Posts in UTMA/UGMA.
What I Have Learned – Life's Journey 

Much to the dismay of prospective parents, babies do not come with a handbook or road map to instruct parents on the journey of this new life. Prospective parents spend hours in classes regarding the birthing process and caring for a newborn. Growth and milestones of a child are measured and tracked. Prospective parents typically do all that is possible to prepare themselves for the new responsibility of caring for and protecting this new life. Most parents, new and seasoned, continue their involvement in the child’s life by making sure the child is active, nourished, emotionally ...

Posted in Tax Law
Views & Visions: The New Economy - Preparing for the Future with Digital Assets Continued

In the Spring/Summer 2023 edition of our firm’s award-winning Views & Visions magazine, Bowles Rice attorneys and tax team members Hannah French and Kathryn Gioia co-authored the article Preparing for the Future with Digital Assets. The article ends with a link to this blog.

What follows in this companion blog post are the real-world examples, considerations, and hypotheticals that Hannah and Kathryn alluded to at the end of their article (i.e., the legitimate issues and considerations that can have a major impact on an account holder and their beneficiaries, and the ...

Tags: Tax Law
Posted in Tax Law
Debt Forgiveness and Pennsylvania Inheritance Tax

Have you made a loan to family and/or friends, such as a mortgage?  You are currently requiring payments on that mortgage from your family and/or friends, but do you want to forgive that debt, if a balance remains, upon your death?  If you are a Pennsylvania resident, there are a few key pieces of information that you and your family and/or friends paying that loan should be aware of.

If you are a Pennsylvania resident, then your estate is subject to Pennsylvania inheritance tax upon your death.  Generally, Pennsylvania inheritance tax is imposed starting at dollar $1 of your estate.  And the ...

Tags: Tax Law
Posted in Tax Law
Back to School Documents that Every College Student Needs

Your college students are back at college, and they have their financial aid, books, laptops, dorm room supplies, groceries…but do they have everything that they need?  Your college student needs legal documents as they head back to school to ensure that you are able to make key medical and emergency decisions for your child should something occur.

Waiver of Family Educational Rights and Privacy Act (FERPA)

With your child now being a legal adult, you no longer have the ability to access their education information.  This may seem unfair if you are paying for their education, but ...

Tags: Tax Law
Posted in Tax Law
Is Student Loan Debt Forgiveness Subject to Income Tax?

With the recent announcement on August 24, 2022 that up to $10,000 worth of federal student loans per borrower, and up to $20,000 for Pell Grant recipients, would be forgiven, many people are asking whether or not this forgiveness will be subject to income tax? 

Federal Income Tax?

The general rule is that the IRS considers forgiven debt to be taxable as income for federal income tax purposes.

However, pursuant to §9675 of the American Rescue Plan Act (ARPA) there is no federal income tax owed on student loans that are forgiven between 2021-2025.  Section 9675 revised IRC §108(f)(5) and ...

Posted in Tax Law
Federal Student Loan Repayment Pause Extended Through December 31, 2022

The U.S. Department of Education announced on August 24, 2022, a final extension of the pause on student loan repayment, interest and collections through December 3️1, 2022.

The Department will provide student debt cancellation to borrowers with loans held by the Department of Education.

Eligible borrowers are those with annual income of either (1) under $125,000 (for individuals) or (2) under $250,000 (for married couples or heads of households).

If an eligible borrower received a Pell Grant in college, then that borrower will be eligible for up to $20,000 in debt cancellation.

Did You Know That You Can Provide for Your Mental Health?

Most people know that you can (and should) have a Power of Attorney (“P.O.A.”) for your financial affairs and health care. But did you know that you can create a P.O.A., a/k/a advance directive, customized to your unique mental health needs?

Some states have specific statutes for mental health advance directives, and other states include them in their existing statutes addressing health care more broadly.  For example, in West Virginia, mental health is not provided for separately but is included in the state’s overall medical health law governing living wills and medical ...

Constitutional Rights and Estate Planning

The United States Supreme Court has recently overturned decades of precedent ending the constitutional right to abortion. Justice Thomas, concurring in the judgment, wrote that the Court “should reconsider all of this Court’s substantive due process precedents,” including Obergefell v. Hodges, which created the constitutional right to same-sex marriage. This threat to overturn the right to same-sex marriage has far-reaching consequences.

IRS Pilot Program for Retirement Plan Audits Offers Grace Period to Plan Sponsors

Employers who sponsor qualified retirement plans for their employees dread the "Your retirement plan has been selected for examination" [i.e., audit] letter. However, a pilot program just announced by the Internal Revenue Service (IRS) provides the potential for self-correction and/or reduced compliance fees when a plan is selected for audit – if the employer acts quickly enough.

The IRS' recently-announced 90-day Pre-Examination Compliance Pilot Program begins now, in June 2022, and grants retirement plan sponsors a 90-day grace period before an audit begins in which to ...

Cryptocurrency – A Magic Pill or a Double-Edged Sword?

I was driving in the car and heard on the radio recently that 3LAU (an American DJ and electronic dance music producer) and Bdice (a Canadian music producer and visual creative director) had been collaborating on a project. During their work together, it came up that Bdice had significant debt from Audio Engineering and Music Production school – he had spent $100,000 over 10 years in interest payments alone. It is a story that we are all too familiar with these days. But what came next was what made me turn up the volume. 

3LAU asked Bdice how much he needed to pay off his loans. He said he needed ...

How Do I Start Saving for My Child's Education – and What Exactly is an UTMA, UGMA, and a 529?

In honor of National College Savings Day / National 529 Day – which is Sunday, May 29 – let’s dive into a few savings and investment options that you can use to help fund your child’s higher education.

Let’s go over the basics

UTMA stands for Uniform Transfer to Minors Act, and UGMA stands for Uniform Gift to Minors Act. Both UTMA and UGMA accounts are custodial trust accounts whereby a grantor (e.g., a parent) can transfer assets into the trust for the benefit of a child. Custodial account means that the grantor, as the custodian, must manage the money as a fiduciary for the benefit ...

COVID-19 and FEMA's Funeral Assistance Policy

Did you, or someone you know, lose a loved one to COVID-19? If so, you may be able to apply for assistance with the funeral expenses, even retroactively.

Under the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 and the American Rescue Plan Act of 2021, the Federal Emergency Management Agency (FEMA) is providing financial assistance for COVID-19 related funeral expenses incurred after January 20, 2020. And on June 29, 2021, the funeral assistance policy was amended to also assist with COVID-19 related deaths that occurred in the early months of the pandemic ...

Planning for the Future with Cryptocurrency

According to the Pew Research Center, nearly nine-in-ten Americans have heard of cryptocurrency, while 16% have personally invested in, traded, or otherwise used cryptocurrency. Cryptocurrency carries strong tax consequences and is incredibly volatile. However, as more people dip their toe in this new method of currency, it is important to determine how this impacts planning for the future – especially in regards to estate planning. As to both the individual passing along the currency and the executor who has a fiduciary duty to preserve estate property, cryptocurrency ...