Claim it or Lose it

An estimated 1 million tax payers are owed more than $1 billion in unclaimed federal income tax refunds for 2013 according to the Internal Revenue Service. In Michigan alone, the IRS estimates that 33,600 people are owed nearly $34 million in unclaimed federal income tax refunds for 2013.

Of course, taxpayers have plenty of reasons for not filing tax returns like debt, child support or other obligations. Your federal return must be filed within three years to claim your refund or the money becomes property of the U.S. Treasury.

Penalties and interest will not be applied if you are owed a refund, however the IRS will hold your refund checks if you have not filed tax returns for 2014 and 2015.

Keep in mind you must file your 2013 tax return no later than Tuesday April 18, if you don’t file it you cannot get the refund.


As we head into another tax season we should all be vigilant of the ever expanding con artists using the tax system to prey on the unsuspecting. We all probably know someone who has had their identity stolen. The recent well publicized data security breaches at major retailers and Sony has put consumers at risk as we become ever more connected.

TAX RETURN FILING: Part of the new problem is identity thieves know the IRS waits until the March deadline to review EIN’s and Social Security Numbers so these thieves file very early. In that period of time, the thief collects the tax refund and then after the IRS review, the business owner or individual receives communications from the IRS demanding a return of the tax refund.

Quick action is critical. First call the IRS Identity Protection Specialization Unit (800-908-1490). You need to establish a record. Next complete IRS form 14039-Identity Theft Affidavit and submit the form to the IRS. We recommend filing your “correct original” tax return by certified mail or overnight mail with a letter of explanation. You should also contact the Social Security Administration as the improper tax return can affect your credits. It is not a bad idea to pull your credit report as well.

TELEPHONE SCAMS: Often time’s businesses or clients receive a telephone call from someone claiming to be from the IRS. Please note these calls are frauds. The IRS does not call you over the telephone out of the clear blue. You can also call the Treasury Inspector General if this occurs (800-366-4484) to report the incident.

BUSINESS IDENTITY THEFT: The typical and simple mode of thieves is to select an established business identity and then establish a fraudulent office. That business name will then be used to establish either a new line of credit or a new bank account to purchase goods and services until the credit line or other resources are exhausted, then the thief just moves on.

DORMANT, SHELL AND AGELESS BUSINESSES: Another new method is for thieves to access and online business registries for ones that were previously dissolved or dormant. These businesses are particularly vulnerable to this type of crime because their owners are less likely to be monitoring the situation. The wrongdoer merely takes advantage of a well established history and credit rating to commit the fraud.



  • Baby Boomers – The Vulnerable Years

These are the individuals born between 1946 and 1964 who are just beginning to retire. They likely will be receiving Social Security Benefits in addition to those who have had the foresight to have significant retirement accounts in place.

  • Generation X

These are the individuals born between 1965 and 1981. Unfortunately, this is the generation where traditional pensions have long been eliminated and the possibility exists that Social Security may not be around when they retire. Their advantage is they have more time to prepare for their retirement including IRA’s, 401k’s and other retirement strategies.

  • Millennials

These are the individuals born between 1982 and 2000. This group statistically is currently the largest in the US Labor Force. Unfortunately, they also have the largest amount of student and credit card debt. This generation also appears to be the savviest when it comes to contributing to employer sponsored retirement accounts which is the most effective way to prepare for ultimate retirement.

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  • For people born between 1943 and 1954, full retirement age is 66. That will be increased in 2017 by 2 months for people born in 1955. Ultimately, the increases will continue until the full retirement age ends up being 67 for those born in 1960 or later.
  • There will be a .3% increase in monthly benefits in 2017, this is an average monthly increase of five dollars.
  • Earnings subject to Social Security tax will increase in 2017 to $127,200.00. This will effect approximately 12 million IRS payers.

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  • Just before the Michigan Legislature went on its Christmas break in December of 2016, it passed and the Governor signed various laws:
    • Modified penalties for unendorsed motorcycle riders.
    • Allowed private college security officers to provide off-campus law enforcement.
    • Expanded the arrest authority of peace officers to include airport authority police
    • Allowed driving of autonomous vehicles in a test setting and provide for an autonomous-vehicle mobility research center.
    • Provide compensation of $50,000 per year and re-entry services for people who are wrongly convicted and imprisoned.
    • Change the penalties for a minor in possession of alcohol from a misdemeanor to a civil infraction.
    • Removed the requirement for a Dower provision in Judgments of Divorce or legal separation.

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Structuring Estate Plans

Many would agree the primary objectives of most estate planning are to avoid probate and paying taxes. But just focusing only on these could mean disaster for surviving relatives.

Traditionally, estate plans are designed to divide the estate to maximize gift and estate transfer options; they defer immediate taxation through alternatives like trusts; otherwise, the estate is simply dropped into the laps of immature, ill-prepared inheritors and depleted. But what if estate planning lived up to its name and was centered on planning for future generations?

Structuring estate plans with family in mind instead of taxes would promote responsibility, good stewardship and family unity. One advisor advocates making estate assets available through grants for specific needs like health, education, home maintenance or support of family members. The estate could also provide enhancement loans and investment opportunities to family members.

A prime example: Family-owned businesses are often passed on from one generation to the next. Unfortunately, only a fraction of them remain viable under the guidance of third or fourth generation family members, usually because those recipients aren’t prepared for the responsibility to enhance the next generation.

By making family the priority, pitfalls like this one might be avoided when establishing estate plans. Not only would it protect estate assets, it also would help surviving family members successfully manage their newly acquired estate.

Post Death Insurance Renewals

Failure to change the named insured on a policy after the policyholder died voids coverage; the Michigan Court of Appeals has ruled (Auto Owners Insurance vs. McGowan Trust).

The named insured was still the deceased father – not the children, the court said.

After their father died, the Trust kept the policy on the family cottage with Auto-Owners, but never specifically notified it of their insured’s death. They did not change the policy’s named insured or send in a copy of a Death Certificate.

The record indicates that, consistent with the insurance policy, Auto-Owners mailed documents to the deceased, paid claims in the name of the deceased, applied a ‘mature homeowner discount,’ and interacted with defendants with regard to the execution of its duty under its contract with Robert Sr., “the appeals court wrote.

The Trust changing the address on the policy, using checks with the Trust name on it to pay premiums and submitting claims against the policy was unfortunately not enough according to the Court of Appeals to provide actual notice to the insurance company of the insured’s death.

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National Elder Care Law Expert Mary T. Schmitt Smith Presents at Second Annual ICLE Elder Law Institute

Schmitt SmithMary T. Schmitt Smith, a Partner at the Lipson Neilson law firm and a nationally recognized Elder Care Law expert, presented “Drafting Your Legal Representation Agreement” at the Institute of Continuing Legal Education’s (ICLE) second annual Elder Care Law Institute. This two-day event was held during September 15-16, 2016. Mary’s presentation provided attendees with valuable insight into topics including identifying who is and who is not your client, establishing the essential terms of the representation agreement, laying the groundwork for timely payments, keeping “the file” and for how long and in what format, and when to end the relationship. Mary also discussed the topic of being involved after the client’s passing, and how an attorney could address this potential with a client and secure consent in advance.

Mary T. Schmitt Smith advises clients about estate planning, tax, and probate options, with a distinct focus on drafting and administration of Special Needs Trusts. She is Michigan’s first Certified Elder Law Attorney. Ms. Smith served on the National Academy of Elder Law Attorneys Board of Directors and was recognized as a Fellow of the Academy in 2003. In 2005, she established the Theresa Law Center PC. She has received an AV-rating from Martindale-Hubbell for the past 17 years, and has been recognized as a Super Lawyer for the past ten years.

Ms. Smith became the ninth annual recipient of the national Theresa Foundation Award in recognition of her community service for people with disabilities in 2003. She received the EP Maxwell J. Schleifer Distinguished Service Award at Disability Awareness Night at Comerica Park in August 2011. Ms. Smith is a past president of the ARC of Oakland County, the nation’s sixth-largest ARC, and served on the Board of Directors for a dozen years, then on the Advisory Board for more than a decade. She is also a member of the ElderCounsel Advisory Board.

Ms. Smith is a founding member of the Special Needs Alliance, a national network of lawyers dedicated to disability and public benefits law. She has presented on probate, tax, estate planning, and special needs trust topics for bar associations and law schools in Michigan, Florida, Wisconsin, Massachusetts, Texas, and New Jersey, as well as NAELA. Ms. Smith is admitted to practice before the U.S. Tax Court and the U.S. Court of Appeals (6th Circuit), where she successfully appealed a federal district court decision interpreting Medicaid law in favor of a Trustee of a Special Needs Trust. She has published numerous articles in such publications as Michigan Bar Journal, the Oakland County Bar Association’s LACHES magazine, and publications distributed by national Elder Care organizations. To learn more please visit

Contact: Mary T. Schmitt Smith
Phone: 248-593-5000

The ARC: Special Needs Attorneys Who Share Your Values


Lipson Neilson attorney Mary Schmitt Smith is a Past President of The ARC of Oakland County, Inc., the nation’s sixth largest ARC, and served on the Board of Directors for twelve years. Mary is also charter member of the Special Needs Alliance, a national network of lawyers dedicated to Disability and Public Benefits Law. Click here to view the most recent newsletter from The ARC.

The Special Needs Alliance’s (SNA®) three-year partnership with The Arc has been built on shared values. Like The Arc, our member attorneys advocate on behalf of individuals with I/DD in their quest for inclusion, self-determination and personal fulfillment. We are a national non-profit comprised of legal professionals who assist people with disabilities and their families with public benefits, special needs trusts, special education and supported decision-making.