November 2013 Insights Newsletter
Client Spotlight: Hospice of the Valley
November 21, 2013 – Beverly Medlyn, Director of Communications, Hospice of the Valley
Hospice of the Valley provides compassionate end-of-life care, supporting patients and families in all realms – physical, psychological and spiritual. Most care is provided in patients’ homes or wherever they live throughout Maricopa and northern Pinal counties. Founded in 1977, Hospice of the Valley is the nation’s largest not-for-profit hospice with deep community roots.
Q. What is hospice and palliative care?
A. Hospice and palliative care is a philosophy designed to achieve the best quality of life possible by relieving suffering and controlling pain and symptoms. Palliative care can be given at the same time as curative treatment. Palliative care continues when patients transition to hospice and are no longer getting curative treatment.
Q. What type of palliative care services do you offer?
A. Arizona Palliative Home Care, a program of Hospice of the Valley, offers care coordination to late-stage, chronically ill patients not ready for hospice who are struggling with daily living and disease management. Some patients are still getting treatment. Services include home visits by a nurse and social worker, 24/7 telephone support, symptom management consultation, caregiver education and help preparing living wills.
Q. How does hospice care differ from that?
A. Hospice care provides all those services and more to people in the final months of life. The hospice team consists of a doctor or nurse practitioner, nurse, social worker, nurse’s aide, chaplain, volunteer and bereavement counselors. Services are given in patient homes, nursing homes, assisted living and group homes. If symptom management requires round-the-clock nursing care, patients can go to one of our 16 palliative care units Valleywide for limited periods of time.
Q. What makes your organization unique?
A. Hospice of the Valley provides 24/7 care by on-duty staff, never an answering service. Arizona Palliative Home Care is a cutting-edge program for an ever-expanding patient population. We have more staff with national certification in hospice and palliative care than any other hospice in the state. We offer specialized expertise for specific diseases; our dementia program has won national and international recognition.
Q. How much does hospice cost?
A. Hospice care is covered by Medicare and nearly all insurance plans. More and more insurance plans are also covering Arizona Palliative Home Care.
Q. Are donations needed?
A. Donations provide vital support that allows Hospice of the Valley to serve people without Medicare or insurance. In 2012 charity care totaled $15.4 million. Donations also pay for the “extras” not covered by insurance, such as music and massage therapy.
Q. How can I support Hospice of the Valley?
A. Donating and volunteering are the primary ways. People can donate by making cash gifts, participating in workplace charitable giving campaigns and company matches, by contributing items to our White Dove Thrift Shoppe (with three Valley locations) and by going to our special events. Volunteers visit patients and families, acting much like a friendly neighbor. Other volunteer opportunities also are available.
Q. What is your biggest challenge?
A. Our greatest challenge is getting the word out that consumers have a choice in hospice providers, and we hope they choose Hospice of the Valley.
Q. How can I get more information?
A. Visit hov.org or call 602.530.6900.
Tax Changes & Opportunities for 2014
November 21, 2013 – Eric Ensign, Senior Client Associate & Brett Meister, Intern
2014 is nearly upon us and with it brings some new tax laws, a discontinuation of old laws, and most importantly, opportunities for tax planning. While tax planning is typically a year-round process, the year end generally heightens attention to the opportunities for mitigating or deferring a tax liability. This article highlights some of the opportunities and tax law changes that will affect many taxpayers in the New Year.
It is helpful to review the significant changes in the tax brackets & exemption amounts.
(1) Taxpayers with income greater than $450k/$400k are subject to the 20% capital gains tax.
Same Sex Marriage
Perhaps the most publicized tax update was the result of a US Supreme Court ruling this year. In 2013, same-sex couples are now eligible to file joint tax returns. Although many states don’t recognize same-sex marriage, legally married couples in these states will be treated as married for Federal and State tax purposes. Even though this ruling occurred in 2013, same-sex couples may choose to amend prior year tax returns and file as married if there is a benefit to doing so.
Sun Setting “Extenders”
Some tax incentives introduced to stimulate the economy are currently scheduled to expire at the end of 2013. Below are some examples. Whether Congress will extend some or all of these provisions is unknown.
- Taxpayers can no longer exclude up to $2 million of cancellation of debt income on a qualified residence.
- IRA distributions (up to $100,000) can be no longer be made directly to charity in lieu of a Required Minimum Distribution.
- Mortgage insurance premiums can no longer be deducted as qualified mortgage interest.
- The sales tax deduction, which currently may be deducted in lieu of state income taxes, will not be available to taxpayers for 2014.
Surtax on Net Investment Income
Although it has been law since January 1, 2013, many taxpayers haven’t felt the Medicare surtax because this year’s tax returns have yet to be filed. In general, a 3.8% additional tax is assessed on passive investment income for taxpayers with income of $250,000 or more. This includes interest, dividends, capital gains, rental income and “passive” business income.
While proper timing of investment income can be beneficial in reducing tax, perhaps the greatest planning strategy for the surtax is located within the passive activity loss rules. Taxpayers with a significant interest in a business are most likely familiar with the passive loss rules and planning for it, but the new surtax changes our thinking. While classifying profitable business activities as passive generally produced favorable tax results (by offsetting passive losses), this may be less desirable today because the 3.8% surtax doesn’t apply to “non-passive” income. The treatment of passive or non-passive is not elective, but rather it is on complicated rules around the taxpayer’s time spent in the business. Taxpayers with significant business activities should review passive vs non-passive treatment with their tax advisors.
Alternative Minimum Tax (AMT)
Under the America Taxpayers Relief Act (ATRA), the AMT exemption amount has been permanently set and will increase each year with inflation, which has tax advisors excited because this law brings consistency where historically there has been very little. In general, taxpayers accustomed to being subject to AMT should expect this treatment to continue. Though AMT planning remains challenging, opportunities to minimize AMT do exist when taxpayers are in periods with significant income and deduction fluctuation.
Energy Efficiency Credits
Currently, taxpayers can claim a $7,500 credit for qualifying Plug-in Electric Drive Motor Vehicles (examples include Ford Focus, Ford Fusion, Ford C-MAX, Nissan Leaf & Chevy Volt). This credit is only available until the manufacturer sales of each model exceed 200,000 (unless expanded by Congress).
Additionally, energy credits for home appliances have been extended, but a lifetime limit of $500 remains ($200 for windows and doors).
Depreciation & Section 179 Expense
Small business owners have become familiar with the benefits of accelerated depreciation, and there could be significant changes in this area if not extended by Congress. Currently, a business can deduct (rather than depreciate) assets up to a max of $500,000. For future years, this limit is set to reduce to $25,000.
If not eligible for the Sec 179 deduction, businesses have been allowed to claim “Bonus Depreciation” on newly purchased assets. This tax incentive is scheduled to expire at the end of 2013.
Washington has renewed these provisions on a year-by-year basis in the recent past, but growing budget concerns and a rebounding economy could push Congress to discontinue these laws originally designed as stimulus measures. Businesses considering large asset purchases in the near future can greatly benefit by purchases before year-end.
There are numerous other law updates that will be affecting taxpayers in 2013 and future years. The updates and strategies discussed above reflect only a portion of the changes we see year to year. With every taxpayer comes a unique situation and consultation with your investment and tax advisors is always recommended before engaging in any particular strategy. Miller/Russell advisors continue to keep watch on the ever-changing tax laws, bring planning ideas to our clients, and are available for questions or to assist in tax planning.
Reviewing & Updating Your Estate Plan
November 21, 2013 – Russ Bucklew, Partner
Once you have established your estate plan, make sure it stays sound by revisiting it at regular intervals, when there are important changes in the law, or at key life events.
Many people review their estate plans at a regular frequency, often when they review their whole financial plan. This can be done annually, semi-annually, or quarterly. For estate planning specifically, the general recommendation is at least every three to five years or as stated above.
The American Taxpayer Relief Act of 2012 (ATRA) signed into law January 1, 2013, resulted in changes that may warrant an estate plan review. Key changes taking effect this year are rates, exemptions, and other estate tax-related breaks that are not scheduled to expire under the new law. It is important to go through a proper review of these changes to fully understand not only how to make the most of your exemptions to keep taxes to a minimum while still achieving other estate planning goals, but also to understand how these changes could have unintended consequences on your estate plan.
The following is a summary of the key changes that may affect your situation:
- Rates. The top rate in estate tax increased from 35% to 40%.
- Exemption. The new law makes the $5 million exemption permanent and indexes it for inflation every year resulting in the 2013 amount at $5,250,000. Now that this exemption is permanent, taxpayers can act with greater certainty and predictability. In 2012, many planners rushed to utilize the $5.125 million exemption per person because it was expiring and there was the potential of it reverting to the 2002 level of $1 million.
- Portability. Under the new law, portability became permanent. Portability effectively makes the federal estate-tax exclusion amount “portable” between a husband and wife. When one spouse dies, the other typically can get the deceased spouse’s unused exemption amount without having to set up trusts or other tax-saving maneuvers as long as they timely file Form 706 and elect this option.
Growing concerns in these uncertain times include the potential for frivolous law suits and potential attachment of assets by creditors. Changes and/or developments in federal and state law may now provide valuable protection from an unfriendly claim. Your estate plan has the ability to build in safeguards that can significantly reduce the risk of others encroaching upon your estate during your lifetime. Additionally there are protections that can be provided to your heirs inheriting assets while also limiting their ability to ‘spend through’ their inheritance.
Has your personal situation changed?
Obvious life events like births, deaths, marriages, and divorces can all have an impact as well as changes in your personal finances or your business. The following list, not inclusive of every possible event, outlines some potential life changes with possible estate plan implications:
- Purchasing a home or other large asset
- Borrowing a large amount of money or taking on liability for any other reason
- Large increases or decreases in the value of assets, such as investments
- If you or your spouse receives a large inheritance or gift
- Changes in federal or state laws covering taxes and investments
- If any family member passes away, becomes ill, or becomes disabled
- Death or change in circumstance of your executor or trustee
- Career changes, such as a new job, promotion, or if you start or close a business
Are your assets in line with your estate planning documents?
All of your assets may not be coordinated to distribute in conjunction with your estate planning documents.
Here are some reminders:
- Are Your Beneficiary Designations Correct? It is essential that your beneficiary designations be updated and consistent with your estate plan. This includes insurance policies, Individual Retirement Accounts (IRA’s), and any contracts that operate independent of your will and trusts. Don’t assume that this is correct – most often it is not.
- How Are Your Assets Titled? All of your assets including investments, bank accounts, and real property, should be reviewed to ensure that they are going to the correct beneficiaries in a tax-efficient manner.
Is all of your estate-related information gathered in one place?
Keeping all of your estate-related information together, including a listing of assets with account numbers, plans for distribution of tangible personal property, names and contact information of advisors, notation regarding the location of original estate planning documents and final arrangement information, may be a valuable resource for your loved ones.
Miller/Russell & Associates encourages clients to establish and maintain an estate plan that is consistent with their goals and objectives.
We also offer an expanded service where clients can retain us to work with their other professional advisors reviewing their plan on a regular basis taking into consideration important changes in the law and their personal situation.
Around the Firm: November 2013
November 21, 2013 – Miller/Russell & Associates
Gina Farley Joins as Administrative Assistant
Gina Farley is Miller/Russell’s newest Administrative Assistant. She completed a distance learning program for her certification in wedding and event planning from the NYIAD (New York Institute of Art and Design). She is currently working towards her associates in General Business, and she is making plans to continue her education. In her free time, Gina enjoys having Sunday dinner with her family and traveling up north to Flagstaff and Sedona for weekend getaways. Her days stay occupied since the birth of her first daughter in February of this year.
Fun Fact: Gina won best Halloween costume three years in a row at her last employer for reenacting Tina Turner, dressing as Smurffette and Dorothy from Wizard of Oz.
Meet Miller/Russell’s Fall/Winter Interns
Now in its third year, Miller/Russell’s internship program is not only a way for us to give back to our community, but it also has become an integral part of how we recruit and develop the future generations of leaders in the firm. As one of the leading wealth management firms in the Southwest, we are able to provide an exemplary learning experience to our interns because our unique team culture allows for an in-depth and intensive mentoring structure. We actively recruit interns for semester-long programs in a variety of areas, including tax, investment and wealth management, and human resources.
Here is a little bit about each of our 2013 fall/winter interns:
Elai Lustgarten is Miller/Russell’s newest financial research intern. He is a second year student in the W.P. Carey Business School at Arizona State University pursuing a degree in the field of Finance and expects to graduate in 2015. He also serves as the Vice President of Finances in his fraternity Delta Kappa Epsilon, is a soccer instructor, and is proficient in Spanish.
As the firms’ newest tax intern, Brett Meister is a senior accounting student at the W. P. Carey School of Business at Arizona State University who expects to graduate in May 2014. He is formerly of the United States Marine Corps as a noncommissioned officer and recently joined the Beta Alpha Psi fraternity.
Leo Panopoulos is the firm’s newest institutional wealth management intern. He is currently a senior in the W.P. Carey Business School at Arizona State University. He is pursuing a double major in Supply Chain Management and Finance and expects to graduate in May 2014. He is involved in the professional business fraternity Delta Sigma Pi and in ASU’s Student Investment Management Fund (SIM Fund).
Season of Giving Campaign
In celebration of the upcoming holiday season, we invite you to join the Miller/Russell team to participate in our first Season of Giving campaign. We have selected three wonderful non-profit organizations, and we will be collecting donations for each organization between now and December 13th.
We hope you will join us in this effort. Collection boxes are located at Miller/Russell’s Phoenix office, located at:
3200 E. Camelback Road, Suite 300
Phoenix, AZ 85018
St. Mary’s Food Bank Alliance – St. Mary’s Food Bank Alliance alleviates hunger by gathering and distributing food in Phoenix, Flagstaff, and other Arizona locations. We will be collecting non-perishable food items.
Toys For Tots Foundation – Toys for Tots collects new, unwrapped toys during October, November, and December each year and distributes those toys as Christmas gifts to less fortunate children in the community.
Pajama Program – Pajama Program is an organization that provides new pajamas and new books to children in need, many who are waiting and hoping to be adopted.