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Articles Tagged with Kentucky

By Leah Morrison            LAM-MERITAS-300x284

Powers of Attorney are a crucial estate planning document and are a critical step in planning for incapacity. A power of attorney allows a person you appoint the written authorization and power to act on your behalf in business, legal, financial, and medical matters. This is usually a trusted family member. If the right power of attorney is put in place, then once incapacitated, the agent (or person appointed under the power of attorney) can step in and take care of the principal’s legal and financial affairs. Without the right power of attorney – or any at all – the incapacitated individual’s family would need to go through the justice system to have a guardian or conservator appointed to represent them.

A power of attorney may be limited or general. A limited power of attorney may only give someone a specific right or two – perhaps the most common place you’ll see a limited power of attorney is in purchasing a car or real estate. Car dealers will often have you sign a limited power of attorney granting them the authority to complete the transaction at the local county clerk. Additionally, you might give someone the authority to sign a deed to property for you on a day that you will be out of town. A general power is comprehensive and usually grants your agent all the powers and rights that you have yourself. This can include allowing your agent to make bank transactions, sign checks, apply for disability, or simply pay your bills.

Nathan VinsonBelieve it or not, the end of 2020 is quickly approaching (insert collective sigh of relief). While I think most of us are ready to start looking forward to 2021 and would prefer to not even have to utter the words 2020 anymore, now is the time to finish off the year strong by reviewing simple, yet important, year-end tax planning and wealth transfer tips.

When most people think of tax planning and wealth transfer, they may have in mind complex estate planning documents and an overload of legal and accounting advice.  But that doesn’t have to be the case.  Here are three simple tips that you can implement with relative ease, though you will want to consult your tax advisor first.

1. The Annual Gift Tax Exclusion. The simplest tax planning and wealth transfer technique involves the all-too-familiar annual gift tax exclusion.  The annual gift tax exclusion is an amount that a person may give to another person without having to file a gift tax return or otherwise report to the IRS.  The current exclusion is $15,000 per person receiving the gift.  The exclusion is indexed for inflation, but it may only increase in $1,000 increments.  Further, married taxpayers may elect “gift-splitting,” which basically doubles the amount of the gift that they may make to one person using the gift tax exclusion; for each person receiving the gift, the limitation would be $30,000 rather than $15,000.  For example, if a married couple has two children and four grandchildren, they can give up to $30,000 to each of these people tax-free and without having to report it to the IRS.  Therefore, the married couple may transfer $180,000 total to the children and grandchildren.  Going further, if the children are also married, the taxpayers may give an additional $30,000 to each child’s spouse, which may be desirable if the child and the spouse hold a joint checking or investment account.  Note, however, that a gift tax return would need to be filed if the taxpayers elect gift-splitting.  The gifts are not taxable at all, but the IRS would like to know that the $30,000 was gifted via gift-splitting.

Nathan Vinson

Nathan Vinson

By Nathan Vinson

Right at two years to the date, Kentucky has again changed its power of attorney law by adopting parts of the Uniform Power of Attorney Act that it did not adopt as part of the changes that went into effect on July 14, 2018.  The new law went into effect on July 15, 2020, and applies to a power of attorney created before, on, or after July 15.  However, acts done before July 15, 2020 are not affected by the new law.

The biggest change created by the 2018 law was the requirement that the power of attorney be witnessed by two disinterested persons, though a power of attorney validly executed before that law went into effect remained valid.  The new law brings about three major changes – one of them being no more witnesses required!  Just two years after that requirement came into effect, it is again changed to take us back to prior law.  However, practitioners may decide it is best practice to continue to require two witnesses.  Further, some states require that the power of attorney have two witnesses, especially when used to transfer real estate.  On the flipside, the new law makes executing a power of attorney in urgent situations much easier.

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Well here we are.  It has been well over a year since the United States Supreme Court’s decision in South Dakota v. Wayfair, Inc.  As a refresher and not to make your eyes agonizingly glaze over with the down and dirty tax details, Wayfair essentially upheld South Dakota’s tax law that required remote retailers with no physical presence in the state to collect and remit South Dakota sales tax.  Prior to Wayfair, states could not require retailers without a physical presence in such states to collect and remit sales tax pursuant to the Supreme Court’s decision in Quill Corp v. North Dakota.

Nathan Vinson

Nathan Vinson

South Dakota’s remote retailer law sets a threshold requirement for its application.  A remote retailer must, on an annual basis, deliver more than $100,000 of goods or services into the state or engage in 200 or more separate transactions for the delivery of goods or services into the state.  The law therefore contains a so-called small retailer exception.

Sarah-Jarboe-Portrait-2016

Sarah Jarboe

On August 21, 2019, a new rule from the Environmental Protection Agency went into effect in Kentucky that could change the way certain healthcare facilities are required to manage pharmaceutical hazardous waste.  The rule is intended to streamline the collection and handling requirements of pharmaceutical hazardous waste and reduce the complexity of hazardous waste regulations that must be followed by healthcare facilities.

What are some of the new requirements?

By Leah Morrison

Leah Morrison

 Leah Morrison

English, Lucas, Priest & Owsley, LLP

2018 Kentucky legislation expanded the types of services subject to sales and use tax, established economic nexus thresholds for remote retailers, and amended certain excise taxes. In other words, 2018 brought new headaches to Kentucky businesses statewide. But one group in particular was more burdened than the rest: nonprofit organizations. New legislation forced nonprofits to pay sales tax on all the extended services, if applicable, plus, most notably, on sales of admission. This cut deeply into a nonprofit’s ability to raise funds at fundraising events.

Nonprofits had to employ some creative techniques to separate sponsorships and donations from the costs associated with being allowed entry into their fundraising events. Additionally, sales tax had to be collected and paid on certain items auctioned during these events. If the auction item in question was a physical object, tax had to be paid on it – and at the auctioned price, not the actual, retail value of the item. But auction items such as lawn care services or vacations were exempt from sales tax collection. These are only a few examples of the nightmare nonprofits were forced to navigate. Compliance with sale tax laws drained their resources and significantly impacted the ability of nonprofits statewide to provide their charitable purposes in draining the resources they had available to them.

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By Brett Reynolds, Partner
English, Lucas, Priest and Owsley, LLP

Brett Reynolds

Brett Reynolds

Everyone has gotten scam calls and emails. The scammers are getting smarter and more sophisticated, and they’re now targeting law firms and other businesses with well-planned attempts to get money.
The scams have enough legitimacy that they sound like they could be real business transactions. In fact, our own firm was hit with an attempt a few weeks ago that we wanted to tell you about so you can see how these type of scams work, and how you can avoid getting taken.
I was contacted by a local real estate developer who owned several apartment complexes. A buyer in China wanted to buy the properties, and he needed someone to hold earnest money in escrow and assist with any legal details that might arise before he could come to the United States. I agreed to do so. This is fairly standard and something we’ve done in countless deals for clients previously. It didn’t raise any alarms for us that the buyer was overseas. This is quite common. Bowling Green is a fairly diverse city with lots of foreign nationals living and working in our community, and we’re better for it.

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By Aaron Smith, Partner
English, Lucas, Priest and Owsley

The U.S. Supreme Court issued a unanimous ruling this week that municipalities need to carefully consider in their hiring and firing practices.

The ruling indicates that local and state governments are required to abide by the Age Discrimination in Employment Act, which has been in place since 1967. The law was amended in 1974 to specify that it applies to public entities as well.

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By Nathan Vinson
English, Lucas, Priest & Owsley, LLP

If you want to save up for your child’s future college education, 529 plans have long been a great option. Lovingly named for the section of the IRS tax code where these reside, 529 plans allow families to save for college with some tax advantages. The plans are sponsored by states, state agencies, or educational institutions, and can be either a prepaid tuition plan or an education savings plan, depending on what the sponsor offers.

Western Kentucky University campus

A prepaid tuition plan allows you to pay today’s rates for future college education. This can be a tremendous savings if you’re 100 percent certain your kid is absolutely going to a specific college (or going to college at all). These are typically state-owned colleges and universities, and you can only pre-pay tuition, not room and board. Kentucky’s prepaid tuition plan is closed, and will be reassessed annually, the plan says on its web site; Kentucky Education Savings Plan Trust does still offer a 529 plan that allows for college savings, and you can find more on that here.

An education savings plan is simply a vehicle for saving up for future college costs, and that includes room and board. These funds can also be used for private school tuition at elementary, middle and high schools, up to $10,000 per beneficiary. That $10,000 cap, though, doesn’t apply to college – just to K-12 education.

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By Aaron Smith, Partner
English, Lucas, Priest and Owsley, LLP

Just a few short weeks ago, attorneys Buzz English and J.A. Sowell from our firm took a case to trial because our client felt it was the best option, and we concurred.

In that case, we were defending a truck driver and the company he worked for against a lawsuit filed by a pedestrian he struck at night while driving. Our observation from that case is that sometimes it is best to go to trial — and we had that lesson reinforced for us and our clients again this week in Simpson Circuit Court.

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