Congress approved on Monday a $900 billion covid relief package and $1.4 trillion to fund the government through September 30. The $900 billion covid relief package will deliver aid to small businesses hit by the pandemic, Americans who have lost their jobs during the economic upheaval and health care workers on the front line of the crisis.

The legislation includes a second round of PPP Loans for Small businesses as well as loan-forgiveness rule changes that are favorable to PPP borrowers.

Businesses with a NAICS code beginning in 72 (generally hospitality businesses) may receive up to 3.5 times average monthly payroll costs.

To qualify for a second PPP loan:

• A small business must have fewer than 300 employees which is down from the 500 employee maximum in the first round. And a small business must have already used or plan to use their original PPP funding. Similar to the original PPP loan program, the small business can use the loan proceeds over a period of 24 weeks and can use the funds for payroll, rent and mortgage expenses.  The bill also adds some new expenses to the list of “qualifying expenses”. These new qualifying expenses include operating expenses, workplace protection costs to protect employees from Covid and covered property damage.
• A small business must certify that they have had a loss of revenue of 25% or greater.  This is different from the original qualification rules for PPP, which simply required the small business to state that economic uncertainty made the PPP loan necessary. Under the 25% loss of revenue test, the small business will compare their 2020 quarterly revenue against their 1^st, 2^nd, and 3^rd quarters of revenue in 2019.  In order to qualify for the second draw PPP loan, a borrower must be able to show a loss in revenue of 25% or more from at least one quarter of 2020 as compared to that same quarter in 2019.

The second PPP loans are forgivable but must be spent on 60% on payroll costs. Since the loan amount is based on 2.5 months of average payroll, which is 10-11 weeks, and since the small business can use the funds over a 24-week period, it seems likely most small businesses will be able to use 60% of the PPP funds on payroll costs.

The new legislation provides that the forgiven PPP loans will not be taxable to the small business borrower.  This applies to all existing PPP loans under the original CARES Act as well as the new second round of PPP loans. The good news for small businesses is that borrowers can have their PPP loan forgiven and will still be able to deduct their payroll and other qualifying expenses that they used their PPP funds on.

William E. Hesch Law Firm, LLC

3047 Madison Road, Suite 205

Cincinnati, OH 45209

(513) 731-6601 Phone

(513) 731-4173 Fax

www.heschlaw.com

bill.hesch@williamhesch.com

 

Patent Pending Retirement Trust for Baby Boomers’ Children

The Patent Pending Retirement Trust is an innovative trust idea that William E. Hesch, Esq., CPA, PFS created when working on an estate plan for his millennial children.  Bill was worried about his children planning for their retirement, and was trying to think of creative ways in which he could ensure that the two of them would have a sufficient amount of money to live off of when they reached retirement age.  Using his expertise in estate planning law, wills and trust law, asset protection planning and tax planning from his years of experience as an attorney, CPA, and financial planner (PFS) Bill created a Retirement Trust for his children.  In its simplest form the Retirement Trust is a trust meant to be a retirement plan for the Grantor’s children who do not expect Social Security to be, much of any help to them in thirty (30) years.

After using the trust for his estate plan, he began sharing the idea with clients over the past three years, to gauge whether or not there was a need in the estate planning market for such an instrument.  Many clients loved the concept and have in fact requested a Retirement Trust for their own estate plan.  Due to the positive reaction from his clients, Bill filed for a patent in August, 2018 and the Retirement Trust became “patent pending” in August, 2019.

Why use a Retirement Trust?

It is well known that the younger generations are not saving enough for their retirement.  Millennials are not saving for retirement in their 401(K)s and IRAs, and social security may not provide much retirement income for the generations that follow the baby boomers.  The main purpose for the Retirement Trust is to provide financial security for Grantor’s children in their retirement years.  A Retirement Trust allows the Grantor (or Grantors) to hold assets in a trust for the benefit of their children until their children reach an age specified by said Grantor, typically sixty-two (62) years of age. Upon reaching age sixty-two (62), the children begin receiving monthly distributions of retirement income, as provided for in the trust document.  There are a number of features the Grantor had customized in the instrument for his or her specific situation.

Who are the clients using Retirement Trusts?

This trust is typically used by baby boomer clients whose children are already old enough to be out of college and in the work force.  These clients want the benefits of using a revocable trust in their estate plans but are concerned with their children’s (or other beneficiaries’) financial security when they retire.  They have these concerns for many reasons, including: (1) their children’s past financial decision making; (2) have children who are entrepreneurs and are worried those children won’t have a nest egg for their retirement; (3) their children have potential creditor problems and don’t want them inheriting trust assets outright in a lump sum distribution; or (4) they believe social security benefits will not be there for their children.  It is a fact that seventy percent (70%) of lottery winners end up bankrupt in just a few years after receiving a large financial windfall.  It is not hard to believe that many children receiving a substantial windfall all at once from their parent, in their thirties or forties, may suffer the same fate.

How does the Retirement Trust work?

The Retirement Trust is a revocable trust that becomes irrevocable upon the death of the Grantor or both Grantors.  Upon the death of the Grantor, the trust is divided into sub trusts for each child.  Each child has the right to certain monthly distributions of their sub trust until that child reaches retirement age, typically age sixty-two (62).

Required distributions before reaching age sixty-two (62).

The Grantor has a choice of the method in which the required distributions before reaching the age of retirement are distributed, but it is commonly one or more of the following options: (1) a fixed dollar amount of the trust income and principal each year, adjusted for inflation annually (i.e. $20k); (2) a fixed percentage of the trust principal each year (i.e. 4% which would allow the trust nest egg to grow, while supplementing beneficiary’s income.); and (3) the Grantor may attach a work requirement to the beneficiary’s distributions before reaching the designated retirement age.  If a child becomes disabled, monthly payments commence for early retirement.

Distributions upon reaching the age of retirement.

Once the child reaches age sixty-two (62), the balance of assets remaining in that child’s sub trust are totaled and that child is entitled to a monthly annuity payment using the average monthly payment amounts that would be payed from Northwestern Mutual and New York Life annuities, payable for the remainder of that child’s life.  Typically, the trust will outline that payments shall be paid monthly beginning on the last day of the month in which the child turns sixty-two (62).

Northwestern Mutual and New York Life do not need to be the insurance companies identified in this section of the Trust.  Any insurance company’s annuities or actuarial tables or the IRS life expectancy tables can be used to compute a monthly benefit to be payable for that child’s life.  To clarify, an annuity is not actually purchased from one of these insurance companies.  The Trustee simply obtains a quote from each insurance company and pays from the trust the equivalent of the average monthly annuity payment that would have been paid from those insurance companies had an annuity actually been purchased.

For more information about this creative, innovative, Patent Pending Retirement Trust, call Bill Hesch to set up a free 30-minute initial consultation at 513-509-7829.

(Legal Disclaimer:  William E. Hesch submits this blog to provide general information about the firm and its services.  Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel.  While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog.  Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)

Our firm remains open and available to serve you while maintaining our top priority of keeping our employees and clients SAFE.  I am working daily at the office from 9am to 5pm and office staff are working at home as much as possible.  Meetings with staff are encouraged to be by phone conference or Zoom if possible.  Otherwise, in person meetings in the office are kept to a minimum and safe distancing is strictly observed.

Tax information can be mailed or emailed to us or can be dropped off on our 2nd floor stairwell by appointment.

Any documents that need to be executed and witnessed or dropped off are done by appointment only.  Please schedule this with Bill Hesch at 513-509-7829 or office staff at 513-731-6601 or 513-731-6612.  Arrangements can be made to schedule a drop off on the second floor stairwell to our front door entrance on Madison Road.

In regard to the sanitation of our office, the office is deep cleaned every week.  We disinfect all door handles, bath sink handles and light switches every day.

When the staff is meeting in each other’s work space or meeting with clients, both employees and clients shall wear masks.  Also, when staff enter into the common areas in our office, they shall be wearing their masks.

Hand sanitizer and masks have been provided to all staff and will be made available to any visitor in the office.

Thank you and prayers for everyone’s safety!!

Bill Hesch

William E. Hesch Law Firm, LLC
William E. Hesch CPAs, LLC
3047 Madison Road, Suite 201/205
Cincinnati, OH 45209
(513) 731-6601 Phone
(513) 731-6612 Phone
(513) 731-6613 Fax
www.heschlaw.com
www.heschcpa.com
bill.hesch@williamhesch.com

The unexpected death of Prince shocked everyone around the world. To those of us in the financial and estate planning world, it was even more shocking to learn that he seemingly died without an estate plan. Even a month after his death, Prince’s family is still unable to locate evidence that he died with an enforceable Last Will and Testament. As a result of such a major blunder, the fate of his estimated $300 million estate lies in the hands of Minnesota state law. Rich or poor, we can all use Prince’s errors as a harsh lesson in the importance of implementing even the most basic estate plan.
Prince’s Property Rights

Prince was known to have been very controlling of his music. He fought to keep his music off of Youtube and other streaming sites and stood up to his record label when he felt his music was not being treated properly. Those close to Prince also believe he kept a trove of unreleased records at his Paisley Park mansion. Without specific instructions in a Will or Trust, the court-appointed Administrator of his Estate will have the sole authority to decide what happens with his property rights. How the Administrator decides to control his property rights may be inconsistent with what he would have wanted to do.

Continue reading “Prince’s Legacy: Harsh Lessons From Estate Planning Errors” →

Baby Boomers: Protect your Biggest Asset From Creditors and the IRS!

IRAs and the Retirement Beneficiary Trust

I often find that the single largest asset my baby boomer clients have is in the form of an IRA or 401(k).  When that’s the case, I always counsel my clients about the importance of properly listing the beneficiaries on those accounts so that their estate plan operates the way they want it to. Typically, baby boomers name their spouse as the sole beneficiary of their retirement accounts. When the account owner dies, the surviving spouse has favorable tax laws and a lot of flexibility to decide what happens to their inherited IRA, including rolling it into their own.  However, what does a single or widowed person do with their IRA when they die?

Continue reading “IRAs and The Retirement Beneficiary Trust” →

Clients and Friends:

Re: IRS changes in tax return filing due dates-To be effective in 2017

Effective for returns for tax years beginning after December 31, 2015, the due date of partnership tax returns is changed to March 15th for calendar-year partnerships and to the fifteenth day of the third month after the end of the tax year for partnerships with a fiscal tax year.

To avoid bunching the workload for filing and processing tax returns, the due date for C corporation tax returns is moved to April 15th for calendar-year C corporations and to the fifteenth day of the fourth month for fiscal-year C corporations.

Because tax returns for tax years beginning after December 31, 2015, will be filed in 2017 and thereafter, the new due dates will affect returns filed beginning in 2017.

The Due dates are not changed for tax returns for tax years ending 12/31/15 to be filed in 2016.

—————————————-12/31/2015
—————————————-Due Date
Trust/Estates—Form1041——4/15/2016
C Corporations—Form 1120—3/15/2016
S Corporations—Form 1120S-3/15/2016
Partnerships—Form 1065——4/15/2016

The Top 3 Reasons How Online Estate Planning Documents Can Devastate Your Family and Leave Them In Financial Ruin – Money Can Be A Curse!!

 

Reason 1: The Pitfalls of Not Getting Legal Advice from an Attorney Can Cause Your Estate Plan to be Defective Because of Wrong Heirs, Wasteful Spending, and Worthless Investments

 

Arguably one of the biggest reasons why online estate planning documents can devastate your family’s estate plan and leave them in financial ruin is because you don’t get legal advice with do-it-yourself documents.  What most people don’t realize is that the value of an estate plan isn’t just in the documents – it’s in the advice and counsel you get from your estate planning lawyer.  An estate planning lawyer can identify issues that are unique to your financial and personal life that will affect your estate plan.  Some of those issues might include: blended families, predeceased beneficiaries, family drug/alcohol problems, problems with the in-laws, careless spending, worthless investments, and Medicaid planning opportunities.  My last blog, Part I of Reason 1, addressed the concerns you might have if the wrong heirs inherited your estate.  This blog will address how your beneficiaries’ wasteful spending and worthless investments can ruin your family.

Continue reading “Top 3-Estate Planning Docs. Can Devastate-Pt. 2” →