Surviving Amidst A Business Euroclydon

Preface: These are genuinely “uncharted waters,” as Governor Wolf said. The  economic expedition employers and employees have involuntary embarked on does not promise an easily charted path forward.

Surviving Amidst A Business Euroclydon

Credit: Donald J. Sauder, CPA | CVA

It is a year for the history books—a global pandemic with unparalleled complexity for the globe, nation, and each state community. The continuing pandemic developments are surreal for both business and individual families.

On Thursday, Pennsylvania Governor Wolf ordered a shut-down of non-life sustain businesses. Valid on that day, enforcement is scheduled to begin on Monday the 23rd at 8:00 AM. This Governor’s proclamation is planned to be strictly enforced. Remote business activities are permitted to continue, so employees who can work from home, you can supposedly continue business as usual.

The individual list of Pennsylvania life-sustaining businesses and non-life sustaining businesses can be read on this link. March-21-2020-Industry-Operation-Guidance. If you have a question, please contact your trusted advisor. If you need an opinion on the specifics for your business or the risks of disregarding this crisis order, contact your attorney.

The Families First Coronavirus Response Act was signed into law on Wednesday, March 18th, and goes into effect on April 2nd, 2020. The new law specifics have been expanded requirements for family medical from work. This crisis law extension remains in effect until December 31st, 2020.

The Family Medical Leave Act is for emergency paid sick leave: Full-time employees of employers with fewer than 500 employees that are unable to work due to COVID-19 are eligible for 80 hours of emergency paid sick leave. Part-time employees are eligible to receive the equivalent of the number of hours they would work, on average, for two weeks.

The crisis law extends to the FMLA for an employer with fewer than 500 employees, expands the definition of a covered employee to include all employees who have worked for covered employers for at least 30 days. So now, your employees will be eligible for up to twelve weeks of unpaid leave if they are seeking a diagnosis or have quarantine instructions from a doctor. Or if they are caring for a person under quarantine, self-quarantine, or say for children unable to attend school or childcare, or any similar condition. So, if an employee has a dependent home from school or childcare, they qualify for the FMLA extension parameters.

Any full-time qualifying employee is entitled to 80 hours of paid leave, and a part-time employee is entitled to pay for regular hours worked in two weeks. Employers with one to forty-nine employees must provide qualifying paid time off under the above circumstances. An employee may apply for sick leave before opting on the extension to the Family Medical Leave Act.

There is a clause that employees laid off before April 2nd do not qualify for the new crisis laws. Consult your labor attorney before making any crisis decision.

To quote Albert Einstein, “A true genius admits that he/she knows nothing.” Ernest Shackleton was a genius explorer. Also consider what you can learn from the book Endurance: Shackleton’s Incredible Voyage.

These are genuinely “uncharted waters,” as Governor Wolf said. The  economic expedition employers and employees have involuntary embarked on does not promise an easily charted path forward.

Will you be safe in a crisis with a significant cash position? Remember the trivial concern with the Cypriot Financial Crisis 2011 haircuts? Maybe not?

And to our friends, Godspeed. Feel free to call if you want to chat.

Preparing a Business Optim-20 Plan

Preparing a Business Optim-20 Plan
Donald J. Sauder, CPA | CVA    

Watching current and continued developments with the Coronavirus Pandemic? Begin early to prepare for a potentially prolonged economic recovery. The implications of the disruptions to business cash flows, revenue, and market declines highlight the importance of appropriate strategic business plans.

Many businesses are experiencing new challenges on a surprising frontier, and a comparison may be to embarking on a financial “Ernest Shackleton expedition.”

Cash is king. Planning to maintain liquidity levels should be top of mind. Remember, though, that cost reduction measures in aggregate, will lead to a longer economic recovery because of the shift to a slower velocity of money.

Prepare for challenges in supply chains, slower payments on accounts receivable, changes in confidence, or potential defaults. These cash implications will have a ripple effect on the economic domino chain of interdependent business.

Special payment relief is now available to individuals and businesses in response to the Coronavirus Pandemic. The filing deadline for tax returns remains April 15, 2020. The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can’t file by the April 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request a six-month extension to file their return.

Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C-Corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers.

If you sense that you will need relief from secured or unsecured creditors, begin discussions before the cash need is critical. Prepare a cash flow analysis of why your creditors should see that your business cash flow risks make sense.

A genuine business expedition is before us. Cash will be king. The greed of yesterday may turn to fear. We are working in uncharted territory. The wisdom of your Guide will be crucial from today forward.

Roth IRAS – What You Need to Know

Roth IRAS – What You Need to Know

Roth IRAs are tax-favored accounts to which qualified taxpayers can make after-tax contributions. Contributions to a ROTH IRA account can grow tax-free, and neither the contributions nor the earnings on them are subject to tax when a Roth IRA owner receives a qualified distribution from the account. Although a Roth IRA is designed to help a taxpayer save for retirement, it is inaccurate to characterize a Roth IRA as just a retirement savings vehicle.

Roth IRAs offer several advantages over traditional IRAs.

•Distributions can be made completely tax free, as long as they are qualified distributions (generally, distributions made more than five years after the contribution that are made after the owner has attained age 59½, died, or become disabled, and distributions for certain special purposes, including the purchase of a first home).

•The owner is not required to take lifetime distributions, so the tax-free buildup can continue throughout the owner’s life.

•Distributions of contributions are always tax free, no matter when they are made.

A taxpayer that decides to take lifetime distributions can benefit from the same favorable tax treatment accorded to Roth IRAs. Like traditional IRAs, Roth IRAs provide for tax deferral on the earnings. However, since no tax is imposed as long as the distribution is a qualified distribution, as discussed above, this benefit is increased.

Because tax-free distributions of earnings can occur only after the five-year requirement is satisfied, to take full advantage of this (as well as to maximize the amount of earnings on which tax is deferred), contributions to a Roth IRA should be made as soon as possible. In fact, parents or grandparents may want to consider setting up and funding a Roth IRA for their children or grandchildren as soon as the children or grandchildren have enough earned income from part-time or summer jobs. This will ensure that the five-year requirement is met when the individual for whom the Roth IRA is established is ready to make a withdrawal to buy a home, for example.

Before making a contribution to a traditional IRA (or other retirement plan), it generally is important to be sure that you can afford to be without the funds for some period of time, since tax and often heavy penalties are imposed when amounts are withdrawn. However, in the case of a Roth IRA, withdrawals before the five-year requirement is satisfied are tax free as long as they consist only of contributions. As a result, a Roth IRA can act as an emergency fund since you can make tax-free withdrawals from the account to the extent of the contributions made to the account.

For example, assume you contribute $3,000 to a Roth IRA in 2020, 2021, and 2022. In October 2023, when the account is worth $11,000 (contributions plus earnings), you need $5,000 for an emergency. Since you’ve made contributions to the Roth IRA equal to $9,000, you would be able to withdraw the $5,000 tax-free from the Roth IRA. In applying this rule, distributions from a Roth IRA are treated as coming from contributions first. You must keep accurate records of the contributions made to a Roth IRA so that if a withdrawal is made from the account, you can show that the withdrawal is coming from contributions and is, therefore, tax free.

The fact that you can withdraw the annual contributions made to the Roth IRA at any time during retirement without incurring any tax means that these accounts can serve financial planning goals that cannot be served by a traditional IRA.

 

 

2019 Tax Filings: Business Mileage Deductions and Education Expenses

2019 Tax Filings: Business Mileage Deductions and Educator Expenses

IRS rules provision businesses with the opportunity to deduct the entire cost of operating a vehicle for business purposes. Alternatively, entrepreneurs can use the business standard mileage rate, subject to some specific exceptions. The mileage deduction is calculated by multiplying the standard mileage rate with the number of business miles traveled. Self-employed individuals also may use the standard rate, as can employees whose employers do not reimburse, or only partially reimburse, them for business miles driven.

Many taxpayers use the business standard mileage rate to help simplify their recordkeeping. Using the business standard mileage rate takes the place of deducting almost all of the costs of your vehicle. The business standard mileage rate takes into account costs such as maintenance and repairs, gas and oil, depreciation, insurance, and license and registration fees.

Beginning on January 1, 2020, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) is:

  • 57.5 cents per mile for business miles driven, down from 58 cents for 2019
  • 17 cents per mile driven for medical or moving purposes, down from 20 cents for 2019
  • 14 cents per mile driven in service of charitable organizations, no change from 2019

Mileage related to unreimbursed business expenses and moving expenses are limited to certain taxpayers as a result of the Tax Cuts and Jobs Act for taxable years 2018 through 2025.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers may have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. If instead of using the standard mileage rate you use the actual expense method to calculate your vehicle deduction for business miles driven, you must maintain very careful records. You must keep track of the actual costs during the year to calculate your deductible vehicle expenses. One of the most important tools is a mileage log book.

Tax Deductions for Teachers with Educator Expenses

Now that tax season is here, many teachers are looking for tax deductions for the expenses from dipping into their own pockets to buy classroom supplies. Doing this throughout the year can add up fast. For those who have already filed, fortunately, eligible educators may be able to defray qualified expenses they paid in 2020 when they file their tax return in 2021.

Educators who work in schools may qualify to deduct up to $250 of unreimbursed expenses. That amount goes up to $500 if two qualified educators are married and file a joint return. However, neither spouse can deduct more than $250 of his or her qualified expenses when they file.

Taxpayers qualify for this deduction if they:

  • Teach any grade from kindergarten through twelfth grade.
  • Are a teacher, instructor, counselor, principal or aide.
  • Work at least 900 hours during the school year.
  • Work in a school that provides elementary or secondary education.

 

Qualified expenses include:

  • Professional development courses;
  • Books;
  • Supplies;
  • Computer equipment including related software and services;
  • Supplementary materials, and;
  • Athletic supplies only for health and physical education.

Eligible taxpayers can claim this deduction when they file their taxes. We encourage teachers to consider tracking their qualified education expenses incurred throughout the school year to obtain this easy tax filing deduction.

 

Small Business Tax Record Keeping and Home Office Deductions

Preface: Accurate tax preparation begins with good record keeping. Small business owners often neglect this area of operations. This blog outlines a few of the reasons why investing in good record keeping is worth the effort.

Small Business Tax Record Keeping and Home Office Deductions

Small business owners should always keep good financials records. This applies to all businesses, whether they have a couple dozen employees or just a few. Whether you install software or make soft-serve. Whether they cut hair or cut lawns. Keeping good records is an important part of running a successful business. Here are some questions and answers to help business owners understand the ins and outs of good recordkeeping.

Why should business owners keep records?

Good records will help you as a business owner:

  1. Monitor the progress of business financial performance;
  2. Prepare financial statements for banks, creditors, and management;
  3. Identify concentrations of income sources;
  4. Keep track of expenses and assist with budgeting;
  5. More accurate tax returns and support items reported on tax returns;

What kinds of records should you keep?

Small business owners may choose any recordkeeping system that fits their business. They should choose one that clearly shows income and expenses. Except in a few cases, the law does not require special kinds of records. QuickBooks is a good choice for many small businesses.

How long should your business keep financials records?

How long a document should be kept depends on several factors. These factors include the action, expense and event recorded in the document. The IRS generally suggests taxpayers keep records for three years.

How should your business record transactions?

A good recordkeeping system includes a summary of all business transactions. For beginners, these are usually kept in books called journals and ledgers, which business owners can buy at an office supply store. All requirements that apply to hard copy books and records also apply to electronic business records.

What is the burden of proof?

The responsibility to validate information on tax returns is known as the burden of proof. Small business owners must be able to prove expenses to deduct them.

How long should businesses keep employment tax records?

Business owners should keep all records of employment taxes for at least seven years.

Tax Deduction for Home Office

Taxpayers who use their home for business may be eligible to claim a home office deduction. It allows qualifying taxpayers to deduct certain home expenses on their tax return. This can reduce the amount of the taxpayer’s taxable income. Here are some things to help taxpayers understand the home office deduction and whether they can claim it:

  1. The home office deduction is available to both homeowners and renters.
  2. There are certain expenses taxpayers can deduct. They include mortgage interest, insurance, utilities, repairs, maintenance, depreciation, and rent.
  3. Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.

The term “home” for purposes of this deduction:

Includes a house, apartment, condominium, mobile home, boat or similar property. Yes, you can work from a boat in the “Roaring 20’s.”

Also, ” home” includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse, or work ship on the water.

“Home” doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.

There are two basic requirements for the taxpayer’s home to qualify as a deduction:

  1. There must be exclusive use of a portion of the home for conducting business on a regularly basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
  2. The home must be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home, but also uses their home to conduct business may still qualify for a home office deduction.

Expenses that relate to a separate structure not attached to the home will qualify for a home office deduction. It will qualify only if the structure is used exclusively and regularly for business.

Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:

The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.

When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.

If you would like to discuss tax planning opportunities, small business record keeping, or understand the ways in which you can use your home regularly and exclusively for your business to reduce your tax bill, please call our office at your earliest convenience.

Individual Tax Planning for Itemized Deductions

Preface: Since the TCJA tax legislative update beginning with 2018, individual tax filers on Form 1040 have revised attributes including a higher standard deductions, therefore changing the applicability for itemizing.

The threshold for the Form 1040 standard deduction you are allowed in the current year depends on the filing status of your tax return for the year.

For those who are single (or married filing separately), the standard deduction for 2020 is increasing $200 to $12,400. If you file as a head of household, your standard deduction will be increasing $300 to $18,650. For married couples filing jointly, the standard deduction is increasing by $400, up to $24,800 for the tax year 2020.

This the legislated tax rule increase in the standard deduction for 2020, will see more people choosing this tax feature. But for those still interested in itemizing, here are a few key highlights.

Itemized deductions include amounts you paid for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, and disaster losses from a Federally declared disaster. You may also include gifts to charity and part of the amount you paid for medical and dental expenses.

You would usually benefit by itemizing on your individual tax filing if you:

• Can’t use the standard deduction or the amount you can claim is limited

• Had large uninsured medical and dental expenses

• Paid interest or taxes on your home

• Had large “other” deductions

• Had large uninsured casualty or theft losses from a Federally declared disaster

• Made large contributions to qualified charities

The higher standard deduction under Tax Reform means fewer taxpayers are itemizing their deductions. However, taxpayers may have an opportunity to itemize this year by keeping these tips in mind:

Deducting state and local income, sales and property taxes. The deduction that taxpayers can claim for state and local income, sales and property taxes is limited. This deduction is limited to a combined, total deduction of $10,000. It is $5,000 if married filing separately. Any state and local taxes paid above this amount can’t be deducted.

Refinancing a home. The deduction for mortgage interest is also limited. It’s limited to interest paid on a loan secured by the taxpayer’s main home or second home. For homeowners who choose to refinance, they must use the loan to buy, build, or substantially improve their main home or second home, and the mortgage interest they may deduct is subject to the limits described in the next bullet under “buying a home.”

Buying a home. People who buy a new home this year can only deduct mortgage interest they pay on a total of $750,000 in qualifying debt for a first and second home. It’s $375,000 if married filing separately. For existing mortgages, if the loan originated on or before December 15, 2017, taxpayers continue to deduct interest on a total of $1 million in qualifying debt secured by first and second homes.

Donating items and deducting money. Many taxpayers often find unused items in good condition they can donate to a qualified charity. These donations may qualify for a tax deduction. Taxpayers must itemize deductions to deduct charitable contributions and must have proof of all donations.

Deducting mileage for charity. Driving a personal vehicle while donating services on a trip sponsored by a qualified charity could qualify for a tax break. Itemizers can deduct 14 cents per mile for charitable mileage driven in 2020. 

Summary: Itemizing deductions for your 1040 tax filings is best performed by an experienced tax accountant for optimal tax benefits. If you think itemizing for your individual tax filing is the right choice for your 2020 taxes contact your trusted tax accountant.

 

How Will I Get Paid?

Credit: Jacob M. Dietz, CPA

Imagine you are a business owner, and the time has come to sell the business. You wipe away a few tears, and you begin to negotiate with a potential buyer. How much will you get paid? That answer may depend partially on how you get paid. This blog explores some options for getting paid.

Cash

Getting paid in cash may be attractive for a seller. After the seller has the cash, they can take the money and do with it as they please. They have the security of getting the cash in hand immediately.

One drawback to the cash sale for the seller is that it brings all the income from the sale into one year. That can throw the seller into higher tax brackets, and they may potentially lose out on credits. On the bright side, if they have a large tax bill from the sale, then at least they have cash to pay it.

With a cash deal, there is less risk to the seller. Consequently, they may not get as much cash for the sale. On the other hand, there may be more risk to the buyer. Therefore, the buyer does not want to pay as much.

Although I am calling this cash, it is cash from the seller’s perspective. For the buyer, the cash could be savings, or perhaps bank debt, or some other source of cash. Calling it cash does not mean that the buyer is debt-free. In fact, in a cash sale, the buyer may be deeply in debt, which can be risky.

Seller-Financed Debt

Another option for the sale is where the buyer agrees to pay the seller for the business, in the form of a loan, over time.

This arrangement increases the risk to the seller. What if the buyer defaults on the loan? The economy might go bad, and even an honest buyer may not be able to pay. Worse yet, the buyer may be dishonest and simply refuse to pay. With the increased risk comes the possible opportunity for a higher sales price. The seller incurs more risk, so they may ask for more money. On the other hand, the buyer may have less risk, at least if it is unsecured debt, and they may be willing to pay more. Also, there may be more potential buyers if the seller is willing to finance it.

How could there be more potential buyers? If a business would be for sale for $600,000, then there would be many people who could not afford that price, even if they wanted to buy it. A bank may offer some financing, but if the buyer does not have a significant enough down payment, the bank may not help them. On the other hand, if the seller finances it, then what was impossible may become possible with seller-financing. The seller and buyer might agree to some type of middle ground in which some of the sales price is paid immediately in cash and some is seller-financed. For example, if the total sales price of the business is $600,000, the seller may ask for $300,000 in cash and offer a 7 year note for $300,000.

Contingency

Another part of the sales price could be a contingency. There could be different contingencies, but let’s use revenue as an example. The deal could specify that if revenues in year 1 equal $X, then an additional $20,000 or will be paid to the seller. A contingency can help reduce the risk of the buyer.

How and How Much

How the seller gets paid can affect how much they get paid. If the seller is taking on more risk, then they may want to ask for more money. On the other hand, if the buyer is taking on more risk, then the buyer may want to pay less. How the seller gets paid, therefore, may affect how much they ask to get paid.

If you are selling or buying, remember to think about both how the payments will be made, and how much they will be. Deals can be complex, and you will likely want to consult with your accountant on important deals.

Hoshi Ryokan

The ideology is among other things to be a small but powerful business.

One specific dream, one night, 1,300 years ago, was the start of one of the world’s oldest businesses. Hoshi Ryokan a traditional Japanese Inn, launched from Taicho Daishi’s dream, has been a family managed business since 718 A.D. The Inn is currently in its 46th generation of Hoshis, with Zengoro Hoshi preparing to transition the business to his grandson. The Hoshi family credits the success of the business and transition longevity to clear succession rules with each passing generation, as well as instilling a motto in each new generation “study the water running down a small current”.

The ideology is among other things to be a small but powerful business. The power of the water was the successful origin of the spa Inn. Taicho’s dream told him specific details where a special hot-spring was located that would serve the village people forever. Taicho sought the help of villagers to locate the hot-spring; the village sick who immerse themselves in the water soon found their health was immediately restored.

While many businesses stories are not that unique, we can learn from the Hoshi Ryokan family succession plan that strict training in family protocol, values and personal ethics has ensured the success of the business transitions for over 1,300 years. The protocol includes a strong set of ethics and values. Each generation has had its own set of idea’s but the Hoshi family hasn’t waivered from their commitment to family succession for 1,300 years. The family knows what made them successful, and they (the Hoshi family) is not permitted to forget.

Planning for the next five or ten years for your business? How important do you think the values of your management culture will be to your businesses continued success?

How Will You Measure Your Life?

Preface: Today we reflect on the life of Clayton Christensen, the Gentle Giant of Innovation. In 2019 Clay Christensen was inducted in the Thinkers50 Hall of Fame, honoring the most strategic thinkers in the world

 “Clay Christensen’s influence on the business world has been phenomenal.“ Stuart Crainer & Des Dearlove, Thinkers50

Clay’s article “How Will You Measure Your Life?” is one of the most downloaded articles in the history of HBR.

Read Two Master Pieces from a Truth-Seeker:

How Will You Measure Your Life? Clayton M. Christensen

After 25 years studying innovation, here is what I have learned

And we will always remember Clayton with this question, we once heard. “What valuation model does God use for a Soul?”

A Lesson Learned By An Executor—The Hard Way (Segment III)

Preface: Key Lessons From This Story: Here are some important lessons we can learn from Mark’s story:

A Lesson Learned By An Executor—The Hard Way

Careful Planning Is Important. Mark’s mother (or her attorney) failed to ensure that her will and transfer-on-death accounts had consistent directions. If Mark had chosen to do so, he legally could have ignored the directions of the will and kept the 1/6th share he received from investment account, as well as the entire balance of the “In Trust For” account. (This is also true when a parent and a child jointly own a bank account, and one of them passes away.) This could have led to conflict in the family if Mark had chosen to be greedy and keep the money. If you know you are named as an executor for someone, consider sitting down with them while they are still alive to talk through their expectations and desires. Also, make sure their documents (will, trust, beneficiary designations, etc.) reflect those desires and that their financial accounts are properly titled. It may be appropriate to have an estate planning attorney be part of that conversation.

It Is Easy to Overlook Important Requirements. For states like Pennsylvania that require payment of inheritance tax, filing the tax return can be easy to overlook if no estate is opened. It is not very difficult to avoid probate if a person plans carefully, but after the second spouse dies (and even sometimes at the death of the first one) an inheritance tax return is often required in Pennsylvania (and some other states). This is true even if no estate is opened. The failure to file will likely be noticed by the Department of Revenue at some point, and filing late often results in interest and penalties. Also, estate administration procedures in all states generally require doing things that the average person simply can’t be expected to know about, such as providing notices to beneficiaries, creditors, and certain government entities. What executors don’t know can come back to bite them because they can be held personally liable for mistakes in how an estate is handled.

It Pays to Seek Out Good Counsel. It is valid for executors to be concerned about the cost of having an attorney assist with administering an estate. Depending how an estate attorney charges, and the size and complexity of the estate, the bill can be sizable. But trying to settle an estate without at least some level of professional help is simply not an option for most people. Rather than risking mistakes or oversights that will cost even more to correct, if you are an executor you should seek professional help (usually an attorney) to ensure that things are handled correctly and that all exemptions and deductions are taken.

An executor does not need to use the attorney that drafted the will! This is a big misconception people have, and often it keeps them from shopping around for a competent and reasonably-priced attorney. This makes it too easy for attorneys who prepare a will to charge high fees when settling the person’s estate. Make sure that you talk about fees before hiring an attorney to do anything, but especially when asking for help to settle an estate. Fees can vary widely between attorneys so it is worth your time to ask. Often attorneys will charge the estate a percentage of the estate’s assets (this is permitted in many states, but it can result in unreasonably high fees). Some will charge a flat rate based on the estimated time required to settle the estate, which allows you to know the cost in advance. Some will charge an hourly rate, but they should at least be able to give you an estimate of the time necessary to do the work. (Because I feel that charging a percentage of an estate is often unfair to the client, I generally charge by the hour or a flat rate when settling estates.)

In conclusion, serving as an executor is an important role and it should be taken seriously. It pays to review plans before death when possible, and it is also important to seek out good counsel to ensure things are handled properly. As Mark learned, “little” oversights can have big consequences down the road.

Nevin Beiler is an attorney licensed to practice law in Pennsylvania (no other states). He practices primarily in the areas of wills & trusts, estate administration, and business law. Nevin is part of the conservative Anabaptist community and is committed to practicing law in a way that builds the Kingdom of God and is consistent with Anabaptist values. His office is in New Holland, PA, and he can be contacted by email at info@beilerlegalservices.com or by phone at 717-287-1688. More information can be found at www.beilerlegalservices.com.

 Disclaimer: This article is general in nature and is not intended to provide specific legal or tax advice. Please contact Nevin or another attorney licensed in your state to discuss your specific legal questions. In order to protect confidentiality and provide a better illustration, names in the above story have been changed and some facts may have been changed or added.