High Swartz Welcomes New Litigation Attorney

High Swartz, a full-service law firm with offices in Norristown and Doylestown PA, is pleased to announce that Samuel T. Cooper Esq. has joined the firm’s litigation team. Practicing out of the Norristown office, Mr. Cooper joins the firm after completing a law clerkship with the Honorable Daniel J. Clifford, of the family court division of the Court of Common Pleas of Montgomery County.

Mr. Cooper’s experience include multiple clerkships with courts and attorneys. During his undergraduate studies at Elizabethtown College, Mr. Cooper gained valuable legal knowledge working in the PA office of the Attorney General and in the office of Senator John Rafferty, Jr. Alongside his tenure at Widger School of Law at Villanova University, Sam completed a judicial clerkship with the Honorable Thomas P. Rogers and also represented the Montgomery County District Attorney’s Office.

Before graduating from Villanova, Sam was a member of the competitive trial advocacy group and was Director of Recruitment and Alumni Relations for the Moot Court Board. In 2018, as a member of the Board he was awarded champion of the UNLV Frank A. Schreck Gaming Law Competition. In 2019, Sam was honored as the recipient of the David E. Worby ’76 Scholarship for distinguished trial advocacy as well as the American Academy of Matrimonial Lawyers (AAML) Eric D. Turner Award.

“The ability to work at High Swartz has been a great opportunity for me as a young attorney in Montgomery County. The experienced team of professionals have given me confidence that our primary focus is on our clients and the service they deserve,” says Mr. Cooper.

Mr. Cooper is a native of Montgomery county with interests and activities including long distance running, hiking, and dog fostering. Since 2019, Mr. Cooper has opened up his home to dogs in need of care through Home At Last Dog Rescue of North Wales, PA.

How to Access the Digital Assets, logins, and passwords of Someone who Has Died

Accessing the digital assets of a loved one after they have passed can be difficult. Below are some tips to make it easier for everyone.

In the age of Covid-19, most of us do everything electronically. Banking, communicating, paying bills, shopping, storing important papers, photos and contacts, filing taxes, keeping a calendar and reminders, sports betting, dating….the list goes on. But where does all of that electronic content go and who can access it for me? What happens if I go on an “extended vacation” – physically, mentally or permanently? Well, things can get messy if you’re not prepared.

I used to tell my partner (half-jokingly) if anything happened to me, to keep my thumb so he could open my phone and computer, to gain access to my accounts/passwords (digital assets) with my fingerprint. Unfortunately, that plan won’t work with the upgrade to facial recognition security, unless he wants to face some tough questioning by the police. And not to mention, the Criminal Fraudulent Access Act prohibits the impersonation of a decedent. So what is he supposed to do when clues of assets and liabilities no longer come through the mail and there is no way to do a global search of assets?

In comes the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), effective January 19, 2021, with a default rule, to help address the frequent challenges fiduciaries (trustees) encounter in accessing the digital assets of a Ward or Decedent.

What is a digital asset?

A digital asset is defined as an electronic record which an individual has a right to or interest in, but not the underlying asset itself (unless we are talking about Bitcoin and the like). For instance, my online bank statement is a digital asset, but the money in the account is not.

The default rule under RUFUDAA, provides methods for a fiduciary to access a catalogue of electronic communications and other types of digital assets, but not the content.

What is a catalogue of electronic communication?

A catalogue of electronic communication “identifies” the person communicating and the electronic address, along with the date and time of the communication. The substance of the communication is not accessible under RUFUDAA.

How can you access a catalogue of electronic communication of a decedent?

In order for a fiduciary to access to the content of electronic communications (documents, photos, emails, basically any information concerning the meaning of the communication stored electronically), the user must specifically do so by an online tool (facebook and Google have these tools) or in an estate planning document.

What if the online tool and estate documents don’t match?

If the online designations conflict with the estate planning documents, the online designation controls. More importantly, the Custodian’s Terms of Service will control what the fiduciary may or may not do with your digital assets.

Tips for legacy planning of your online accounts

Google.

For accounts that have legacy planning, like Google and Facebook, designate a person who can access your data. You can customize the information you want to share, with up to 10 people, if your account is inactive for a designated period of time (3-18 months).

Facebook.

Under memorialization settlings, you can designate a legacy contact who can manage your account after you pass away.

Financial Powers of Attorney.

Have your Financial Powers of Attorney updated to provide your Agent with authority to specifically access digital asset content.

Wills and/or Trusts.

Update these documents to provide your fiduciary with authority to specifically access digital asset content.

  • If you find yourself in Orphans’ Court on a guardianship matter, make sure to include language requesting Custodians of digital assets to disclose a catalogue of electronic communications and digital content to the Guardian of the Estate of the Incapacitated Person, in the proposed Order.

Write it down.

I give all of my estate planning clients the same homework assignment- which always starts off with “Make a binder with the below outline in mind. Identify automatic debits and payments and keep an inventory of digital and cybersecurity assets. Keep a hard copy and a digital copy, and give your estate planning attorney a copy to secure in the law firm’s vault.

The binder should include:

  • A list of logins and passwords for each of your devices (phone, tablet, watch etc.)
  • A list of all online accounts with user names and passwords
    Banks (brick & mortar and online banks)
  • Social media
    • Facebook
    • Pinterest
    • LinkedIn
    • Twitter
    • Snapchat
    • TikTok
  • Email addresses
  • Online shopping sites
  • Online Bill Pay
    • Utilities
    • Phone
    • Internet
  • Payment Services
    • Paypal
    • Venmo
    • Google Pay
    • Stripe
    • Square

Do I qualify for Social Security Disability Benefits? The 5-Step Process

Regardless of whether you are applying for SSDI and/or SSI benefits, Social Security uses a 5-step sequential process to determine whether an applicant qualifies for Social Security Disability benefits.

First, it may be beneficial to go over the differences between SSDI and SSI and how they pertain to you.

Step 1 – Are you working?

The Social Security Administration looks at whether or not you have Substantial Gainful Activity (SGA) which is defined in 2020 as earning of $1,260.00 per month. For blind applicants, SGA is defined as earning $2,110.00 per month. The general rule is that if you are earning $1,260.00 per month, you are not disabled and SSA’s review of your application stops at this point.

There are few exceptions to this rule. If you are working and earning less than $1,260.00, or $2,110.00 if you are blind, your case will move forward to Step 2 of the analysis, however your chance of receiving benefits is far less likely.

Step 2 – Is your condition severe?

In order to be found disabled you must have a medically determinable physical or mental impairment, or combination of impairments, which are severe. Severity is determined by how the condition(s) interferes with your ability to perform basic work activities. The duration of the severe condition must have lasted 12-months, be expected to last 12-months or result in death. You must meet both the severity and duration requirements to move onto the next step.

Step 3 – Does your condition meet the severity of a Listing?

Social Security maintains medical criteria in a listing, in order to determine the severity of an applicant’s condition. There are Listings for physical and mental health conditions which include very specific, detailed and stringent criteria that must be met primarily through an analysis of the available medical records, with little reliance on an applicant’s subjective complaints or anecdotal history.

If you meet or equal the severity of a Listing and your condition also meets the duration requirement defined in Step 2, you are determined to be disabled. It is likely that you will not be found disabled at Step 3. If that is the case, the medical reviewer handling your case will develop an x capacity (residual functional capacity (RFC)) which defines how they feel your condition limits your ability to perform work activities. Your case will then move onto Step 4 where the RFC will be utilized to determine your ability to perform work.

Step 4 – Can you perform your past relevant work?

Past relevant work (PRW) includes the work you have done in the last 15-years which you performed at Substantial gainful activity (SGA) and for a long enough period to have learned how to do the job. If it is determined that you have the residual functional capacity to physically and mentally perform your past relevant work, you are not disabled. If it is determined that you are unable to perform past relevant work or there are questions regarding your ability to perform your past relevant work, the case moves to the final step of analysis.

Step 5 – Can you make an adjustment to perform work other than your past relevant work?

During this final step, the reviewer will consider your age, education, vocational history and residual functional capacity to determine if you can perform other work. The older you are, the less educated, the longer you have performed the same type of work and the more physically demanding your past relevant work was, are all factors that are considered in this step. If you are between the ages of 18-49, and have a high school diploma, the chances of getting disability benefits during the initial application process are very unlikely. The burden of proof that Social Security needs to meet in order to show you can adjust to and perform other work is minimal. If you are between the ages of 50-54, your chances improve slightly but not significantly.

If you are in need of an SSDI attorney at any crucial step of the social security disability process, please contact Linay Haubert R.N., Esq of the Doylestown office of High Swartz law firm at 215-345-8888.

Do I Need to Pay Philadelphia City Wage Tax During the Pandemic?

The Covid-19 Pandemic has brought many changes to our lives, requiring masks when leaving the house, frequent hand washing, and (for many people) work from home. For suburbanites who work in the City of Philadelphia, there is an unexpected twist from Governor Wolf’s stay at home order – in the form of a tax refund.

The City of Philadelphia reached a settlement of litigation brought by professional athletes for Philadelphia teams who were required to pay Philadelphia city wage tax on all of their wages even while traveling to other cities. The settlement provided that any employee who worked outside Philadelphia at the demand of an employer for an extended period was not required to pay wage tax on wages attributable to work outside the City.

I’ve been working from home during the pandemic and my office is located in Philadelphia. Does my situation fall under this settlement language?

Yes. If you commuted into the city before Governor Wolf’s stay-at-home order and paid Philadelphia city wage tax, you are not liable to pay it while working from home at this time.

How do I change my city wage tax status in Philadelphia?

Workers can change their tax status and be exempt from the City of Philadelphia’s City Wage Tax of 3.4481% until June 30, 2020 and 3.5019% beginning July 1, 2020. The responsibility for proper tax reporting falls on the individual employee. You must speak to your employer about changing your tax status. If you did not or cannot change your tax status, you can file for a refund beginning January 2, 2021. The refund forms are available online from the City of Philadelphia Department of Revenue and are usually made available on the first business day of the year.

I paid Philadelphia wage tax while working from home. What should I do?

If you have paid by mistake while working from home, the City will not refund your taxes until the tax year ends.

It is critical that you check you paystub to see if your employer has changed your tax status, because if you live in a municipality or school district that collects earned income tax, you will owe Philadelphia city wage tax to that municipality and/or school district for the time worked outside of the city.

In a normal year where you don’t work from home, you should be filing annual Earned Income Tax returns with your County Tax Collector each April showing that you work in Philadelphia. In 2021 you will file two returns, one for the City showing the time you worked in Philadelphia and one with your County showing the time you were required to work from home.

How long will I be exempt from Philadelphia wage tax?

You will continue to be exempt from Philadelphia city Wage Tax and responsible for it for as long as your employer decides to have you work from home even if the Governor no longer mandates telework. The work from home decision must be made by your employer as a condition of employment.

Due to the significant savings, it is important that you contact your employer to check your tax status if possible and begin saving now. You also want to check at tax time in 2021 to make sure you only pay the City of Philadelphia for those days attributable to the time you were working in Philadelphia and calculate the number of days you were teleworking and file the returns accordingly.

High Swartz Partner Thomas E. Panzer and MIRIA Board Pass Quick Response Grants

During its meeting on September 4, 2020, the Military Installation Remediation and Infrastructure Authority (MIRIA) Board of Directors approved more than $2.5 million dollars in “Quick Response Grants” to local water and sewer authorities. The grants will help those authorities pass through reimbursements for surcharges applied to customers relating to the cost of remediating polyfluoroalkyl (“PFAS”) substances present in drinking water related to the presence of former military installations.

The Quick Response Grants represent preliminary grants to benefit the resident ratepayers. Additional grant requests are being evaluated and additional grant awards are anticipated in the fourth quarter of 2020. Pursuant to Act 101 of 2019, only Municipalities and Municipal Authorities are eligible for grants from the MIRIA Funds. The grants were awarded to Warminster Municipal Authority, Horsham Water & Sewer Authority, and North Wales Water Authority.

High Swartz Partner, Thomas E. Panzer, Esq., is a former Warminster Municipal Authority Board Member and municipal attorney appointed to the MIRIA Board by the Speaker of the House of Representatives. Scott DeRosa is a local community volunteer and accountant appointed to the MIRIA Board. Meghan Schroeder is the elected State Representative for Warminster, Warwick, Ivyland Borough, and sections of Buckingham, Pennsylvania, and was instrumental in passing Act 101 creating the funding for the MIRIA Grants.

About MIRIA

MIRIA was formed by Horsham Township in Pennsylvania under Act 101 of 2019. Introduced by State Representative Todd Stephens, the act was then signed into law by PA governor Tom Wolf in November of 2019.

MIRIA was created to protect local communities located near NAS-JRB Willow Grove and the former Johnsville Naval Warfare Center. These communities were negatively affected by PFAS (perfluoroalkyl and polyfluoroalkyl substances) contamination in their water supplies. The contamination can be traced to fire fighting activities and exercises using aqueous film-forming foam (“AFFF”).

Residents and water suppliers for the municipalities have spent millions on remediation efforts to protect the communities. Even with some financial assistance from the Navy and Air National Guard, the communities are still not fully reimbursed of the remediation costs. That is where Act 101 comes in.

Act 101 provides funding to reimburse water providers and their customers for remediation costs that may have been given to customers due to remediation efforts. The Act also makes state taxes available to MIRIA generated on specific parcels of land in Horsham Township commonly referred to as the “MIRIA Zone”. The zone consist of 58 parcels or about 1,787 acres of land in Horsham Township.

IRS Issues Payroll Tax Deferral Guidance – What You Need to Know

Given the sparse guidance, there is currently a lot of leeway in how employers can implement the tax deferral holiday.

On August 8, 2020, President Trump declared an optional payroll tax deferral holiday for the employee portion of social security taxes. The IRS issued guidance for employers to implement the deferral program on August 28, 2020. While the policy could result in a temporary net pay boost for employees, the policy is fraught with peril for both employees and employers. Here is what you need to know:

Who is eligible for payroll tax deferral?

Any employee who makes less than $4,000.00 in a bi-weekly pay period is eligible for deferral of the 6.2% social security payroll tax. This can up to a $248.00 increase in net pay in a bi-weekly pay period.

What is the deferral time period?

The deferral period is for all payroll paid between September 1, 2020 and December 31, 2020.

Will the payroll tax deferral be forgiven?

It is important that employees and employers understand that this amount is deferred, not forgiven. All taxes deferred must be repaid through payroll deduction between January 1, 2021 and April 30, 2021.

Do all employers need to participate?

The program is optional. Employers do not have to participate. The IRS guidance is clearly aimed at employers, not employees.

Who is responsible for repayment?

The burden of paying deferred taxes in 2021 ultimately falls on the employer. While the IRS clearly states that the employer can make arrangements to withhold the deferred taxes from the employee upon separation, at the end of the day, if the employee does not pay the deferred taxes, the employer will be liable for them, and any associated penalties and interest if the deferred taxes are not repaid by April 30, 2021.

Employers and their human resources departments may want to take some of the following steps:

  1. Clearly communicate your policy regarding the tax holiday to your employees, even the ones who don’t qualify for the deferral.
  2. If your company participates, make sure the employees understand the following:
    a. The deferral may be helpful in the short term, but will result in additional withholding, absent action by Congress, in 2021. The employee may see withholding at double the current rate in 2021, which may result in future hardship.
    b. Should the employee separate from service before all deferred taxes are repaid, the employer will withhold all remaining deferred taxes from the final paycheck.
    c. Theses concepts should definitely be acknowledged by the employee in a written or electronic manner.

Employers need to be aware that they could be exposed to up to approximately $2,150 per eligible employee for unpaid payroll tax deferrals.

The big question is whether, if Congress acts and forgives the deferred payroll tax, whether it will direct the US Treasury to issue refunds to all employees whose payroll taxes were remitted, direct employers to issue the refund, and credit the amounts against 2021 payroll taxes due, or undertake some other method to put the money back in the employees’ pockets. These are issues to be aware of, but there are no specific ways to plan for these speculative policy outcomes, except to keep abreast of all changes.

What is an Alternate Valuation Date for Federal Estate Tax Purposes?

You may have heard about the “alternate valuation date” when valuing assets for federal estate tax purposes during estate administration. Generally, when a person dies, the personal representative is required to value the decedent’s assets as of the date of death. However, under federal estate tax law, the personal representative can do so up to six months after the date of the decedent’s death.

Why can we wait an extra 6 months to value the decedent’s assets?

The purpose for this additional time is to provide flexibility to the personal representative in selling, administering, and ultimately, paying taxes on the estate’s assets. When the federal estate tax is 40%, this is a significant decision.

How to I know which valuation to use?

When a personal representative considers whether to use an alternate valuation, he needs to consider the consequences to all three types of taxes commonly assessed against decedents estates and their heirs. These taxes are:
a) federal estate tax
b) state inheritance or estate tax
c) federal and state income taxes

For most people, the alternate valuation is not a viable choice.

Should I claim the alternate valuation?

An alternate valuation must do two things. It must decrease the value of the federal taxable estate, and it must decrease the amount of federal estate tax due. 26 U.S.C. § 2032(c). Whether you can or should claim the alternate valuation requires some knowledge of the interaction of the various income, estate and inheritance taxes.

The value of the gross federal estate is generally calculated by including the value of all assets, whether they are probate assets (that pass via the will) or non-probate assets (that pass by operation of law, contract or beneficiary designation). The federal estate includes business interests, many interests held in trust and life insurance proceeds from a policy the decedent owned on his own life, along with other assets.

There is good news, however. Most people don’t pay federal estate tax.

In 2020, the first $11.58 million of assets is exempt from taxation under current estate law, so long as there are no other lifetime gifts. This means that if your estate is less than this amount, known as the “unified credit,” the alternate valuation will not lower the amount of federal estate tax owed, since it is already zero.

For example, if a the value of an estate’s assets are $11.0 million on the date of death, but decrease to $10.5 million six months later, the personal representative cannot claim the lower value of assets, because it doesn’t lower the amount of estate tax due, which is already zero. However, if the assets are worth $11.7 million on the date of death, but decrease to $11.4 million six months later, the alternate date may be used, as the value of the federal taxable estate is lower, and the amount of tax due has been reduced from approximately $40,000 to $0.00. A personal representative cannot claim alternate valuation for increases in value.

What is the downside?

It is important to note that the decreased valuation becomes the tax basis for the assets for all purposes. This mean choosing the lower valuation creates a lower tax basis for calculating capital gains liability. It is possible to save on federal estate tax, and cause unforeseen capital gain liability. The maximum marginal rate for most long terms capital gains is currently 20%

In the second example above, if the assets appreciated back to $11.7M, and were then liquidated, the estate would realize a $300,000 gain, and pay $45,000 in realized capital gains, rather than $0.00. To be clear, a personal representative should understand how long assets will be held, their likelihood to appreciate or depreciate in value, and the effect of marginal capital gains, and federal estate tax rates when determining whether to use the alternate valuation date.

Regarding Pennsylvania inheritance tax, the alternate valuation date is not available. Thus, the date of death value of an asset is its value for inheritance tax purposes. The taxable estate for Pennsylvania inheritance tax is calculated slightly differently than the federal taxable estate.

In order to determine the most tax efficient administration strategy, a personal representative needs to know the types of taxes affecting the estate, understand the holding periods and uses for assets, and make reasonable projection regarding asset appreciation and depreciation.

If you are in need of assistance regarding whether an alternate valuation date is appropriate, and how it may affect federal estate tax, state inheritance tax, or state income tax, contact attorney Don Petrille of the Doylestown office of High Swartz at 215.345.8888.