecting your child to meet in order to be “approved” for the loan.

“Even though the money transaction is between family, it is best if it is treated like a business transaction. Be as clear as possible on the expectations, and it will cut down on family disputes down the road,” Till says. “[And] it’s important to stay firm to the agreement. This can be a learning opportunity for your adult child—no matter the age.”

Read the original article on LearnVest. Copyright 2016.

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Why Death Doesn’t Take a Holiday Break

Each winter, a strange phenomenon repeats itself as people gather to celebrate the holiday season: Deaths spike.

The surge was particularly extreme in early 2015, when nearly a third more senior citizens died than normal in the first two weeks of the New Year.

Researchers have known for some time that more people die in winter. But even when they adjust for the expected increase, an irrepressible bulge that begins to swell in December persists.
Experts aren’t quite sure what causes it, but it affects nearly every age and disease group. It fells both men and women. And, curiously, after researchers adjust for it, three days emerge as the deadliest for deaths of natural causes: Dec. 25, Dec. 26 and Jan. 1.

“These increases are above and beyond what you would expect for that season,” said David Phillips, a sociology professor at the University of California, San Diego, who has studied the phenomenon. “We did not find equivalent spikes on any other major holiday. There’s something about Christmas and New Year.”

Dr. Phillips examined 57.5 million U.S. death certificates from 1979 through 2004. He compared the actual number of deaths with the expected number and found that over two weeks beginning with Christmas, an excess of 42,325 deaths from natural causes occurred over the 25-year period.

“People have known forever that mortality from a wide variety of causes is higher in the winter, but nobody knew before we did about the spike above that hill, particularly on Dec. 25, Dec. 26 and Jan. 1,” he said.

Although Dr. Phillips appears to be the only researcher who has broken the trend down by day and factors such as demographics and type of disease, the others have documented the overall seasonal effect.

Legacy.com, which hosts obituaries for 1,500 newspapers around the world, noticed it a few years after it launched in 1998.

“If you have people reading literally millions of tributes a year, if it fluctuates by as much as 20% in one part of the year, you need to know that to have correct staffing to handle the volume,” said Stopher Bartol, Legacy’s founder and executive chairman.

Once the company noticed the variation, it used government data to model the trend and verify what it suspected. As Mr. Bartol reported on the company blog: “Yes, it’s true: More people die in January.”

To try and explain the holiday spikes, Dr. Phillips, who focused on deaths from natural causes, examined five major groups of disease, including circulatory ailments; diseases of the respiratory system; cancer; endocrine, nutritional and metabolic disorders; and diseases of the digestive system.

The spikes occurred in all but cancer.

By age, only children appeared to be exempt from the trend. The increases occurred in all settings combined, but were especially acute among patients who died in the emergency room or who were dead on arrival, suggesting, Dr. Phillips said, that overcrowded and understaffed emergency rooms might contribute or that patients delay seeking medical help this time of year until it’s too late. No single cause seems to bear full responsibility, he said, although actuaries at the Reinsurance Group of America believe flu played a part last year, when the U.S., U.K. and Japan reported spikes that were significantly higher than in any of the previous 10 years.

“By about week two of the year, they were 130% of what they have been on average for ages over 65 in the U.S.,” said Peter Banthorpe, the head of actuarial research for RGA Services UK who wrote the report. “In the U.K., we saw the number spike 120% over the average.” 14 other European countries, he said, reported similar increases.

Mr. Banthorpe suspected a strain of influenza not covered by the annual vaccine contributed to the increase, a theory supported in the U.S. by the Centers for Disease Control and Prevention, which recorded the highest rate of flu-associated hospitalizations among people 65 and older since it began tracking the numbers in 2005. That year’s vaccine, the CDC reported, did not protect against the strain of H3N2 flu that was predominant early that year.

Dr. Phillips couldn’t pin down what is responsible for the holiday spikes, but he did rule out several potential contributing factors. For example, stress, winter travel and substance abuse did not explain the increase, he said, nor did the coldness itself.

“We show the effect is slightly smaller in the cold states than in the warm states,” Dr. Phillips said.

More than likely, he concluded, a variety of circumstances, not merely foul weather or the strain of the holidays, are to blame.

“A lot of times researchers wave their arms in the air and say well, it’s cold, people are depressed, they’re stressed.” Dr. Phillips said. “Probably there are several explanations.”

So, to borrow from the Bard, with the wrathful, nipping cold of winter upon us–at least in some parts of the country–perhaps it’s best to take shelter in the warmth of another’s watchful gaze. And, if needed, seek the help of a trusted physician without delay.

Source: Wall Street Journal, December 31, 2015

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What could happen if you write your own living trust

Readers often ask me about do-it-yourself estate planning. Lawyers want to know how to discourage clients from using books or software and websites that spew out documents for free or for a fraction of what they charge. Meantime, consumers ask, “What’s wrong with that?”

The trouble with do-it-yourself planning is that even if your situation seems simple, there are many oddball things a layman wouldn’t think of that can go wrong, especially with wills and trusts. These mistakes can end up costing you or your heirs a lot more than you saved in legal fees.

Eileen Guerin Swicker, a lawyer with her own practice in Leesburg, VA, recently told me about a really doozy. It involved a client who set up his own living trust.

By way of background, both a will and a living trust can be used to transfer assets, and each has unique uses and features. For example, only a will can name guardians for children who are minors. (For how to choose a guardian, see my post, “Adam Yauch’s Will Reveals His Private Dilemma.”) And unlike a will, a living trust can take effect while you are alive, so it can be used to hold assets for your benefit if you become unable to manage them yourself.

The client who Swicker told me about set up his own trust in 1984, using a 3-page form that he bought at an office supply store. He recorded a deed to transfer his home into the trust, and absentmindedly dated that deed 1983 (in other words, one year before the trust was created).

Flash forward to 2009 when this fellow, who had paid off the mortgage on the house, wanted to borrow against it. He planned to give his adult daughter $300,000 in cash so she, in turn, could pay off the mortgage on her own house. Great strategy (see my posts, “5 Ways To Help Family Pay For Housing,” and “The Best Investment Advice I Ever Received”).

But at this point, his clerical error of 25 years earlier came back to haunt him. Why? Because the title company said he didn’t have a clear chain of title to his home, so the bank wouldn’t give him the loan. The man, who by then was 75, called Swicker’s previous law firm in tears, asking for help.

Fixing the problem was a convoluted process that took two weeks and wound up costing the client $2,000 in legal fees. That’s about twice what he would have had to pay back in 1984 if he had had the firm draw up the trust instead of doing it himself, Swicker says.

After that, Swicker hoped the client would call back and ask lawyers to help bring his estate-planning documents up to date. But by the time Swicker left the firm eight months later, he still hadn’t done that. Says she: “It was one of those classic cases of somebody who dug a hole, and kept digging it deeper.”

Source: Deborah L. Jacobs – Forbes, August, 2012

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Facebook’s Mark Zuckerberg to use CLLC

The Daily Beast, Mark Zuckerberg’s Charity Windfall

In a Securities and Exchange Commission filing on Tuesday, Facebook founder and chief executive officer Mark Zuckerberg announced that he would gift “substantially all of his shares of Facebook stock” to “further the mission of advancing human potential and promoting equality by means of philanthropic, public advocacy and other activities for the public good.” The vehicle for his beneficence will be the Chan Zuckerberg Initiative LLC, a charity that he controls and through which he will maintain control of Facebook for “the foreseeable future.”

Like great capitalists before him, including Bill Gates, Warren Buffett, John D. Rockefeller, and Andrew Carnegie, Zuckerberg is saving a lot of money by intending to do a lot of good. But there’s plenty in it for him.

Back in 2008, David Yermack a professor of finance at the NYU Stern School of Business, published a paper called Deductio Ad Absurdum: CEOs Donating Stock to Their Own Family Foundations. In it, Yermack questions the value of public subsidies for CEO stock gifts. He even points to such gifts as a mechanism for executives with highly appreciated stock to dispose of their holdings without running afoul of insider trading laws. It also allows those CEOs to maintain control of their companies in the future, but through their newfangled organizations.

Maybe the biggest benefit for Zuckerberg, or any CEO who donates stock to a family foundation: He will transfer ownership of his Facebook stock without paying capital gains taxes.

Though not mentioned by Yermack, Zuckerberg will also benefit from the possibility that his foundation will live beyond him, with his heirs and their heirs at the helm, untouched by estate taxes.

There’s an almost overnight financial benefit, too: The Facebook founder will deduct the fair value of his gift to his foundation from his taxable income in the year he makes the donation. A donor like Zuckerberg could realize a tax benefit equal to about one-third of the value of his gift.

In this case, he stands to benefit as much as $333 million, based on the $1 billion he plans as his first transfer.

Of course, all of this favorable tax treatment exists to encourage wealthy stock owners to build humanity-optimizing foundations. But this behavior can invite a dark side: We may be subsidizing more sinister insider trading.

Source: The Daily Beast

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Veteran’s Affairs (VA) maintains a list of U.S. Navy and Coast Guard ships associated with military service in Vietnam and possible exposure to Agent Orange based on military records. This evolving list helps Veterans who served aboard ships, including “Blue Water Veterans,” find out if they may qualify for presumption of herbicide exposure. Veterans must meet VA’s criteria for service in Vietnam, which includes aboard boats on the inland waterways or brief visits ashore, to be presumed to have been exposed to herbicides. Veterans who qualify for presumption of herbicide exposure are not required to show they were exposed to Agent Orange or other herbicides when seeking VA compensation for diseases related to Agent Orange exposure.


Ships will be regularly added to the list based on information confirmed in official records of ship operations. Currently there are 344 ships on this list. A Veteran must file an Agent-Orange related disability claim before VA will conduct research on a specific ship not on VA’s ships list. This requirement also applies to survivors and children with birth defects.