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Dear Trust Officer:
Do I really need to have a will? Do have to see a lawyer to have a will?—AFRAID OF ATTORNEYS
Dear AFRAID:
No, you really don’t need a will. If you die without a valid will, you are “intestate.” Every state has “laws of intestacy” which govern property distribution when a deceased owner did not take the trouble to have a will drawn up. This default rule will always reach a conclusion. Whether that conclusion is satisfactory is a different question.
But let me tell you about a lawyer friend who was well versed in trust and estate planning. He knew better than most why a will is important, yet he and his wife never did their wills. They were always too busy. After his wife died of breast cancer, after he had to settle her estate working within the law of intestacy, he finally did have his own will drafted. He recognized that the equalization regime provided by state law was not at all appropriate for his new circumstances.
August is “National Make-A-Will Month.” For the two-thirds of Americans who do not yet have a will, it’s a reminder that this chore should be undertaken by every responsible person who owns property or investment assets. You don’t have to see a lawyer to make a will, there are forms available on the internet. But we strongly recommend seeing an estate planning professional, to be confident that there won’t be any oversights in the development and execution of your plan.
Article ©2024 M.A. Co. All rights reserved. Used with permission.
In 1967 the Phillip Morris tobacco company wanted to introduce a new, slimmer cigarette. They turned to their advertising agency, Leo Burnett Agency, for marketing ideas. The ad creatives kicked ideas around for a month, eventually coming up with the concept of a cigarette “designed” exclusively for women. The new product was Virginia Slims. The memorable tag line: “You’ve come a long way, baby.” The product launch was a huge success.
Whether an increase in tobacco consumption by women is an achievement to celebrate is debatable. What is not up for argument is that women have more wealth in 2024 than they have ever had before in human history. Some data nuggets from a recent CNBC story:
The shift in wealth ownership has important implications for philanthropy, as well as institutions in the business of wealth management. With great resources comes great responsibility, as seen with the efforts of notable female billionaires.
For an entertaining review of the ads for Virginia Slims, see https://flashbak.com/youve-come-a-long-way-baby-virginia-slims-advertising-year-by-year-365664/. The slogan was dropped in the 1990s, having worn out its appeal. For a look behind the creative curtain in the development of the ad campaign, see https://www.industrydocuments.ucsf.edu/tobacco/docs/#id=jmnb0122.
Article ©2024 M.A. Co. All rights reserved. Used with permission.
Two things are required to comply with the federal income tax: time and money. The money part is the roughly $4.9 trillion in federal tax collections, amounting to 17% of the U.S. gross domestic product. How about the time element?
The Tax Foundation has issued a new analysis, relying on figures developed from the White House Office of Information and Regulatory Affairs. Americans will spend more than 7.9 billion hours to comply with tax filing and reporting requirements in 2024. That is the same as 3.8 million full-time workers doing nothing but tax paperwork—which comes to 46 times the IRS workforce. This is why the U.S. tax system is characterized as a “voluntary” system, as the most of the cost of compliance falls upon those trying to comply.
The report converts those hours spent on taxes to an estimated cost of $413 billion in lost productivity. There’s an additional out-of-pocket expense, for computer software or accountant services and such, that adds $133 billion to the bill. Total compliance cost comes to $546 billion, which is about 1.9% of GDP. For comparison, that is larger than the entirety of corporate income taxes collected, which is 1.8% of GDP.
New rules for cryptocurrency
The advent of virtual currencies such as bitcoin has created new and novel tax problems. The IRS treats virtual currency as property, with a tax basis, not as money. Thus, every use of cryptocurrency in a transaction represents a possible capital gain or loss. In 2022 keeping track of such transactions required 674,000 hours. However, the Infrastructure Investment and Jobs Act dramatically expanded the requirements, to a projected 2.2 billion hours, a cost of $123.7 billion.
The new rules were projected to raise $28 billion in new tax revenue over 10 years, not quite $3 billion per year. The costs and benefits of the new requirements seem unbalanced.
Moore’s law posited that the number of transistors on a chip would double every two years at very little increase in cost, which in turn led to the explosive growth of many tech firms through continuously improved efficiency. One might think that because 94% of individual tax returns are prepared with computer software and 90% of returns are filed electronically, efficiency gains would cause compliance costs to fall. That has not been the case, according to the IRS’ own estimates.
Why not? Because tax law has become ever more complicated faster than technology can keep up. Concluded the report: “Tax law has trumped Moore’s Law.”
Article ©2024 M.A. Co. All rights reserved. Used with permission.
Once upon a time, there was no such thing as a tax break for individual retirement savings. That was before 1974, before passage of the Employee Retirement Income Security Act (ERISA). The primary purpose of ERISA was make certain that the retirement promises made by private companies to their employees would be kept, and that tax-preferred retirement savings programs would be made available in a nondiscriminatory fashion. But what about those who did not participate in an employer plan? For them, the Individual Retirement Account was created. At that time, up to $1,500 could be contributed by eligible taxpayers to an IRA, and a corresponding deduction taken. The eligibility rules were later loosened in 1981, but the tax deduction was later scaled back for higher-income taxpayers. In 1998, the Roth IRA was introduced, providing for an after-tax savings option with potentially tax-free distributions.
According to the Investment Company Institute’s 2024 Fact Book:
Article ©2024 M.A. Co. All rights reserved. Used with permission.
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