Legacy Lost: The Dwindling Family Inheritance

Ninety percent of family inheritance is often lost within just three generations, according to the Wall Street Journal (Lost Inheritance).  By the end of the second generation — to be clear, that’s after your children have passed away — you can expect 70% to be gone.

This bodes particularly ill for the massive wealth transfer of the baby boomers, who are set to inherit $7.6 trillion — equivalent to the GDP of China — over their lifetimes, mostly in their later years.

(Credit: Wall Street Journal)

Given how the bottom has fallen out of interest rates, the volatility on Wall Street in recent years, and the sluggish recovery of a real estate industry still trying to pick itself up off the mat, it seems there is no shortage of reasons for this generation to be concerned about its financial legacy.  And that’s just the economy.  

E-Commerce: “Physical Presence” Sales Tax Collection

You don’t have to look hard to find the advantages internet retailers enjoy over their brick-and-mortar counterparts — and I’m not just talking about the lack of a enraged landlord banging down the door for this month’s rent (not to mention last month’s).

Indeed, lower overheads in general is a key reason why the e-commerce business model can offer the consumer more choices and more convenience at lower prices than rivals with physical premises maintain. But lower taxes, too?

As a matter of fact, yes.

You see, notwithstanding the myriad legal challenges pending around the country, internet retailers are not required to collect sales tax from many of their customers. That savings translates to the modestly lower prices that 2 out of 3 online shoppers indicate as the reason they shop online.

The “Physical Presence” Rule

Pursuant to the 1992 U.S. Supreme Court decision in Quill Corp. v. North Dakota, mail-order businesses — now understood to include online businesses — are only required  to collect sales tax on internet sales to customers in those states where the business maintains a physical presence.

Basically, if your business pays rent, tax, or commission in a given state, then you’ll need to collect sales tax there as well. More specifically, in the eyes of the court a “physical presence” includes: 

New Maryland Slayer’s Law to Disinherit Murderers from Victim’s Estate

What sounds like the plot of a BBC murder mystery tragically became reality for the family of Ann Sue Metz in 2009, when her husband killed her and inherited her estate. Though he was convicted and sentenced for the crime, Metz’s husband still assumed ownership or her property — which he proceeded to sell off from his jail cell, leaving Metz’s children next to nothing by which to remember their mother.

To this day, Maryland is one of eight states without a Slayer’s Law – a statute preventing a murderer from financially benefitting from the death of their victim — but the Ann Sue Metz Law pending approval by the General Assembly would change this.

Family bids farewell to Ann Sue Metz.
(Photo Credit: Frederick News-Post)

Supported by 25 sponsors, House Bill 1211 was heard before the Maryland House of Delegates two weeks ago (Feb. 27), and its sister Senate Bill 0489 appeared before the Senate this week (Mar. 8).

The bill’s fiscal and policy note explains that the Slayer’s Law disqualifies anyone “who feloniously and intentionally kills, conspires to kill, or procures the killing of a decedent from benefitting from the death of the decedent.” The law would take effect on October 31, 2013.

The Slayer’s Rule, a common law tradition, has been used in the past by judges to determine similar cases (Cook v. Grierson, 380 Md. 502). However, codifying it into a statutory Slayer’s Law would clearly enumerate the law for those judges and potentially speed up the lengthy judicial challenge process.

Metz’s children had challenged their step-father’s right to inherit after the murder but delays in the courts allowed him time to liquidate their mother’s assets for himself. They hope that passage of the Slayer’s Law in their mother’s name will memorialize her legacy in lieu of the tangible heirlooms that were lost.

My friend, the Rev. Henry Green, would say it’s shameful this isn’t already a statute. I probably would agree with him. I’ll let you know when/if the bill passes, which I expect it will.

Until then, good luck and good hunting.

Randy

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The Fisher Law Office is known for its experience in estate planning, probate administration, asset protection, and business development. Annapolis attorney Randall D. Fisher has practiced for over 20 years, maintains the highest peer review rating for ethics (AV Preeminent) by Martindale-Hubbell, and is a sucker for long walks on the fairways.

Find out how to reach Randy via TheFisherLawOffice.com or find him at Facebook.com/FisherLawOffice, on Twitter @thefisherlawoffice, or at LinkedIn.com/in/FisherLawOffice.

8 Elements of an Effective Business Plan

In our series on starting a business, we have presented some important questions to consider and discussed why the first thing you should do is count the cash. Yet addressing these issues is just the bare bones of starting your company; the business plan puts the flesh on the bone.

You need a business plan to get financing, whether it’s from a bank or your brother-in-law. (OK, maybe not to get financing from your brother-in-law, but it’s useful backup when he starts yelling, “You got me into WHAT?”) Otherwise, if you walk in without a business plan under your arm, you’ll be walking out without funding.

Beyond securing the company’s finances, the business plan also help you as a business owner focus. Putting every detail on paper ultimately lets you identify your company’s strengths and weaknesses and forces you to address both in a balanced way. That may seem daunting but it’s really not that bad. Why? 

Sequestration: How we got here and what comes next

Unless your television has (mercifully) not functioned these past two weeks, you have heard that federal sequestration will carve $1.1 trillion out of the federal budget starting today.

The sequester  is a series of automatic, across-the-board spending cuts to federal government agencies that are scheduled to take place in fiscal years 2013 through 2021. The cuts will be split evenly between defense and domestic discretionary spending. 

If you believe the media, this is Day 1 of Armageddon. What’s more, it’s an Armageddon that was agreed to by our elected officials. How exactly?

Fortunately, one of my fellow Rotarians, Elaine Shanley, is a fellow political junkie–and a successful financial planner to boot. I tip my hat to her for giving a me crash course on all things sequester. She took me back to where to it all started.

For a while it was tough to determine where the idea came from. If you asked the President, he pointed at Capitol Hill. If you asked the Speaker of the House, he pointed at the White House. 

Eventually, Bob Woodward of the Washington Post printed a paternity test: the sequester has White House DNA, but adoptive (and supportive) Congressional parents. With much squirming and little eye contact, the President’s press secretary reluctantly confirmed this part of Woodward’s findings–just before another presidential aide threatened the journalist with a time out in the press room.

Drama aside, why even agree to this mess in the first place?