Various estate planning documents require you to appoint someone to act on your behalf. These appointees are your “fiduciaries” and include your personal representative, guardian for minor children, trustee, attorney-in-fact, and health care agent.

Often times, people name certain individuals for these roles without much consideration, or they may consider the wrong criteria. Below is a general description of each fiduciary role and a few suggestions on what to consider when deciding who to appoint to those roles. In general, you should carefully consider the skillset each role requires and whether the person you would like to appoint possesses those skills.

Personal Representative

You name your personal representative in your Last Will and Testament. Your personal representative will be responsible for overseeing the administration of your estate during the probate process. Consider naming someone who lives nearby so they can administer your estate and someone who will have the time to file all the necessary paperwork.

Guardian

You name a guardian for your minor children in your Last Will and Testament as well. This person will be responsible for taking care of your minor children. Consider naming someone who lives close by so your children won’t have to move (or move very far), has similar values as you and will raise your children similar to how you would, and will have the energy to raise young children or children who require extra care and attention.

Trustee

You appoint your trustee in your trust agreement. Your trustee will administer the trust agreement pursuant to its terms, manage and invest the trust assets, and make distributions to your beneficiaries (sometimes at their own discretion). Consider naming someone who will be able to understand the document and its terms, has a financial background and can manage your assets effectively, and will not be placed in an uncomfortable situation if they decide to refuse a beneficiary’s request for a distribution. If you cannot think of someone with the requisite skillset, or if you have complex assets that will need to be managed, consider naming a professional fiduciary.

Attorney-in-Fact

You name your attorney-in-fact in your Financial Power of Attorney. This person will manage your financial affairs in the event you become incapacitated. Consider naming someone who has a financial background, lives nearby and can easily manage your financial affairs, and who is familiar with your financial affairs. If you cannot think of someone with the requisite skillset or someone you completely trust to have these broad powers, consider naming a professional fiduciary.

Health Care Agent

You name your health care agent in your Power of Attorney for Health Care. This person will make medical decisions for you in the event you become incapacitated. Consider naming someone who has a medical background or who will be capable of understanding your medical situation, will respect your wishes regarding medical treatment, and will be able to carry out your wishes regarding medical treatment even if others disagree.

As you can see, there are several things to consider when selecting a fiduciary. If you would like more information on these fiduciary roles, or if you would like to create or update an estate plan, please contact attorney Kelly M. Spott.

Almost every organization in the world collects personal data from individuals, in one form or another. Indeed, most websites collect consumer information automatically. For this reason, every business must become familiar with relevant data protection laws and understand how to collect, store, use, and share data in compliance with these laws. Organizations that fail to comply with data privacy laws could incur substantial fines and other damaging consequences.

This blog post intends to give Wisconsin organizations a basic overview of consumer data privacy laws, their significance, and how such laws may apply to them.

What is Privacy Law?

“Privacy law” refers to laws governing the regulation, storage, sharing, and use of personally identifiable information, personal healthcare information, financial information, and other types of personal information. While both state and federal governments have various laws governing certain types of information privacy, as of now, no federal law exists to protect consumer data.

Given the absence of federal protection and the number of internet companies collecting—and often misusing—consumer data, several states, including Wisconsin, have developed or are beginning to develop state statutes designed to protect residents from data misuse online. Together with international data protection regulations, these state laws create an increasingly complex web of obligations for any organization collecting personal data.

What is Personally Identifiable Information?

The key to understanding and properly complying with consumer data privacy laws is understanding the term “Personally Identifiable Information” (PII). In general, PII is any information that may be used to identify an individual. Such information may include not only names, addresses, and government IDs, but also internet protocol (IP) addresses, cookie identifiers, and other automated identifiers.

Despite their many commonalities, international and domestic privacy laws have subtle differences in their categorization of PII. For example, some privacy laws allow pseudonymized or anonymized data to be excluded from PII. Pseudonymization is a reversible process that substitutes the original personal information with an alias or pseudonym such that additional information is required to re-identify the data subject. In contrast, anonymization irreversibly eliminates all ways of identifying the data subject. Similarly, IP addresses may be either static (i.e., specific to a particular computing device) or dynamic (i.e., the IP address changes over time). Static IP addresses are likely to be considered PII whereas dynamic IP addresses may not, depending on the applicable law.

An Overview of Key Data Protection Laws

Modern consumer data protection laws generally articulate both consumers’ rights to data privacy and the responsibilities of entities that collect and process personal data.

Concerning consumers, most consumer data privacy laws establish that consumers have any combination of five fundamental rights, including the right to:

• be informed that data is being collected;
• access collected data;
• rectify incorrect data;
• erase collected data; and
• object to certain uses of that data.

While these diverse privacy regimes have many similarities, they often have substantial differences, including varying definitions, scope, punishment for violations, and jurisdiction. Therefore, it’s critical to determine which laws apply to you and to thoroughly review those laws to understand your organization’s compliance obligations.

a. The European Union–General Data Protection Regulation (GDPR)

The European Union’s (EU) data protection regulation, known as the GDPR, is the world’s first comprehensive data protection law. Having gone into effect in 2018, the GDPR interprets PII extremely broadly and takes substantial steps to protect such PII. It covers not only IP addresses and cookies but also certain forms of pseudonymized data and metadata. The law is revolutionary in that it applies to all entities possessing or processing the personal data of EU residents, regardless of an entity’s nationality. Therefore, U.S. companies who deal with EU citizens as customers, users, or clients are likely to be subject to GDPR rules and regulations.

It is crucial to determine whether your organization is subject to GDPR rules. Should EU regulators determine that a company subject to the GDPR has violated any of the GDPR articles, the company may be subject to fines for as much as €20 million or 4% of the company’s global turnover, whichever is higher.

b. The California Consumer Privacy Act (CCPA)

Effective as of January 1, 2020, the CCPA is the first significant consumer data protection act in the United States. Like the GDPR, the CCPA defines PII to include any information that could, directly or indirectly, lead to the identification of any user or household.

Also similar to the GDPR, the CCPA is applied broadly to businesses globally should they do business in California. The CCPA includes specific language defining what businesses are subject to the CCPA. The CCPA applies to any for-profit business that collects, possesses, or otherwise handles the PII of California residents AND that meets any of the following criteria:

1) has annual revenues over $25 million;

2) possesses the personal information of 50,000 or more California consumers, households, or devices in any calendar year; OR

3) earns more than half of its annual revenue from selling consumers’ PII.

This statute is intended to be broadly applied to commercial enterprises, regardless of geographical location and whether they explicitly target California residents. Because most businesses operate websites that automatically collect PII, such as cookies or IP addresses, even small non-California businesses risk falling under the CCPA by having a passive online presence.

The California Attorney General may fine companies up to $2,500 per non-willful violation and up to $7,500 per willful violation—amounts that add up quickly if a violation affects thousands (or millions) of users.

c. Other Relevant Consumer Data Protection Laws

Apart from California, 43 other states have made or are in the process of introducing forms of consumer data privacy bills. Wisconsin introduced three separate bills at the beginning of 2020 that would create rights and obligations concerning consumer data privacy similar to those created by the CCPA and the GDPR.

Currently, Maine and Nevada are the only two other states to have signed consumer data privacy protection bills into laws. The Maine privacy law applies only to internet service providers and not to independent businesses that may possess PII of users. The Nevada law is similar to CCPA in many ways, but it doesn’t apply to non-resident companies that do not actively do business in the state.

Additionally, in March 2020 Senator Jerry Moran (R-Kan.), introduced the Consumer Data Privacy and Security Act; however, the federal Congress has yet to take action on the proposed bill. If passed, this federal legislation would create a clear federal standard for consumer data protection and create specific rights of consumers to access, correct, and delete personal information. The proposed bill would also create substantial obligations for businesses, including those in Wisconsin, that use, collect, or otherwise possess PII. Finally, the proposed bill would provide the Federal Trade Commission (FTC) with the specific authority to enforce these rights and obligations.

In conclusion, while there are currently no Wisconsin or federal laws directly governing the regulation, storage, sharing, and use of personally identifiable information, Wisconsin businesses could be subject to the requirements of the CCPA or the GDPR. Additionally, it seems likely that in the near future, either Wisconsin or the federal government will pass a law that directly impacts Wisconsin businesses. Moving forward, it will be very important to understand how your company’s collection of personal data may be impacted.

O’Neil, Cannon, Hollman, DeJong and Laing remains open and ready to help you.

Recently, the Merit Shop Contractor magazine featured Attorney Joseph Gumina’s article entitled “COVID-19 and Liability.” In the article, Attorney Gumina emphasizes methods for construction employers to prevent and control worksite hazards relating to COVID-19. The article also discusses general safety and health mandates a construction employer should follow in order to help protect themselves from possible COVID-19 litigation. This article is a must read for all construction employers.

Read the full article here.

Some of your most significant assets, like your life insurance and retirement accounts, ask you to make beneficiary designations. If you make valid beneficiary designations on these assets, then upon your death they will pass directly to your named beneficiaries without being subject to the probate process. Click here to view our article on probate and why you might want to avoid it.

Many people overlook the importance of beneficiary designations and neglect to name beneficiaries because they think their other estate planning documents will cover those assets. However, beneficiary designations operate independently from other estate planning documents, like a will or trust agreement. Therefore, you should make beneficiary designations because your other estate planning documents will not control how these assets are to be distributed and to whom they should be distributed. If you neglect to name beneficiaries, then these accounts or policies could become part of your estate and be subject to the probate process.

Just as it is important to make beneficiary designations, it is equally as important to review and, if necessary, update those designations. Major life events, changes in circumstances, or even a change of heart can all warrant an update to beneficiary designations. It is good practice to review your estate plan every three to five years, and each time you do so you should be reviewing your beneficiary designations.

Finally, it is important to consider any unintended consequences to naming someone as a beneficiary. For example, if a special needs person receives assets through a beneficiary designation, then he or she may no longer be eligible for government benefits. In these circumstances and in others, you should consult with an estate planning attorney to discuss your options.

Beneficiary designations are an important part of your estate plan and require special attention. If you would like more information on beneficiary designations and estate planning in general, please contact attorney Kelly M. Spott.

On August 8, 2020, President Trump issued an Executive Memorandum directing the Secretary of the Treasury to defer the withholding, deposit, and payment of the employee portion of the Social Security tax (6.2% of wages) for the period beginning on September 1 and ending on December 31, 2020. The deferral applies for employees whose pre-tax bi-weekly wages or compensation is less than $4,000. On an annualized basis, this equates to a salary not exceeding $104,000.

The IRS recently issued limited guidance on the implementation of the deferral. Open issues and takeaways are summarized below.

Additional Detail

In addition to calling for the deferral of the payroll tax, the Memorandum directs the Secretary to explore avenues for eliminating the taxpayers’ obligation to repay the deferred taxes in the future. It should be noted that only Congress, not the Secretary, has the authority to waive taxes.

The Memorandum does not provide detail on how the payroll tax deferral will be implemented. In related interviews, the Secretary commented that, while he hoped that many companies would participate, he couldn’t force employers to stop collecting and remitting payroll taxes. In other words, he suggested that the payroll tax deferral would be voluntary—a proposition not included in the Executive Memorandum.

Requests for Clarification

Uncertainty surrounding how to implement the payroll tax deferral resulted in requests from multiple trade groups for clarification, including an August 18 letter signed by 33 trade groups, including the U.S. Chamber of Commerce. The letter, submitted to the Secretary and to the respective leader of the U.S. Senate and of the U.S. House of Representatives, notes that under current law, the Memorandum creates a substantial tax liability for employees at the end of the deferral period.

While the stated purpose of the Memorandum was to provide wage earners with additional available spending money, unless Congress later acts to forgive liability for the deferred payroll tax, the affected earners will owe an increased tax bill next year. As the U.S. Chamber of Commerce letter maintains, the deferral “threatens to impose hardship on employees who will face a tax bill” in an amount of double the usual payroll deduction for Social Security (amounting to 12.4% of employee wages) in the first four months of 2021.

The following chart illustrates the U.S. Chamber of Commerce’s assessment of the magnitude of the potential tax bill for employees compared to the immediate benefit of the deferral:

The U.S. Chamber of Commerce letter further states that many of its employer members would likely decline to implement the deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law.

IRS Notice 2020-65

Late in the afternoon on August 28, 2020, the IRS issued Notice 2020-65 to provide guidance regarding the payroll tax deferral. The Notice clarifies that any deferred amounts must be recouped by being collected from employee wages and repaid during the period between January 1, 2021 and April 30, 2021. Interest and penalties begin to accrue May 1, 2021 on any unpaid amounts. While the Notice is silent on the issue, it is presumed, because of the normal operation of payroll tax law, that employers would be responsible for paying any interest and penalties that accrue, in addition to paying any underlying deferred amounts that cannot be collected from employees.

Some questions about how to implement the deferral remain unanswered by the IRS guidance. Specifically, the guidance addresses neither self-employed individuals nor the method for reporting the deferral of taxes on IRS Forms 941 or W2. The guidance is also silent on how to collect deferred tax for an individual who is no longer employed for all or part of the 2021 repayment period. Staffing agencies, in particular, are concerned about employer exposure to the repayment cost in the event that employees for whom taxes were deferred are no longer employed during the repayment period. It is not clear that deducting the amount owed from an employee’s final paycheck would be specifically permitted under either federal or state law, or any applicable bargaining agreements.

Decisions, Decisions

While some employers may welcome the ability to offer the payroll tax deferral to employees as a current relief measure, others may view with some reluctance the prospect of exposure to additional payroll tax costs coupled with the need to re-code payroll software effective September 1, 2020, January 1, 2021, and May 1, 2021. Implementing the current deferral and future double collection would also require careful and accurate communication to employees.

The IRS guidance leaves the door open for employers to avoid, rather than to implement the deferral, and to proceed, instead, to process payroll according the normal procedures. In the language of the guidance, an employer may, “if  necessary, . . . make arrangements to otherwise collect the total Applicable Taxes from the employee.”

O’Neil, Cannon, Hollman, DeJong and Laing remains open and ready to assist you. To discuss how the Memorandum, IRS guidance, and practical considerations relevant to the payroll tax deferral may apply to your business objectives and circumstances, please speak to your regular OCHDL contact.

John G. Gehringer was recently recognized by Best Lawyers as the 2021 “Lawyer of the Year” for Construction Law.

Only a single lawyer in each practice area and designated metropolitan area is honored as the “Lawyer of the Year,” making this accolade particularly significant. Receiving this designation reflects the high level of respect a lawyer has earned among other leading lawyers in the same communities and the same practice areas for their abilities, their professionalism, and their integrity.

In addition to the “Lawyer of the Year” award, John G. Gehringer was also listed in the 2021 Edition of The Best Lawyers in America in the following practice areas:

• Commercial Litigation
• Corporate Law
• Real Estate Law

Best Lawyers has published their list for over three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence.

We are pleased to announce 20 of our lawyers have been included in the 2021 Edition of The Best Lawyers in America, and an additional five have been selected as 2021 Best Lawyers: Ones to Watch.

The following are the O’Neil, Cannon, Hollman, DeJong and Laing lawyers named to the 2021 lists:

Best Lawyers in America

• Douglas P. Dehler – Litigation – Insurance

• James G. DeJong – Corporate Law, Mergers and Acquisitions Law, and Securities / Capital Markets Law

• Seth E. Dizard – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law and Litigation – Bankruptcy

• Peter J. Faust – Corporate Law and Mergers and Acquisitions Law

• John G. Gehringer – Commercial Litigation, Construction Law, Corporate Law, and Real Estate Law

• Joseph E. Gumina – Employment Law – Management and Litigation – Labor and Employment

• Dennis W. Hollman – Corporate Law and Trusts and Estates

• Grant C. Killoran – Commercial Litigation and Litigation – Health Care

• JB Koenings – Corporate Law

• Dean P. Laing – Commercial Litigation, Personal Injury Litigation – Plaintiffs, and Product Liability Litigation – Defendants

• Gregory W. Lyons – Commercial Litigation and Litigation – Insurance

• Patrick G. McBride – Commercial Litigation

• Thomas A. Merkle – Family Law

• Joseph D. Newbold – Commercial Litigation

• Chad J. Richter – Business Organizations (including LLCs and Partnerships) and Corporate Law

• John R. Schreiber – Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law and Litigation – Bankruptcy

• Jason R. Scoby – Corporate Law

• Steven J. Slawinski – Construction Law

Best Lawyers: Ones to Watch

• Kelly M. Spott – Trusts and Estates

• Trevor C. Lippman – Litigation – Trusts and Estates

• Erica N. Reib – Labor and Employment Law – Management and Litigation – Labor and Employment

• Christa D. Wittenberg – Commercial Litigation

About Best Lawyers

Best Lawyers has published their list for over three decades, earning the respect of the profession, the media, and the public as the most reliable, unbiased source of legal referrals.

Best Lawyers: Ones to Watch recognizes associates and other lawyers who are earlier in their careers for their outstanding professional excellence in private practice in the United States.

Lawyers on The Best Lawyers in America and Best Lawyers: Ones to Watch lists are divided by geographic region and practice areas. They are reviewed by their peers on the basis of professional expertise, and they undergo an authentication process to make sure they are in current practice and in good standing.

An August 31, 2020 deadline applies both to individual retirement account participants who want to repay a required minimum distribution received in 2020 and to employer plan sponsors who wish to reduce or suspend certain 401(k) or 403(b) safe harbor employer contributions. Details on each of these special tax relief provisions are summarized below.

Employers and individuals who wish to avail themselves of these special tax relief provisions should take prompt action.

Deadline for Repayment of Certain Waived 2020 Required Minimum Distributions

As we’ve described previously, tax law generally requires a 401(k), 403(b), or 457(b) retirement plan participant, or IRA owner, to take required minimum distributions (RMDs) annually once the owner reaches age 72 (or 70 ½ under the SECURE Act).

In late March 2020, the CARES Act waived the requirement to take an RMD from a retirement plan or IRA in 2020.  For retirement account owners who had already taken 2020 RMDs and did not need them, the CARES Act provided a way to return them. Although RMDs are not usually eligible for rollover treatment, the CARES Act repayment mechanism is to treat the waived RMDs as if they are distributions eligible for rollover. Instead of actually rolling the amount over to a different plan, however, the CARES Act permits a 2020 waived RMD amount to be repaid only to the same account that paid it out. Any repayment, as described in the CARES Act, was required to take place within the standard 60-day window for making a rollover from one tax-favored account into another.

Because the CARES Act was passed in late March, the 60-day repayment period had by then already expired for those who had taken an RMD in early January 2020. The more recent IRS Notice 2020-51 extends the 60-day window period, so that any waived RMDs received on or after January 1, 2020 may now be repaid, provided that such repayment occurs by August 31, 2020.

Employer plan sponsors may also wish to review whether their plan document should be amended by the deadline to accept RMD repayments if their participant population desires to repay previously-distributed 2020 RMDs to the plan.

Employer Deadline to Reduce or Suspend 401(k) or 403(b) Safe Harbor Contributions

In a separate announcement, Notice 2020-52, the IRS has provided special relief to employer plan sponsors of 401(k) and 403(b) retirement plans who wish to make a mid-year reduction or suspension of safe harbor nonelective employer contributions.  The ability to take such action expires on August 31, 2020 and should be properly documented as of that date.

Background

More and more employer sponsors of workplace retirement plans, in recent years, have chosen to adopt a “safe harbor” employer contribution feature. The key advantage of safe harbor status for a tax-qualified retirement plan is that the plan is deemed to treat highly and non-highly compensated employees fairly, with respect to one another. It is therefore exempt from the otherwise applicable annual nondiscrimination testing.

In exchange for safe harbor status and the perk of avoiding complex and sometimes costly nondiscrimination testing, a safe harbor plan must meet certain requirements, including committing to provide a minimum employer contribution or formula, immediate vesting of the contributions, and the provision of an informational notice regarding the contributions before the beginning of the plan year (a safe harbor notice).

The Safe Harbor 12-Month Rule

Typically, once a safe harbor provision is adopted for a retirement plan, it must be in effect for all 12 months of the plan year. This requirement is intended to prevent employers from avoiding nondiscrimination testing if they do not honor the corresponding requirement to contribute to the plan for the benefit of participants.

Generally, there are two exceptions to the 12-month rule that permit a mid-year suspension or reduction of the safe harbor contribution:

1. The first applies if the employer is operating at an economic loss for the plan year.
2. The second applies if the safe harbor notice explicitly reserves to the employer the right to amend, reduce, or suspend the safe harbor contribution during the year.

Under either exception, an additional notice of amendment, reduction, or suspension must be provided to all participants at least 30 days in advance of the effective date of such action. As a result of any mid-year change to a safe harbor contribution, a plan is required to pass nondiscrimination testing in lieu of relying on the safe harbor testing exemption for the year.

Temporary Relief Related to Mid-Year Safe Harbor Nonelective Contribution Changes and Notices

IRS Notice 2020-52 provides special relief under which employers may make a prospective mid-year suspension or reduction of safe harbor nonelective contributions to 401(k) and 403(b) plans after March 13, 2020, for the balance of the year, regardless of whether the employer has satisfied either the requirement of incurring an economic loss or of previously providing a safe harbor notice reserving the right to change contributions.

Additionally, for safe harbor nonelective contribution plans, rather than providing the revised safe harbor notice at least 30 days before the effective date of the suspension or reduction, the notice must be provided by August 31, 2020.

This relief is time-limited, however. To take advantage of these special rules, a plan amendment  suspending or reducing the safe harbor contribution must be adopted by August 31, 2020.

Note that the relief provided in IRS Notice 2020-52 does not apply to a mid-year reduction of 401(k) safe harbor matching contributions. This is because of the IRS’s view that matching contribution levels as communicated to employees directly affect employee decisions regarding elective contributions and should therefore not be changed.

Note also that this article does not address the implications of certain SECURE Act changes to the safe harbor notice requirement, of the impact of IRS Notice 2020-52 thereon.

Conclusion

The temporary relief provided in IRS Notices 2020-51 and 2020-52 will respectively assist individual taxpayers seeking to avoid taking RMDs in 2020, and employer plan sponsors seeking 2020 cost reductions. In either case, action to take advantage of the relief must be taken by August 31, 2020.

The attorneys of the Labor and Employment Group of O’Neil Cannon are actively monitoring COVID-19 developments and are available to assist employers with related employment law and employee benefit plan compliance matters. Please contact us if you need assistance in amending your employer-sponsored retirement plan to accommodate mid-year safe harbor changes or the return of 2020 RMDs.

Probate is the legal process during which a court oversees the collection and transfer of a person’s assets upon his or her death. In general, the probate process includes filing a will, appointing a personal representative, inventorying the decedent’s assets, paying the decedent’s debts, filing taxes, and distributing the balance of the estate according to the decedent’s will. If the decedent did not leave a will, then the decedent’s property is distributed according to Wisconsin’s intestacy laws.

Many people seek to avoid probate because probate documents are public record, so avoiding probate means maintaining a sense of privacy. Additionally, the probate process can be very time consuming, ranging anywhere from six months to two years, and expensive. Expenses such as court costs, probate bonds, fees paid to the personal representative, and attorneys’ fees can all add up to a significant amount by the end of the probate process. Because the estate generally pays for these costs, the probate process can significantly drain an estate and take away what you left behind for your beneficiaries.

With a good estate plan in place, it is possible for your estate to avoid the probate process, or at least lessen the process’s impact on your estate. If you would like more information on estate planning options to avoid probate, please feel free to contact attorney Kelly M. Spott.

Newsletter Article Highlights:

• Should a Contractor Stop Work Due to Nonpayment?
• How a Trust Can Provide Asset Protection for Your Children
• Wisconsin Will Not Tax Forgiven Paycheck Protection Program Loans
• When Are My Employees Entitled to Leave under the FFCRA because their Children are Home from School or Daycare?

Firm News:

• Attorney Joseph Gumina Featured in Super Lawyers
• Steve Slawinski Published in State Bar’s Construction Blog
• Attorneys Erica Reib, Joe Newbold, and Grant Killoran Featured in Wisconsin Lawyer
• Attorney Kelly M. Spott Admitted into the Florida State Bar

Click the image below to read more.