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First Time Homebuyer Tax Credit (as seen on NBC6)
For home purchases in the year 2008, the credit operates as an interest-free loan from the government which must be repaid over a 15 year period. Therefore, if a taxpayer received the full $7,500.00 credit allowable in 2008, the taxpayer is required to pay approximately an additional $500.00 of tax for the 15 year period beginning in 2010.
The tax credit was then extended in 2009, but the government removed the repayment obligation for any first time homebuyer who purchased a home in the year 2009. Thus, the purchase date of the home, and not the year in which the credit was claimed on a tax return, is the key factor in determining whether the taxpayer will be required to repay the credit.
According to the IRS, approximately one million taxpayers who claimed the first time homebuyer tax credit on their 2009 tax return will be required to repay the credit.
Tips to Obtain the First Time Homebuyer Credit (as seen on NBC6)
Deadlines
The closing deadline has recently been extended from June 30, 2010 to September 30, 2010. However, in order to qualify, you must have entered into a binding contract to buy a principal residence on or before April 30, 2010.
Attachments
In order to obtain the credit, you must include a properly executed copy of the settlement statement, or HUD-1, used to complete the purchase. If you are a long-time resident applying for the $6,500.00 credit, you should also include documentation which supports your assertion that you have lived in your current residence for any five consecutive year period during the eight year period ending on the date you purchased your new home. Examples of such documentation includes property tax records or homeowners insurance records.
Filing Year
If you purchase a home in 2010 which qualifies for the tax credit, you may claim the credit on your 2009 original or amended return. Otherwise, you may claim the credit on your 2010 tax return.
Time Period
The IRS recently issued a statement indicating that it may take approximately 12-16 weeks to receive your refund. Therefore, it is important that you correctly file your return with all the correct supporting documentation. Otherwise, your receipt of the credit will be delayed even further.
For further information, you can visit the IRS website.
http://www.nbcmiami.com/news/local-beat/Do-your-homework-to-collect-housing-tax-credit-101597558.html
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Estate Planning: Avoiding Costly Litigation from a Creditor Attack on a Spendthrift Trust
June 22, 2010
A spendthrift trust is one that is created for the purpose of providing a fund for the maintenance of a beneficiary, while at the same time protecting the trust’s assets, and/or the beneficiary’s interest in those assets, from the beneficiary’s creditors. A significant factor in these trusts is that the beneficiary has no control over the trust or trust property. The 4th District Court of Appeals recently overturned a decision which had allowed a creditor to gain access to the assets of a spendthrift trust over which the beneficiary appeared to have significant control. In doing so, the Court stretched the use of spendthrift clauses for asset protection planning to its furthest possible limit.
In Miller v. Kresser, a judgment creditor of the beneficiary of a spendthrift trust sought to receive payment of his debts from the trust. The facts showed that while the trustee was technically given complete control over the trust property, the beneficiary was in reality exercising a considerable amount of control over the property himself. The trial court initially concluded that this exercise of control terminated the trust's spendthrift provision. However, the Court of Appeals reversed this decision holding that it was not their role to evaluate how well the trustee was performing his duties. Instead, the Court limited its evaluation to the express language of the trust to determine the extent of the beneficiary's control and the extent to which a creditor could reach the trust assets. Because the language of the trust had never given the beneficiary any authority to manage or distribute trust property, the creditor could not pierce the spendthrift provision.
The Catch . . . This could be seen as a decision in which the Court reaffirmed the strength of spendthrift provisions placed in a trust. However, while the beneficiary won his appeal, significant legal fees could have been avoided if the trust had been managed by a true, independent trustee. When planning ahead for asset protection, this should be an important consideration. Choosing a trustee who is independent and will strictly follow the express language of the trust can help avoid costly litigation down the road.
Miller v. Kresser, 2010 WL 1779899 (Fla. 4th DCA 2010)
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Trust Drafting: Public Policy May be Against Your Policy
June 30, 2008
Courts generally frown against any kind of restraint on marriage. Recently, an Illinois court struck down a provision in a trust document which stated, “A descendant of mine other than a child of mine who marries outside the Jewish faith (unless the spouse of such descendant has converted or converts within one year of the marriage to the Jewish faith) and his or her descendants shall be deemed to be deceased for all purposes of this instrument as of the date of such marriage.”
The Illinois Court of Appeals voided the “Jewish Clause” because it was against public policy. The dissent in this case argued that the creators of the trust sought to preserve “their 4,000-year-old heritage by providing that upon their death, a grandchild who married outside the Jewish faith shall be deemed to have predeceased the testators, but if they have complied with the restrictions, are to immediately receive their legacy.” While this may seem like a noble goal, the concurrence to the opinion specifically critiques this by saying; if the trust creator had wanted to preserve his heritage he would have made the clause applicable to his children and not just his grandchildren.
Taylor v. Feinberg (In re Estate of Feinberg), 900 N.E.2d 1118 (Ill. 2008)
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