Hogwash Volume 19

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November 2013
Welcome to Hogwash!

Greetings,

Rosi and Gardner If this is the first edition of Hogwash! you've received it's because someone you know thought that you would like to receive it and perhaps pass it on to a friend.

If you enjoy this E-newsletter and know others who you think would like to be on our list or receive a copy by mail, please let us know at info@rosigardner.com

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Homestead Exemptions for Principal Residences

leaning-home-couple.jpg

Every year we see more and more individual families moving up to God's Country, perhaps to simply retire or to have a second home. Often the new arrivals have property elsewhere, either downstate or in another state, perhaps even in Florida or Arizona.

One matter that may not be adequately addressed in the move is the property tax implications that come with having more than one home. Under Michigan Law there are certain tax advantages to having a Michigan property as a "Principal Residence" To take advantage of that exemption you must be a Michigan resident. To meet that requirement:

(A) Michigan must be your permanent home; that is the place you intend to return to whenever you leave. Although many residents may choose a temporary absence from Michigan during the coldest months and spend the winter in another state, that does not make them a part-year resident, and

(B) The property for which an exemption is sought must be the "Principal Residence". To obtain an exemption, a PRE Affidavit, Form 2368, available both on line at www.michigan.gov/PRE or from your town, city or county office, must be submitted to the local tax collecting unit. If you submit the form on or before June 1 it will reduce that year's summer and winter taxes and future years taxes as long as the property is owned and occupied as your principal residence.

(C) The PRE must include evidence to verify your claim that a particular property is a principal residence such as a driver's license, voter registration card, and documents indicating the mailing address of the person(s) requesting the exemption.

In a recent decision appealing a rejection by the Michigan Tax Tribunal (MTT) of a PRE application, Michigan's Court of Appeals discussed the kinds of evidence need to support a PRE application, holding that because there was a substantial evidence to support to MTT's decision that the petitioners' were not entitled to a PRE on the property, and the MTT did not misapply the law or adopt an incorrect principle in arriving at its decision, the court affirmed.

In this situation, the property at issue was a residence Mackinac County which the petitioners purchased in 2004. They also owned a home in Oakland County. The homeowners claimed that the Mackinac County property had become their principal residence in 2007. After an audit, their PRE for the years 2007, 2008, 2009 and 2010 was denied and they received a tax bill for $12,230.84. The homeowners appealed to the small claims division of the MTT.

The homestead tax denial was based on evidence that petitioner Beth Nelson's driver's license reflected the Oakland County address because she was generally downstate, while petitioner Gary Nelson changed his driver's license to reflect the Mackinac County address on August 18, 2010. The Nelsons also voted in Oakland County, and filed their federal income taxes using the Oakland County address until 2010 when they began using the Mackinac County address. Their mortgage statement also had the Oakland County address. The couple had joint bank accounts in both locations. The disparity of the mailing addresses was explained as a matter of convenience – the Nelsons traveled extensively to Oakland County and it was more convenient to have family or neighbors collect and forward their mail.

The court held that Nelsons failed to provide it with any reason to disturb the MTT's conclusion that the Mackinac County property was not their principal residence. The wife's driver's license reflected the downstate address and the husband did not change his driver's license until 2010. They also voted in Oakland County and their mortgage statement went to that address. They also filed their federal tax returns using the Oakland County address until 2010.

A decision to select one property or another for a PRE exemption requires careful analysis of the specific facts. Guidance, beyond what the Court of Appeals has identified can be found in Guidelines for Michigan Principal Residence Exemption Program available at Michigan Department of Treasury, bulletin no. 2856 (Rev. 3-13) And any confusion should be discussed with legal counsel before a decision is made.

Probate gets a Bad Rap

Probate Court gets no respect. "The Probate Court will get it all" and "Nobody but the lawyers will get anything" are commonly heard refrains. "Avoid Probate at all costs" and "Get a trust so that you can avoid Probate" are instructions that often follow. Why is that?

Everyone has heard stories about a probate case or two, where family members just wouldn't stop fighting, the lawyers kept getting paid, and when the dust (and assets) settled, there was less left for the heirs and beneficiaries than had been paid to the attorneys involved in the fight.

But, consider a few counterpoints:

  1. The vast majority of probate cases proceed through the probate process in an orderly and expeditious fashion, bringing definition and closure to the affairs of the deceased. (No one hears about these . . . they don't make headlines, or even good water-cooler fodder.)
  2. In Michigan, the "Inventory Fee" is less than 1% of the value of the asset(s) involved, and that is the only substantial fee that is paid to the Probate Court for handling the case.
  3. The Probate Court provides a structure and mechanism for heirs or family members, who may have been wrongly excluded, to bring and protect their claims, and ultimately have the intention of the deceased determined.
  4. The Probate process gives a structure for determining, prioritizing, and handling creditor claims, and estate expenses, like the funeral bill, executor expenses, and final medical bills.
  5. The Probate Court serves as final arbiter.

If your trust fails, for some unforeseen reason, or not everything was properly titled to the trust, the probate process is always there, for any decedent, to tie up the loose strings.

The probate process can "catch" that "dangling" asset that didn't make it into the trust, and put it there (if there is a "pour-over" will).

If a trust never got signed, or the original will is lost, the probate process can, and will, wrap things up, according to a predictable, orderly schema.

So, the next time you hear someone say "Avoid Probate at all costs," ask yourself (or them) "Why?" Maybe Probate isn't the scariest monster since Godzilla, after all . . .

Real Jewelry Month

stone-necklace.jpg It might be considered November's greatest preparation for the holiday season – Real Jewelry Month.

Not surprisingly this event was originally created by Jewelers of America a New York-based trade association for the jewelry business in an effort to promote the purchase of real jewelry instead of costume jewelry.

According to the New York Times, costume jewelry has become a $2.3 billion a year industry – one that appeals to women of all ages and financial positions. High end costume jewelry is becoming more and more popular – it's no longer relegated to 50 cent basket set out on top of the checkout counter in a clothing store for customers to rummage through.

Surprising? Yes, for years costume jewelry has labored under the label of looking "tacky" or "cheap".

So what's a jewelry buyer to do? There are a couple things to consider:

  • The preference of the wearer. If you're buying for yourself it's easy. Where it gets sticky is when you're buying for others. Know the person you're gifting. Jewelry is beloved because it's a way for the wearer to express themself personally, whether they prefer rhinestones, beach stones or pearls.
  • Invest in classics. Pearls, high quality gold or silver chains, classic earrings, great watches. Everyone will wear these at some time in their lives.
  • Chose the "unique" item carefully. Just as a 10 gallon hat may look great in Texas but silly in New England, trendy jewelry will go in and out of style in the blink of an eye.
  • If it's a gift and you're considering costume jewelry, be sure the wearer doesn't have any metal allergies. Often people switch to real jewelry because some of the less expensive metals in costume pieces can touch off an allergic reaction.
  • For the men in our readership – remember that jewelry is never the wrong size

Northern Michigan is filled with stores that feature artisan jewelry. Craft fairs and online shops are also filled with unique jewelry that makes wonderful gifts. Happy shopping!

Issue: 19
In This Issue
Homestead Exemptions for Principal Residences
Probate gets a Bad Rap
Real Jewelry Month
Thanksgiving Story
Is it time to face the fridge?
Setting a World's Record
Karen's At Home Cookin'

Thanksgiving Humor

This story has been making its way around the Internet – particularly on Facebook.

We thought it a great one to share with Hogwash! readers as we prepare for the holidays.

An old man in Tampa calls up his son in Traverse City and says, "Listen, your mother and I are getting divorced. Forty-five years of misery is enough."

"Dad, what are you talking about?" the son screams.

"We can't stand the sight of each other any longer," he says. "I'm sick of her face, and I'm sick of talking about this, so call your sister in Chicago and tell her," and he hangs up.

Now, the son is worried. So he calls up his sister. She says "Like hell they're getting divorced!" and calls her father immediately.

"You're not getting divorced! Don't do another thing, the two of us are flying home tomorrow to talk about this. Until then, don't call a lawyer, don't file a paper, DO YOU HEAR ME?" and she hangs up.

The old man turns to his wife and says "Okay, they're coming for Thanksgiving and paying their own airfares."

Is it time to face the fridge?

As the year begins to wind down and as the Thanksgiving, Christmas, Hanukah and other year-end festivals approach, it's time to toss out Grandma's peach preserves with the thin layer of white stuff on top (dated September 08) and get ready to the onslaught of holiday leftovers.

It's Clean Out The Refrigerator Day – celebrated annually on November 15. In anticipation of Guinness World Records day on the 16th, we ask our dear readers, if they are not too embarrassed to do so, to report on the most ancient items found in their fridge. The most ancient and unique item will be awarded a Hogwash! Cup. Happy digging!

Setting a World's Record

Once you've faced the task of cleaning out the fridge, found your science class sample and submitted it to the Hogwash! editorial team for consideration for a Hogwash! Cup, then it's time to focus on November 16, Guinness World Record Day. In 2009 and 2010 over 300,000 people each year took part in attempting to break a world's record.

Guinness World Record Day commemorates when Guinness World Records (previously known as The Guinness Book of World Records) annual edition hit its 100th million copy in 2004. The publication was first issued in 1955.

In recent years it has focused on feats by human competitors. To learn more about Guinness World Records check out this article on Wikipedia.

November's Special Offer

Have you made someone a joint owner, to avoid probate (this is almost never a good idea . . . )? Does that destroy your tax exemption? What happens to the real estate tax "cap?" Have questions?

FREE
30-minute consultation if you mention this Hogwash! offer and make an appointment during the month of November.

Offer Expires: November 30, 2013

Karen's At Home Cookin'

This Thanksgiving I'm taking a risk and not cooking traditional dishes. My big brother is preparing the traditional fare, and I will bring my choice of side dishes. I try to make compromises when feeding the extended family but I've quit telling people "what I put in the dish." I just say try it! If you like it, have more (my brother thinks I am trying to poison him)! However, there is picky (as in it has to be fresh, organic, non-genetically modified) and then there is "picky" (as in "I don't like onions"). So, here are my vegetarian-compromise side dishes for the great eating event. Most of the ingredients are still available at the local farmer markets. Happy Thanksgiving everyone!!

Roasted yellow beets, fennel and vidalla onion

4 Yellow beets

Olive oil

2 fennel bulbs

Chevre

2 large Vidalla onions

Chopped sage leaves

Cut the vegetables in chunks. Arrange the veggies in a circle with the onions on the outside, beets in the next circle and fennel bulbs in the middle of a roasting pan. Drizzle with olive oil and cover. Bake at 325 degrees for about 30-40 minutes. Check from time to time to see how it's doing. You may have to add more oil. Uncover and cook another five minutes to get the veggies browned up. Sprinkle with a good chevre cheese, salt and pepper to taste, and lots of fresh or dried chopped sage. This is good warm or at room temperature.

Mushroom Cups

Pie Dough

Mushrooms (2 cups chopped – a variety is best)

Garlic (as much as you want)

Smoked Gouda

Black Currants (1/4 cup)

Fresh Parsley

Using pie dough, cut in circles about 3" round and form into little cups. Bake at 350 deg. until browned (approx. 10 minutes).

Chop and fry the mushrooms and garlic in a little olive oil and butter for 15 minutes or so, add the currants and cook another couple minutes. Spoon into the cups and top with a chunk of smoked gouda, and the fresh parsley.

Asian Pear, Celery, Cabbage Salad

4-6 Asian Pears
1/4 cup Rice or White Vinegar

4 Celery sticks

3 tbsp Lemon Juice

1 medium head of cabbage

3 tbsp Honey (more or less)

2 carrots, shredded

Chop the cabbage, celery and pears in thin strips. Blend in dressing. This is very tart, so adjust for your own taste. Plain yogurt can be blended into this too. If you prefer, add sugar instead of honey. (Or, if you want to get fancy, use a blend of Fustini's Lime Infused Olive Oil and Coconut Balsamic Vinegar for the dressing).

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Rosi & Gardner, P.C.
735 S. Garfield Avenue
Suite 202
Traverse City, Michigan 49686
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Philip R. Rosi

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Gary Allen Gardner
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