Monday, March 16, 2015

Inheritance Status of Posthumously Conceived Children

On November 21, 2014, New York Governor Cuomo signed into law a new statute, EPTL 4-1.3, which addresses the inheritance rights of children conceived after the death of one parent.  The children generally show up because a parent had frozen his semen or her eggs, maybe because the parent is terminally ill, going off to combat, or a workaholic at a law firm.

Under the new law, a child conceived after the death of a parent may inherit from that parent (or relatives of that parent and other people) if four requirements are met:

1. The parent storing the sperm or egg must expressly authorize the use of that genetic material for posthumous conception, and the written authorization of someone else to make that decision must be updated at least every seven years.  The written authorization needs two witnesses in addition to the authorized decision-maker.  (Though not stated in the statute, the stored genetic material should probably also be updated at least every seven years.)

2. The written authorization must be recorded with the Surrogate's Court [no pun intended] within seven months of the storing parent's death.

3. The future child must be in utero within 24 months of the storing parent's death or born within 33 months of the storing parent's death. 

4. Notice of the existence of the genetic material must be provided to a decedent's estate within seven months of the death.  The decedent does not necessarily have to be the storing parent; for example, a grandparent might die with bequests to her grandchildren, and her estate must be notified that there might be some grandchildren chilling at the sperm bank.

If the above requirements are met, the posthumously conceived child is treated like any other child of the storing parent.  The new legislation applies immediately to the wills of a storing parent.  But since other relatives might be surprised and not necessarily in favor of giving to posthumously conceived children, the new legislation only applies to trusts executed after September 1, 2014 and to wills of people who died after that date. 

Thursday, March 12, 2015

Tax Break for Auto Salesmen

Employees are normally taxed if they receive the free use of a car from their employer. 

But Internal Revenue Code section 132(j)(3) generally provides that a car salesman is not taxed on use of his or her employer's vehiclesBasically, the salesman can drive the car as much as he or she wants during the working day, plus some more driving after hours. 

The requirements are:
1. The salesman is a full-time employee of the car dealership,
2. The car is used in the geographic sales area in which the dealership sales office is located (a radius of at least 75 miles),
3. The dealership prohibits family members from using the car, the storage of personal items in the car, and the use of the car for personal vacation trips, and
4. The dealership limits the use of the car outside the dealership's normal working hours to the normal commuting distance plus around ten miles per day. 
 The Internal Revenue Service has issued numerous regulations and procedures in order to ensure that this tax break does not get out of hand, including the 33 pages of Revenue Procedure 2001-56 [pdf]. 

The automobile use tax break is unfortunately not available to the dealership's other employees, such as mechanics, bookkeepers, and part-time salesmen.