Friday, November 17, 2017

Protecting Your Identity in the Aftermath of the Equifax Breach

By Andrew Zashin*

By now you have probably heard that Equifax’s database was breached sometime this past summer. Announced only in September, cybercriminals gained access to about 145.5 million consumers’ personal data. Some consumers in the United Kingdom and Canada were affected as well. Data stolen included full names, Social Security numbers, birth dates, addresses and even driver license numbers. More than 200,000 credit card credentials were stolen as well. Obviously, breaches are not new news, and several other data breaches have been discovered and reported since that time. Your chance of becoming victim of identity theft is higher than ever before, and it’s becoming less a question of “if” your identity or financial information is compromised and more a matter of “when” it will happen.

Every breach presents a huge concern for those affected – and a public relations nightmare for the breached entity. The Equifax breach is particularly troubling. Not only was the sheer number of credit files impacted huge, but the breadth of the information obtained is particularly scary. And, unlike an insurance company, bank or other entity with which consumers choose to do business, any consumer wanting any type of consumer credit forms a relationship with Equifax by default – and never had an option to “opt out” in the first place.

What’s the average person to do? While it’s enough to make anyone want to switch back to cash, there are some common sense steps you can take to decrease your chances of becoming a victim:

• Specific to the Equifax breach, you can visit equifaxsecurity2017.com to determine whether your data was among that stolen. Follow the prompts and instructions on that website to sign up for their complimentary credit-monitoring service.

• Monitor all bank and credit accounts regularly for charges or withdrawals you don’t recognize. If you see something, call your bank or the number on the reverse of the credit card to report it immediately. There are laws on the books to protect consumers from fraud, and it is likely that you will get your money back, but they do require quick reporting – and you may be out of pocket for the money while it gets corrected.

• Check your credit reports regularly. You are entitled by law to get a free credit report from all three major credit reporting agencies each year via annualcreditreport.com. You can even maximize your coverage by staggering your requests and, say, getting a report from Equifax now, a report from TransUnion in four months or so, and a report from Experian a few months after that. If you see an unknown account or inquiry, contact that entity immediately to report possible fraud.

• You may want to consider the possibility of a credit freeze. You can accomplish this though each of the major agencies – Equifax, Experian and TransUnion – and you will want to contact each of them individually. In effect, a freeze locks down your credit file and prevents new lines of credit from being opened with your credentials without having the PIN number that you create. When you intend to open up a new line of credit, you simply call the agencies and ask for the freeze to be lifted temporarily.

• File your taxes well in advance of the filing deadline and make sure to read and respond timely to any communications from the IRS or other tax agencies. Surprisingly, tax fraud is a fairly common scam using stolen credentials. Filing early will make it more likely for a fraudulent filing to be caught before it creates a big headache for you.

• If making purchases online, consider using a trusted payment service such as PayPal, and if you can, use a credit card rather than a debit card. Another option is to use a temporary credit card number generated specifically for that purpose – a service which many banks are now offering – if you have any concerns about whether the site has adequate security protections.

The breaches are concerning, without a doubt. But the fact is it is pretty hard to exist in our modern world – with all of its technology and convenience – without some risk of data breach. While the typical consumer can’t do anything to impact how companies like Equifax protect their data, and while it is impossible to completely lock down everything, there are some common sense steps you can take to protect your information.

This article originally appeared as a column for the Cleveland Jewish News.

Wednesday, October 18, 2017

Tax reforms may pose significant hit to charitable giving

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Every level of government, from the smallest municipality to the federal government, must tackle tax issues. Politicians, pundits and, of course, prospective tax payers will each weigh in, offering separate opinions as to how best to generate the funds the government needs to operate without breaking the back of the average citizen or losing his vote.

President Donald Trump recently released a skeleton outline of his tax plan. The plan proposes sweeping overhauls that, among other things, aims to significantly increase the standard deduction to $12,000 for a single filer and to $24,000 for a jointly-filing married couple. And, for many middle-class Americans, higher standard deductions do away with the complicated process of itemizing deductions for things like qualifying medical expenses, state and local taxes paid, and charitable contributions.

A simplified tax filing process is certainly something taxpayers could get behind. But charitable organizations have some concern as to what impact this plan may have on their bottom lines. Certainly, people donate for benevolent reasons; they do it because they genuinely want to see a cause succeed and because it feels good to do good in the world.

But charitable organizations are well aware that people also give because they derive some direct benefit from it. At certain levels of giving, name recognition may be involved. Perhaps the giver will see their name in a printed program or on an inscribed plaque or brick, or even on the entrance to a hospital wing or theater. Maybe they benefit by having a cleaner home after donating unwanted clothing or household goods.

Or, maybe they get a tax write-off. And, it is the last reason that is causing some concern; if the average taxpayer will no longer get the same tax benefit for his charitable contributions, will he still give at the same level? Nonprofit leaders certainly don’t think so, and experts are estimating that overall giving could decrease by as much as $13 billion to $26 billion per year.

Support is increasing for the concept of a universal charitable deduction, and one congressperson, U.S. Rep. Mark Walker, R-N.C., has introduced the Universal Charitable Giving Act, which proposes to offer an incentive for lower and middle income families to keep or start giving, by allowing them to deduct their charitable donations in an amount of up to one-third of the value of the standard deduction, without itemizing.

Clearly, it is far too soon to know if any of these tax changes may come to fruition or in what form. But, it is apparent that the proposed Trump reforms would mean that as many as 95 percent of taxpayers would derive no value from itemizing deductions and, therefore, no additional tax benefit for charitable giving.

The National Council of Nonprofits responded with a statement calling for Congress and charitable nonprofits to “quickly identify relevant data and come to a consensus on how best to improve the universal charitable deduction so that all American taxpayers, not just 5 percent, benefit from the tax incentive for donations designed to make a difference in local communities across the country.”

Tuesday, September 19, 2017

In estate planning for your minor children, think beyond just money

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Do you have minor children? Do you know what would happen to them if you were to pass away unexpectedly? This is never a pleasant topic to think about, but it is one of the most important estate planning decisions you can make.

Depending on your specific situation, the answer may be obvious. If a minor loses one parent, most often the surviving parent would simply assume custody. If the parents are divorced, or if they were never married, the domestic relations or juvenile courts may need to get involved depending on formal parenting plans that may already be in place. But from a legal perspective, it may be a simple matter.

On the other hand, if the surviving parent is estranged, unfit, or otherwise not around or uninvolved, the answer could become more complex. In that case, it may be necessary to seek the appointment of a “guardian.”

In general, anyone with some ties to the child could apply in the appropriate probate court to become the child’s guardian. Once appointed, that guardian would be expected to care for the child’s well-being just as a parent would, providing food, shelter, and clothing, and ensuring schooling and medical care. If the child has any assets, a guardian would be expected to manage those on behalf of the child as well.

In Ohio, as in many states, a person can be named as the guardian “of the person” or the guardian “of the estate.” A guardian of the person would be responsible for providing necessities and care and for decision-making regarding the child’s health and well-being, while a guardian of the estate would be tasked with management of the minor’s financial affairs, such as managing monies held in trust for the child. One person could feasibly fulfill both roles, or a different person might fulfill each. And, if the child has no significant assets, there may be no need for a guardian of the estate to be appointed at all.

Ideally, your wishes as to who should serve as your child’s guardian, and maybe a “backup,” or successor, guardian will be spelled out in your will. A probate court would not be required to follow a guardianship designation made in a will, but generally would, so long as that designation is in the interest of your child. It is also important to understand that just because you choose to name someone does not obligate them to accept the responsibility; they could decline to serve in that capacity.

For these reasons, it is important to consider carefully who you would trust with such responsibility and, ideally, discuss in advance if he or she would be willing to take on the job should it become necessary. If a significant inheritance or other monies could be involved, consider who you believe would handle those funds appropriately and in a manner that you would be satisfied with. And, if you have a spouse or co-parent, it is very important to discuss with him or her the identity of a successor guardian in the – however unlikely – event that neither of you would be around to care for your child. Any disputes will likely ultimately be resolved by a court, and it is far better to tackle this issue in advance via a clear and concise estate plan, rather than in a court of law after legal challenges.

Friday, August 18, 2017

Take common sense precautions with social media

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Although social media has been around for decades, the benefits – and pitfalls – of it continue to make headlines. Facebook, Snapchat, Instagram, Twitter, LinkedIn, Google+ and Pinterest are household names and just a sampling of the many available services. All of this social connectedness has spawned considerable research and opinion, but also some unexpected legal questions.

In relatively recent headlines was the case of a British nature photographer whose equipment captured a number of selfies taken by a group of Celebes crested macaque monkeys. Those images have since been widely distributed and reproduced and a number of lawsuits regarding ownership of their copyright have been fought. The photographer has claimed financial ruin as a result.

In 2014, singer Courtney Love won a landmark suit regarding alleged libel posted on her Twitter account. Ultimately, her statements that her lawyer had been “bought off” were determined by a Los Angeles jury to be untrue, but they did not constitute libel because she did not know them to be untrue at the time she made them.

Earlier this year, a number of so-called celebrity “influencers” were sued for using their social media presence to promote the now-infamous Fyre Festival, allegedly in violation of federal law.

In the context of family law, social media posts have uncovered wrongdoing, including bigamy. Smart litigants and attorneys will mine an opposing party’s social media presence for useful nuggets.

Photos that go viral and become internet memes are especially tricky and their subjects unintentionally find their lives altered in unexpected ways. Sometimes this is for the better (such as “Success Kid,” who was able to leverage his image’s popularity for a GoFundMe campaign to pay for his father’s kidney transplant), but often it is for the worse, when an unflattering image is ridiculed or given a fake backstory and is forwarded by thousands or millions of nameless and faceless strangers.

What does all of this mean to the non-celebrity, non-criminal, non-monkey-photographing person? Here is some food for thought:

Most of us will never have copyright issues from photos that we have taken. Go ahead and post those photos of the Rock & Roll Hall of Fame and don’t worry if you caught the Cleveland Indians’ logo in your family photo at the ballpark.

Photos taken in public that happen to include bystanders generally will be fine. But, please don’t be like the former model that made headlines and lost gigs for posting negative commentary attached to a photo of someone changing in a gym locker room – a place where people generally have some expectation of privacy.

If you are going to take and use a photograph that you did not create, know that someone else may own the copyright and someone else may take you to task for using it.

Know that you cannot put the toothpaste back in the tube and once that image or language is out there in cyberspace, assume it will live on forever (perhaps even in the U.S. Library of Congress)

Always assume that whatever you put out there will have a wider audience than you anticipate. It is impossible to control where the information goes once it is out there, even if your Facebook settings are set at the strictest level.

It’s almost enough to make you want to shut down all your accounts and turn off your devices. Almost. These stories do highlight the importance of taking precautions in posting online, but with precautions, social media can still be a safe place.

Thursday, July 27, 2017

Reverse mortgages: predatory lending or valuable planning tool?

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

“Are you over the age of 62?”

“Do you have equity trapped in your home?”

“Having trouble making your monthly mortgage payments?”

“Supplement your retirement savings and make that money work for you.”

Targeted advertisements tout the benefits of reverse mortgages.

A reverse mortgage is a special type of loan offered to homeowners over the age of 62, generally with at least 50 percent equity in their home. Under this type of loan, borrowers pay property taxes and homeowner’s insurance, but no mortgage payment, and get immediate access to the home equity that has built up. The borrower keeps the home and will generally never be forced out of it.

It differs from other loan products like home equity loans or home equity lines of credit in that the borrower makes no monthly mortgage payment. Instead, repayment of the loan – including the interest that has compounded each month – is deferred until the home is sold or the borrower dies.

In general, the home is the collateral for the loan, and the borrower, or borrower’s estate, is not responsible for repaying interest that exceeds the home’s value. Given the way these loans are structured, it should come as no surprise that there may or may not be any equity left in the home when it is time to sell it.

This type of loan – known more formally as a home equity conversion mortgage – was first made available under the Reagan administration in 1988. In the subsequent decades, reverse mortgages have been criticized for many reasons, including confusing terms that make predatory lending a concern, high initiation costs, higher interest rates than conventional mortgages or home-equity loans, and compounding interest that can quickly deplete home equity, leaving little wealth to pass on to heirs.

AARP has been rather vocal in its efforts to advocate and educate consumers about this planning tool. While the terms of a reverse mortgage prevent foreclosure on the borrower, before 2014 those protections did not extend to a surviving spouse who was under the age of 62. The law was subsequently changed, making it a less risky option for borrowers with spouses below the age limit.

Reverse mortgages have developed a stigma as being a “last-resort” option for those who desperately need money because they have insufficient retirement savings to meet expenses or unexpected bills. It is certainly true that this type of loan can help with those things. But the recent recession is still fresh in everyone’s mind and has proven that real estate is not the sound, guaranteed return investment that it was historically thought to be. While this loan product can certainly help people with cash flow concerns, even if you have more than enough saved to last and sustain a few retirements, rising home values may make a reverse mortgage a smart financial tool to – just like advertisements say – make your money work for you.

Wednesday, June 21, 2017

Should you draft your own will and the risks of using software

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

The more technology advances, the more we rely on it in our everyday lives. Where we once called first to our family doctor, we may now look first to the internet to research our symptoms. DIY is easier than ever with YouTube tutorials.

Who needs an accountant when you have tax preparation software available for a quarter of the price. And, for a fraction of the cost of attorney time, we can access software to help us self-prepare a litany of legal documents, including a last will and testament. Sounds good, right? With all the resources readily available to do it yourself on the cheap, why not?

Not so fast. Television and movies present a dramatic picture of the probate process. Family, loved ones, and others just hoping for a windfall, all assemble in an attorney’s office for the “reading of the will.” Inevitably, in a dramatic reveal that may or may not involve tears and fainting, a widow learns that her deceased husband left their entire marital estate to his mistress, or the estranged children who paid little attention to their elderly mother in her old age discover they have been written out of her will in favor of her trusted housekeeper. In real life, probate matters are significantly less dramatic, and infinitely more tedious.

In will drafting, formalities must be observed. Those formalities vary from state to state, and a software program may not necessarily alert you to these intricacies. Something as seemingly simple as not having the proper number of witnesses to the signing may make it invalid. And, the fact that you know what you mean does not prevent heirs and potential heirs from interpreting it quite differently. If a term is accidently left out, or if you fall back on language like “according to law,” you may end up with a result you never intended.

There is an old joke involving a plumber who marks an “X” on the pipe that needs tightened and then charges $500 for the work. When questioned on the seemingly outrageous cost for such a small amount of effort, he sends an itemized statement showing a charge of $5 for marking the “X” and $495 for knowing where to put it. The occupation, service and costs in this joke vary widely from telling to telling, but the point is that expertise is invaluable.

If you want to draft a simple document that leaves everything to your spouse, and then equally divides everything among your adult children if your spouse predeceases you, a simple software program could probably cut it for you.

If you want to write someone out of your will, divide assets in unequal measures, if you have minor children or may have more children after you draft it, if you have children from prior relationships, or want to include step-children, you could likely benefit from speaking with a professional. If you have some assets that get passed through other means, such as jointly titled real property, life insurance, or retirement assets, if your situation is anything but the most uncomplicated, or if you are doing more complex estate planning involving trusts and Medicaid planning, you are similarly better served to work with a knowledgeable attorney.

Ultimately, “knowing where to put the ‘X’” – or, in this case, knowing what questions to ask and how to properly reflect the answers in a valid will – may mean the difference between a relatively clean estate settlement and a bitter will contest.

Friday, May 19, 2017

Naming rights can make donations more complex

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Philanthropy happens at all levels of giving. Some donors are comfortable writing checks with one or two zeroes at the end. Others may add a few more zeroes or, perhaps, sponsor a table at a gala or donate a valuable item. But the pinnacle of philanthropic giving involves naming rights.

Who isn’t familiar with Carnegie Hall or Rockefeller Center? Cleveland’s local universities are filled with buildings named for donors. Naming rights can be very useful for a nonprofit institution. After all they are very expensive, and naming rights can encourage major donations. A wing, hall, or building becomes part of the local landscape, and the name lives on beyond the person. There is something very appealing about leaving a lasting legacy, and the right to do that can encourage the sort of major donation that can help an organization meet its philanthropic goals.

Large anonymous gifts get publicity. Each December, for example, we hear news blurbs about generous but anonymous donations into Salvation Army buckets. But publicity surrounding large public donations tends to be much more beneficial for the organization overall, attracting more attention and often more donations from other large donors.

But naming rights require a delicate balance between satisfying the donor’s (or donor’s heirs’) wishes for the name to live on and the need to attract future large donations by having the latitude to bestow further naming rights. After all, the things that get named require upkeep. Maybe a wealthy donor provided needed funds for a facility overhaul and negotiates naming rights as a condition of the gift. What then happens when the next overhaul is required? Do those same naming rights get bestowed on the next donor?

There are differing schools of thought surrounding the “best” way to manage these types of issues. Many donors and organizations believe that revolving naming rights are the best way to further the organization’s mission, by enticing new donations. On the other hand, many large endowments have fallen through when an organization refused to honor certain naming demands. And sometimes rights that were to be in perpetuity are bought out or otherwise terminated in some way in order to meet future goals.

For tax purposes, the Internal Revenue Service has long taken the position that public recognition does not count as a measurable benefit that would impact any tax deduction. So, a $20 million gift has the same tax benefit irrespective of whether or not the donor gets a new museum wing named after him in perpetuity, for a limited period of time, or not at all.

Ultimately, significant consideration and negotiation goes into giving at this level, both from the standpoint of the donor, as well as the nonprofit organization, and lengthy legal contracts must be drafted to carefully spell out the terms of the naming rights and the contingencies surrounding the donation.