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Sorry to Waste your time with this Ridiculous Situation


FDNY

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This week I've been dealing with some kind of rocket scientist from CA who is the son in law of a client.  The client is an 83 y/o retired teacher from CA, a real hipster from the beatnik era and a Haight/Ashbury veteran.  A few years ago she decided to help out her handyman who is nearly 30 years her junior by marrying him (and swears me to secrecy) because as she says, he has no SS.  I asked why does he have no SS?  Well, he was in jail for 21 years and he now gets paid off the books.  She wants to file separately, so I explained she will pay more in taxes.   She didn't care, she just wants him to get her SS when she dies (she only gets $4,600/yr).  So the son in law comes east to visit his kid in college and stops by my client's house and looks at the tax return as he will be taking over her finances because she overpaid her credit card by $2K.    She now confesses to him and he calls me, livid that I did not tell the daughter (I'm also a contingent trustee for client).  I told him I advised my client of the consequences, especially for estate planning and that she should consult a lawyer.  So the rocket scientist says he will contact his lawyer because I was negligent.  I don't think so, my obligation is to the client, besides, he doesn't scare me, I've stared down danger bigger than this pencil neck geek scientist.   All in all, I find this comical, now the client thinks she better get a quickie divorce, a  happy ending in my opinion.  Again, sorry for wasting your time.

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Husband can draw on wife's account and continue to draw after her death, but all things being equal (they are not equal if he's not FRA) he gets about half of what she gets.  As you say, no big whoop.

We can NOT tell family members that mommy got married or any other information we collect to prepare her tax returns.  Circular 230.  Hopefully, his lawyer will tell him that and charge him for an hour of his time, too.

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You've all made me smile, thank you.  

While this sham marriage (as client calls it) happened without my knowledge, if I had known I of course would have advised against it.   Handyman recently began paying taxes and uses my client's address (don't know if he actually lives there) so client was also not able to deduct rental losses for a rental she has in CA (filing MFS), a double tax whammy for her.  A real tax disaster that I've had to report to client for last 2 years.  But client did not care, she does care about people, animals, and always wants to do good and help others,  I respect that very much.

Now I am just hoping that the $139 quickie divorce client wants is agreeable to the handyman, if not, we have the makings of an award winning screenplay.   If I ever retire I don't know what I will do for entertainment.

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Handyman may have sold your client on marriage as getting SS when she's gone and not an issue to her or her family.  But, now he's her husband, and without a solid pre-nup or a will revised after the marriage date, he will get her house and bank/broker accounts and jewelry and....  Then, that son will have big legal bills to try to salvage things for her own children and grandchildren.  Yes, keep us posted on the next episode.  Same bat-time, same bat-station.

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2 hours ago, Lion EA said:

Handyman may have sold your client on marriage as getting SS when she's gone and not an issue to her or her family.  But, now he's her husband, and without a solid pre-nup or a will revised after the marriage date, he will get her house and bank/broker accounts and jewelry and....  Then, that son will have big legal bills to try to salvage things for her own children and grandchildren.  Yes, keep us posted on the next episode.  Same bat-time, same bat-station.

Without giving legal advice to this client, she has become a friend (don't many of them), where we have nearly a 20 year history, I have advised the last 2 years to see an estate planning attorney.  The trust only holds the rental property and another property housing client's other daughter who has manic depressive issues.  There is much to get done.  She claims the handyman is a good person, who knows.  I have spoken to him on the phone and he sounds concerned about client's health (heart condition problems), I find this a little scary.  At the least, I see time is of the essence here. 

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1 hour ago, jklcpa said:

I'm hoping, with FDNY mentioning "contingent trustee" in the first post, that this client has most of her assets titled and protected in a trust.

Glad you mentioned this Judy, I now see it is time for me to aggressively get all the loose ends tied.   Thanks, Bill

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3 minutes ago, Lion EA said:

Good point.  And, if per her state law, that the trust does not have to be revised following her marriage.  (In CT, a will would need to be revised or reconfirmed or whatever the appropriate legal term is following a marriage or divorce.)

Thanks Lion, she lives in MA, with 2 properties in CA, she needs to re-do everything, and not on legal zoom which is her avenue of choice for legal matters. 

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How about the client who comes to you each year with totaled information on charitable donations as well as other itemized deductions - and in going through the details lumps cash and non-cash donations together as one amount. You question further, and it turns out he segregated the cash from the non-cash but the non-cash was less than the threshhold to require 8283. So I advised him for next year to itemize the non-cash on a listed schedule, and takes pictures of the items before he donates them.

The next year he brought me a photo of stuffed black garbage bags, and reminded me that I told him "to take pictures of what was donated before giving it away".

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Be careful with these clients who just give you contribution totals.  One of our clients was randomly selected for a line by line audit as part of the National Research Program.  She has pretty good records of how much cash she put in the church plate every week, but the auditor won't accept it.  We all know the rules about having proof for ALL cash contributions.  About $6k deduction down the drain.  Interestingly, he did accept the undocumented Goodwill donations of $350.  Some auditors have their own entertainment value.  This one has been in our office several times, puts his lunch in our frig and warms it in our micro, and dug around to find the Keurig cups. 

FDNY, CA is a community property state.  I don't know where the marriage took place, or if your client owned the rentals before the marriage.  This could be something a quickie divorce won't cure.  Your client needs an attorney.

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10 hours ago, SaraEA said:

FDNY, CA is a community property state.  I don't know where the marriage took place, or if your client owned the rentals before the marriage.  This could be something a quickie divorce won't cure.  Your client needs an attorney.

Thanks Sara, marriage took place in VT 2 years ago, both were MA residents and client's properties in CA were purchased before the marriage.   I will be reminding client today that she should seek the counsel of an attorney as this could have complications and now that family knows there will be fallout.  Client says it was her idea to marry, I don't know, some people can have a way of influencing other people's thought processes, especially the elderly.  Just wish she spoke to me before marriage, it is costing her about $2,500 a year in extra tax.   If she wasn't such a sweet (and elderly) person I would have stated my opinion to her and been done with it.     One of my practices is to protect the elderly from the unscrupulous but I never had a chance here, and evidently she never heeded any of my general advisories to the elderly to protect themselves.

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2 hours ago, FDNY said:

Thanks Sara, marriage took place in VT 2 years ago, both were MA residents and client's properties in CA were purchased before the marriage.   I will be reminding client today that she should seek the counsel of an attorney as this could have complications and now that family knows there will be fallout.  Client says it was her idea to marry, I don't know, some people can have a way of influencing other people's thought processes, especially the elderly.  Just wish she spoke to me before marriage, it is costing her about $2,500 a year in extra tax.   If she wasn't such a sweet (and elderly) person I would have stated my opinion to her and been done with it.     One of my practices is to protect the elderly from the unscrupulous but I never had a chance here, and evidently she never heeded any of my general advisories to the elderly to protect themselves.

Be careful.  If any community funds were used for the rental property (such as paying the property taxes out of a joint account), that "separate" property in CA will have been tainted with co-mingled funds and may in fact become community property.  I am not saying it has happened, but there is the possibility.

Tom
Modesto, CA

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59 minutes ago, BulldogTom said:

Be careful.  If any community funds were used for the rental property (such as paying the property taxes out of a joint account), that "separate" property in CA will have been tainted with co-mingled funds and may in fact become community property.  I am not saying it has happened, but there is the possibility.

Tom
Modesto, CA

Interesting, so one of my questions to ask client today will be if they have a joint account.  I sure hope not, this could get ugly.  Thanks Tom. 

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3 hours ago, ILLMAS said:

@FDNY please make sure you are compensated for your worries.

Thanks, that happens to be an area where I am severely lacking especially with clients that I have compassion for,  I know, not a good business practice, but next year will be a good time to raise my fee.   I already decided on that.

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FDNY, do NOT give your work away!  You spent time with the client, talking with the husband, being threatened by the son in law, and on this board trying to figure out what to do.  A consultation fee concerning marital filing status is in order.  You better believe we are charging a representation fee to our client who was so lucky to be selected for the NPR.  She initially tried to handle this herself and had the auditor at her home office for an entire day (where said auditor also used her microwave).  That got too intimidating so we were hired to take over.  I don't think we'll add the cost of the Keurig cups, but we have spent a lot of time putting things in the order of the three-page list of documentation requested.  I also did research contesting some things the auditor doesn't seem to know (like amortizing points on a refinanced mortgage), complete with legal citations.  Yes indeed, we will charge.

Anyone ever been through one of these audits?  They are awful.  Every single number is questioned and has to be documented.  Our client keeps good records, but there are a lot of things we'll have to concede.  She takes standard mileage, for example, which the auditor is not questioning, but is questioning the total mileage driven during the year.  Only difference it makes is the ratio of property taxes that go on the A and C.  It's not much money, so put it all on the A if you want.  Geez.

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  • 4 weeks later...

An update to a now continuing saga that has ended sadly.  My client fell in her home and broke her hip.  The "husband" who did not live there found her and called 911.  She spent 2 weeks in hospital then was able to go home.  I was in touch with her regularly until she left the hospital.  I called yesterday and could not reach her so I called a daughter in SF and was told that she passed away a few days ago.  She had fallen again, laid there for 24 hours and then passed away in the hospital due to pneumonia that daughter said she had beginnings of when she originally left the hospital.  So now son in law calls me and he is my best friend.  I gave him whatever information he needed as he will head east soon.

Now here's the very sad part.  Daughters were here when she died.  They went to the house to retrieve personal belongings and now husband is living there and would not let them in.   I decided to Google this guy's name to find out what he did to be incarcerated for 21 years.  He is a sex offender and convicted of raping a minor in 1993.  Also had other similar convictions.  This will hit the papers if it gets ugly.  I will be mostly out of this, let the attorney and authorities handle it.    I will miss my client, she was a character and we always had a good comedic back and forth.   This is what happens when a special client becomes a part of your life and dies,  you feel the loss just like a family member.  If only she told me of her plans to marry this guy I might have googled him then and relayed the info to her and hopefully change her mind.  I'm sure many of you can relate to this.  Take care of yourselves, and your clients (if they let you).  

Bill

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