Penn State/Dickinson Law School and Elder Law

Each monthly issue of the electronic newsletter, Alumni Connection, sent to graduates of The Dickinson School of Law of the Penn State University (generally now known as Penn State Law) includes a link to a legal blog. The September, 2011 issue includes a link to this PA Elder, Estate & Fiduciary Law Blog.  

Such a selection shows consistency between this Blog's focus, and the past and present involvement of PSU/DSL in elder law study, research, and clinic practice.

For example, on Tuesday, September 27, 2011, according to a Press Release entitled "Professor Pearson to speak on preventing elder abuse", Professor Katherine C. Pearson will visit the Penn State School of Nursing (and its Hartford Center of Geriatric Nursing at Penn State) to present a lecture, "Beware of Befrienders: Analyzing Roles for Professionals in Helping Older Adults Avoid Financial Abuse.

When an elderly person is caught in the snares of financial abuse, a professional such as a nurse, physician, banker, or attorney can only provide help if he or she knows what to look for and what to do when elder abuse is suspected. * * *

“This is a rare opportunity to speak with an experienced elder law attorney and better understand this important issue, which has become an enormous problem for older adults in recent years,” said Patricia Webb, project administrator at the Hartford Center of Geriatric Nursing at Penn State, which is sponsoring the event.

“Financial abuse can be a complex interdisciplinary problem. We would shortchange vulnerable people by addressing this problem through the eyes of just one profession,” said Professor Pearson, who is a scholar of legal issues facing older adults and focuses on interdisciplinary and comparative approaches to elder care.

Beyond teaching law school courses on elder law, she is well-qualified to discuss elder abuse. For example:

• She co-wrote a book on financial elder abuse, published early in 2011.  See: "Professors Co-Author Book on the Law of Financial Abuse and Exploitation"; and PA EE&F Law Blog posting New Book: "The Law of Financial Abuse and Exploitation" (01/26/11).
• She testified on July 16, 2010, before the United States Senate Special Committee on Aging about "The Importance of Resident Voices in Regulation of Continuing Care Retirement Communities."
• She discussed financial elder abuse on WITF-TV in a personal interview.  See: Professor Pearson discusses the elderly as targets of fraud on WITF-Smart Talk
• She will work with researchers from Northern Ireland and England and lead a year-long study that examines whether the U.S. legal system is meeting the legal advice needs of older adults.  See:  "Do the elderly get the legal advice they need? Professor Pearson works with researchers from the UK to get answers." (07/13/11).

Beyond such faculty involvement, DSL/PSU law students in Carlisle, PA, support the Wills for Heroes Foundation program locally, providing free basic estate and personal planning for first responders and their families.  See: "Wills for Heroes" (10/11).  Students there also offered legal assistance to local senior citizens.  See: "Students Expand Outreach through “Senior Law Day” (02/08).

Most importantly, the Law School has operated its Elder Protection Clinic continuously since 2001.  See:  "Partners in Outreach and Advocacy: Interdisciplinary Opportunities in University-Based Legal Clinics" by Katherine C. Pearson & Lucy Johnston-Walsh, published and posted by the Journal of Higher Education Outreach and Engagement, Volume 11, Number 4, p. 163, (2006).

I've noted the Elder Protection Clinic's periodic Newsletters previously.  See: PA EE&F Law Blog postings PSU-DSL Publishes Its Elder Law Clinic Newsletter (12/19/07) and "Adventures in Law & Aging" -- Spring, 2009 Issue (04/27/09).

As I've said recently, I'm proud to be an alumnus.

Whether anyone will notice the Law School's posting of a link to this particular blog is not important.  It is the Law School's sensitivity to this area of the law -- demonstrated by including such a link -- that is so important. 

IRS Issues Revised 706 Instructions & Preparer Requirements

On September 22, 2011, the IRS issued revised Instructions for the recently-finalized Form 706, according to Vincent F. Lackner, Jr., Esq., who sent an email to customers of The Lackner Group, Inc. today.  

As a software developer, he has tracked the development of that form and its instructions carefully.

Early yesterday [09/22/11] evening, the IRS authorized a final draft of the US 706 Instructions for 2011 for release to the general public.

Please feel free to download it from the following link and to circulate it to interested parties:  www.lacknergroup.com/Draft_11i706.pdf

The IRS's ability to post new forms and instructions to its website has been temporarily interrupted due to scheduled maintenance. When it is again able to post to its website next Wednesday morning (9/28/2011), the "Draft" watermark will be removed from this version.

The key change in these instructions relates to the portability of an unused exclusion amount for a married couple from the 1st estate to the 2nd estate. This feature is currently available only for 2011 and 2012 estates. * * *

Once finalized, those Form 706 Instructions should be updated on the IRS Online Instructions for Forms web page.

Vince also sent a detailed comparison of prior Form 706 Instructions and the latest issuance, which relates to the revised Form 706, issued on September 8, 2011.  See: PA EE&F Law Blog postings Revised IRS 706 Form Released (09/12/11) and 2010 Decedent Estates Granted Federal Filing & Payment Relief (09/13/11).

Vince emphasized an important point regarding filing of a Form 706 under certain circumstances:

Even for a married 2011 decedent with a gross estate of $5m or less (there are about 950,000 of these annually), you would need to file a timely and complete 706 in the 1st estate in order to preserve the unused exclusion amount for the 2nd estate.

You might consider filing an extension request (Form 4768) to gain more time to analyze this issue pending the IRS' release of the final 706 Instructions for 2011 sometime next week. * * *

Separately, on September 21, 2011, the IRS issued a Press Release entitled IRS Issues Guidance to Further Implement Return Preparer Oversight, IR-2011-96, which provided "clarification for tax return preparers about when to renew their preparer tax identification numbers (PTINs), how suitability testing will be conducted, and when the continuing education requirement will begin."

Key points include:

• The return preparer initiative requires anyone who is paid to prepare all or substantially all of any federal tax return or claim for refund to register with the IRS and obtain a PTIN. PTINs must now be renewed on a calendar year basis. 
• Certain preparers (individuals who are not attorneys, certified public accountants, or enrolled agents) also must pass a competency examination, undergo a suitability check and complete continuing education courses annually. 
• The IRS will designate individuals who meet these requirements as a Registered Tax Return Preparer, who will be authorized to prepare federal tax returns and claims for refunds and to represent their clients during an IRS examination of a tax return or claim for refund that the individual signed as the paid tax return preparer.
• All PTIN holders must renew their numbers using the online PTIN application or paper Form W-12 and pay the required fee ($64.25 for 2012) after Oct. 15 and before Jan. 1 annually.
• Certain tax return preparers who must pass a suitability check will have to provide their fingerprints so that a Federal Bureau of Investigation database search can be conducted. Generally, the fingerprint requirement will affect those preparers who currently have provisional PTINs.
• Attorneys, certified public accountants, enrolled agents, enrolled retirement plan agent and enrolled actuaries also are expected to be exempt from the fingerprinting requirement at this time.  However, these individuals also must answer all the suitability questions asked on the PTIN application, such as whether they have been convicted of a felony in the previous 10 years.

Also on September 21, 2011, the IRS published proposed regulations (REG-116284-11) that would establish user fees for fingerprinting and taking the competency examination. 

As proposed, the IRS portion of the fingerprinting fee would be $33, and the IRS portion of the testing fee would be $27. These user fees are in addition to any fees charged by the third-party vendors administering the programs. The fees to be charged by third-party vendors are not being announced at this time, but the total fees, including the IRS user fees, are expected to be between $60 and $90 for fingerprinting and $100 and $125 for testing.

For IRS guidance regarding its PTIN program, visit www.IRS.gov/ptin.  You can watch an introductory video here (01/11).

Blogger Notes 35th Law School Reunion

On a personal note, I will attend the 35th Reunion of the Class of 1976 of The Dickinson School of Law (now a professional graduate school of Penn State University) on Friday evening, September 16th, and Saturday, September 17th, 2011.

To promote classmate attendance, I created a website, DSL Proud 1976, where I noted:

The "Proud and Independent" Dickinson School of Law that we once attended evolved into the more expansive Penn State University Dickinson School of Law (also known as Penn State Law or The Dickinson School of Law of the Pennsylvania State University).  It now operates in two locations -- University Park, Pennsylvania and Carlisle, Pennsylvania -- as a unified enterprise with a solid reputation, a growing stature, and a bright future.

On that class reunion website, I noted the changes in the Law School.  I posted images reflecting the changes and links explaining them.

I'm proud to be a graduate; and I'm proud that the Law School still educates lawyers well.

Anyone contemplating a law school education should consider The Dickinson School of Law of Penn State University.

2010 Decedent Estates Granted Federal Filing & Payment Relief

The IRS has relented on next week's (September 19th) earliest filing and payment deadlines for some 2010 estates, otherwise anticipated by Section 301(d) of the Tax Relief Act and enforced by the IRS' prior Notice 2011-66, released on August 5, 2011.

That Act states that for decedents who died after December 31, 2009, and before December 17, 2010, the time for filing the estate tax return and the payment of estate tax “shall not be earlier than the date which is 9 months after the date of the enactment of this Act.” Thus, the earliest due date could be September 19, 2011, depending upon the date of death.

The new taxpayer (and tax preparer) relief is described in a September 13, 2011 Press Release, which appeared online today on the IRS Newsroom:

IRS Offers Filing and Penalty Relief for 2010 Estates; Basis Form Now Due Jan. 17; Extension to March Available for Estate Tax Returns

IR-2011-91, Sept. 13, 2011 — The IRS announced that large estates of people who died in 2010 will have until early next year to file various returns and pay any estate taxes due.

This is the brief, complete text of that Press Release, with links:

The Internal Revenue Service announced today that large estates of people who died in 2010 will have until early next year to file various required returns and pay any estate taxes due. In addition, the IRS is providing penalty relief to certain beneficiaries of these estates on their 2010 federal income tax returns.

This relief is designed to give large estates, normally those over $5 million, more time to comply with key tax law changes enacted late last year. Revised versions of the estate tax forms are now available on IRS.gov, and the carryover basis form will be released this fall.

The IRS is providing the following relief:

• Large estates, opting out of the estate tax, now will have until Tuesday, Jan. 17, 2012, to file Form 8939. This special carryover basis form, required of estates making this choice, was previously due on Nov. 15, 2011. Because this is a change in the specified due date rather than an extension, no statement or form needs to be filed with the IRS to have this new due date apply.

• 2010 estates that request an extension on Form 4768 will have until March 2012 to file their estate tax returns and pay any estate tax due. Normally, a six-month filing extension is automatically granted to estates filing this form, but extensions of time to pay are granted only for good cause. As a result, most 2010 estates that timely file Form 4768 will have until Monday, March 19, 2012 to file Form 706 or Form 706-NA. For estates of those dying late in 2010 (after Dec. 16, 2010 and before Jan. 1, 2011), the due date is 15 months after the date of death. No late-filing or late-payment penalties will be due, though interest still will be charged on any estate tax paid after the original due date.

• Special penalty relief is provided to many individuals, estates and trusts that already filed a 2010 federal income tax return, or obtained an extension and plan to file by the Oct. 17, 2011 extended due date. Late-payment and negligence penalty relief applies to persons inheriting property from a decedent dying in 2010, who then sells the property in 2010 but improperly reports gain or loss because they did not know whether the estate made the carryover basis election. Details are in Notice 2011-76, posted today on IRS.gov.

Revised IRS 706 Form Released

On September 8, 2011, the IRS released its long-awaited, really final Form 706 United States Estate (and Generation Skipping Transfer) Tax Return (PDF 2.52 MB, 28 pages) for decedents dying in 2010, along with revised (July 2011) Instructions (PDF 441K, 48 pages).  The Form 706 is in a fillable PDF format that applies to decedents who died in 2010.

Why is this the "really" final form?  Because the IRS issued an initial July 2011 form on September 3, 2011, then revised it somewhat, and reissued it again on September 8, 2011.  See:  Estate Taxes Are Back! Are You Prepared? (09/12/11) by Julie Garber, posted on the Wills & Estates section of About.com.

Vince Lackner, of The Lackner Group, explained at least some of the errors made in the initial version:

The IRS released the final version of the 706 for 2010 at 1:05 am this past Saturday morning (September 3, 2011). This version of the 706 is included in the current 6-in-1 [software] update. * * * 

Yesterday we brought two issues to the attention of the IRS. As a result, it will be re-posting the 706 within the next 12 hours:

    (1) The "penalties of perjury" statement at the bottom of Page 1 should not have the second sentence ("...property...situated in the United States"). This was evidently a copy/paste from the 706-NA, and will be removed by the IRS. We contemplated this change in the update currently posted on our website. * * *

    (2) Schedule F (Question #1 at the top) should no longer have a reference to "collections whose artistic or collectible value combined at date of death exceeded $10,000." There appears to have been no statutory or regulatory authority for this additional reporting threshold (Reg. 20.2031-6(b)). This reference was removed from the instructions for Schedule F, but inadvertently left on Schedule F itself. * * *

The "What's New" section of the July 2011 revised Instructions summarizes the updates from the prior form:

• Use this revision of Form 706 only for the estates of decedents dying in calendar year 2010.

• The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Act) included several provisions affecting the 2010 Form 706. They are:
• a. Executors of estates of decedents who died in 2010 may make a special election to apply modified carryover basis treatment (within the meaning of section 1022) under section 301 of the Act. If the special election is made, the estate will not be subject to federal estate tax and Form 706 should not be filed. See Notice 2011-66, 2011-35 I.R.B. 184 (http://www.irs.gov/pub/irs-irbs/ irb11-35.pdf) and Form 8939 and its instructions for further information on the time and manner of making the special election.
• b. For decedents dying between January 1, 2010, and December 16, 2010, the due date for Form 706 is September 19, 2011.
• c. The applicable exclusion amount is $5,000,000 (a credit equivalent of $1,730,800).
• d. The maximum estate tax rate is 35%.
• e. The applicable rate for generation-skipping transfers is zero.
• f. Prior gifts must be calculated at the rate in effect at the decedent’s date of death.

• Various dollar amounts and limitations relevant to Form 706 are indexed for inflation. For decedents dying in 2010, the following amounts are applicable:
• a. The ceiling on special-use valuation is $1,000,000.
• b. The amount used in computing the 2% portion of estate tax payable in installments is $1,340,000. The IRS will publish amounts for future years in annual revenue procedures.

• Executors must provide documentation of their status.

The need for the 706 form to be revised in compliance with applicable law and in advance of a firm upcoming deadline, is explained in Alert: IRS Releases Final Form 706 and Instructions With Respect to 2010 Deaths (09/09/11), by Kerry L. Spindler, Esq,of Goulston & Storrs, PC, posted by the Boston Bar Association Trusts & Estates Section:

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) was to have repealed the federal estate tax for decedents dying in 2010 and replace the step-up in basis traditionally available to property transferred at death with a modified carry-over basis regime.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRA) restored the federal estate tax for 2010 decedents, subject to a $5M federal estate tax exemption amount and a 35% maximum federal estate tax rate, and also restored the step-up in basis rules.

This notwithstanding, TRA § 301(c) permits the executor or administrator of a 2010 estate to elect into EGTRRA’s zero estate tax/modified carry-over basis rules. This election (a § 1022 Election) will be made on a timely filed Form 8939 (see IRS Notice 2011-66).

This Form 706 is to be used only with respect to decedents who died during calendar year 2010 where the executor or administrator is not making a § 1022 Election. * * *

An excellent summary regarding the new form and its crucial filing deadline was posted by the Journal of Accountancy in Estate Tax Form, Instructions Finalized for 2010; Due Sept. 19 (09/08/11).

The American Institute of Certified Public Accountants, in its August 8, 2011 letter to the Department of the Treasury and the IRS (Doc, 4 pages, with links to sources), has requested extension of, or relief from, the looming deadlines for filing and tax payment, which could occur as early as September 19, 2011.

Update: 2011-09-13:

The IRS has granted relief in application of filing and payment deadlines.  See: PA EE&F Law Blog posting 2010 Decedent Estates Granted Federal Filing & Payment Relief (09/13/2011).