The PPP Compliance Puzzle

Few things are certain in these unprecedent times. One thing is. Forgiveness under the Paycheck Protection Program (PPP) is likely subject to heightened scrutiny. What are some steps small businesses can take now to ensure proper PPP compliance?

These basics do not guarantee any particular results. They are the start of a plan to move forward and measure against. Planning and execution in all phases are essential to success. Ensuring compliance with PPP is no different. 

Small business success is our passion at The Skeen Firm. Call us at 724-550-6970 for a free one-hour consultation about your business questions. 

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship. 

SECURE Act - Searching for a Stretch

The SECURE Act, short for Securing Every Community Up for Retirement Act of 2019, took effect in January 2020. Congress’ intent in passing the SECURE Act was to expand retirement options, particularly 401(k)s through small businesses and for part-time employees. Further, it opens avenues to protect retirement income by offering annuities through 401(k) plans. This means….Other improvements include postponing the required minimum distribution (RMD) age to 72. It also allows traditional IRA owners to make contributions indefinitely. All of these changes are geared to help Americans grow and preserve their retirement accounts. 

For all the good the Act brings, it did eliminate what was colloquially known as the Stretch IRA. What exactly was the Stretch IRA? The Stretch IRA was a strategy used to expand the distribution timeline and reduce the tax burden of a non-spouse that inherited a Traditional IRA. Using the previous guidelines, a non-spouse inheriting a Traditional IRA would take distributions at a rate based on their life expectancy and not the original account owner’s. 

Stretching out the distribution timeline allowed the new owner to essentially defer taxes, while simultaneously allowing the investment to grow. This strategy was radically altered under the SECURE act, which requires a non-spouse inheriting an IRA to distribute the full value within ten years of the date of inheritance. Doing so creates a multitude of tax consequences and ultimately benefits the government in new revenue generation. Please note, this does not impact those non-spouses inheriting before January 1, 2020. It also will not apply to a list of excepted recipients, including spouses, children who have not reached the age of majority, disabled or chronically ill, or similarly aged recipients. No matter what your current situation or designation, there are still workarounds and innovative ways to tax plan for your estate, regardless of estate size. It is more important now than ever to review your beneficiary designations, asset blends, and overall family plan. 

Contact us today at 724-550-6970 or info@theskeenfirm.com if you have questions regarding your estate plan and how the SECURE Act will benefit or impact your particular situation.   

*Disclaimer: this article is for informational purposes only. It is not providing legal advice. It does not create an attorney-client relationship. 

Probate and Taxes and Fees, oh my!

Picture this for a brief second. We are all mid movie and a beloved character has tragically passed. What happens next? Everyone knows the answer. The family goes to some unknown attorney’s office to “read the will”. They all act surprised and furious when they are cut out of the decedent’s estate, the bulk of which went to charity and a beloved tabby. But is this an accurate construct in the real world? Keep reading for an explanation of why this is all Hollywood drama. Do not confuse this with meaning there might not be drama in what is better known as the probate process, but this is a preview of what to expect when a loved one dies. 

The scene described above in some ways describes an estate set up by a Trust. Those who die with an estate plan based on a will (testate in the legal world) are required to go through a process known as probating the will. For lack of better terms, filing a will with Register of Wills and petition for probate with the Orphans’ Court opens an action against the decedents’ estate so that their debts can be settled and remaining assets disbursed. Upon filing the petition, the court will grant Letters Testamentary enabling the listed executor/executrix within the will to begin gathering assets and acting on behalf of the estate.  At this point a whole list of beneficiaries, creditors, heirs, and even the public are given notice by the executor that probate is underway. 

After clearing these initial hurdles, the executor/executrix will focus on valuing all estate assets for a basis from which to settle debts and pay taxes. Tax situations vary by estate, but most can plan on paying a PA inheritance tax for any transfer that is not between spouses or children under 21. Federal inheritance taxes are more difficult to pin down because they change periodically based on the party in control. There are ways to plan for these changes, should an estate value project out that high. This is one of many reasons to develop a plan that can change to meet your needs as these changes occur. Once the assets are valued and both creditors and taxes are paid, the executor/executrix can prepare a final accounting and distribute the estate. 

Sure a will costs less up front than some other estate planning methods, it might cost the family more in the end through taxes and attorney fees. These fees vary from .5% to 7% based on estate size. Also, worth consideration is the emotional toll the probate process will have on some. Trusts offer a viable alternative but cost significantly more to establish.  They do, in many cases, avoid the probate process all together. One thing is certain; neither provides a way to completely avoid estate taxes. At The Skeen Firm we are ready to help you decide which plan makes sense for your situation and provide custom tailored solutions. Contact us today at 724-550-6970 or info@theskeenfirm.com to get started on your plan!

*Disclaimer: the advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on, nor construed as creating an attorney-client relationship.