By Brandy Stykes

The Tennessee state legislature has repealed the Tennessee gift tax, effective as of January 1, 2012.  The repeal of the gift tax will help those individuals that make large gifts take advantage of the $5.12 million federal exemption.

The Tennessee state legislature has also repealed the Tennessee inheritance tax, effective as of January 1, 2016.  The yearly taxable estate exemptions until that date are as follows:

• 2012 – $1,000,000
• 2013 – $1,250,000
• 2014 – $2,000,000
• 2015 – $5,000,000

By Rebecca Wilson

Blackburn, Childers & Steagall Presents an Opportunity to Discuss Government & Nonprofit Accounting with Peers & Auditors

On June 14, Blackburn, Childers & Steagall will host a Government & Nonprofit CPE in Kingsport, TN at MeadowView Convention Center. In addition to providing 8 hours of CPE credit at an exceptionally low price, there will be an opportunity for the participants to discuss issues with their peers and audit professionals who specialize in Governments & Nonprofits. The expert Government panel consists of the Finance Director from Johnson City, TN and the City Clerk/Comptroller from Bristol, VA. The nonprofit panel of regional experts includes a nonprofit Executive Director, a President/ CEO, and a Chief Financial Officer from three successful nonprofit organizations.

Congressman Phil Roe, MD and BCS Partner Karen McMurray will be presenting at a special breakfast for elected officials and board members.  Breakfast and lunch will be provided.

Participants will also have the opportunity to choose three 1 hour sessions from nine unique sessions offered. From what we have heard so far, several participants are eager to discuss budgeting, fraud prevention and common audit findings.

For more detailed information about the CPE, click this link and/or call us at (423) 282-4511.

Please visit our Registration page, or call Kendra or Kathy at (423) 282-4511 to sign up.

By Alice Williams

With the disappearance of green ledger pads comes the age of inexpensive accounting software.  There has been a huge boom in over-the-counter programs in the last few years.  QuickBooks (Intuit) is the most widely known, but there are other less known options like Peachtree (Sage).  There are also industry-specific packages such as PCLaw for attorney practices.  Whether you want to use it for home or office, it’s readily available at almost any store or online site.  And the banks are even catching onto the craze and offering use of the software packages through their websites.  So with all the choices out there, which one is right for you?  Well that depends on who you ask and on your needs (and hopefully the latter is taken into the equation when you ask).

QuickBooks is the most widely recognized software on the market. It’s owned by Intuit which also sells Quicken software. Peachtree is not as well known. Both have the capability to provide most of your accounting needs. If you’re familiar with computer software, you know that most software packages come in a variety of versions ranging in price from the affordable to the outrageously expensive. Don’t be sucked in by the salesperson or the advertising.

Bottom line – do your homework before you buy.  Whatever choice you make needs to be a benefit to your business and not a burden.  It would behoove you to discuss your options with your accountant to find out the best product to help you deal with your day-to-day accounting activity.  Taking your specific needs into account, they can suggest the most useful tool for you, not the most popular or most expensive.  And used properly, any of the choices out there will save you time and money in the office so that you can apply your time to making more money in your business.

By DJ Berry

Effective July 1, 2007, Tennessee joined ten other states by passing into law what is commonly referred to as a domestic asset protection trust (DAPT) via the Tennessee Investment Services Act. For Tennessee purposes, the trust is titled an “Investment Services Trust”, but this particular trust is also known as a self-settled trust, because the person who is creating the trust with their own assets is doing it for their own benefit; i.e., they will receive the income and other benefits of the trust.

Typically, a DAPT is created with asset protection as the primary purpose-hence, the name “asset protection trust.” For the most part, the trust is constructed to afford a layer of protection between the assets and the creditors of the trust’s creator. The trust is known as a domestic trust because the asset protection provided by trusts such as these were previously supplied by foreign offshore trusts. However, with the creation of the first DAPT statute in Alaska in 1997, offshore trusts began to lose some of their allure. Regardless, offshore trusts are still popular, especially in states that don’t provide DAPT statutes.

In general, the Tennessee version of the DAPT does protect assets from a creditor. Like most laws, there are exceptions to the general rule and fairly rigid standards that must be followed. In order to protect assets from creditors in Tennessee, the following requirements must be met:

1. Tennessee law must be used to create the trust (i.e., it must be a Tennessee trust);
2. The trust has to be irrevocable; and
3. The interest of the beneficiary cannot be transferred (often referred to as a spendthrift clause).

The trust must also have a qualified trustee. A qualified trustee is one who meets certain conditions. For instance, the trustee cannot be the actual creator of the trust. They must also be a resident of Tennessee (or an entity allowed by Tennessee law to act as a trustee). Moreover, the trustee must maintain in Tennessee some or all of the property that is the subject of the trust itself.

The layer of protection for assets in a DAPT may seem invincible, but in reality, there are some limitations on the shelter offered by the DAPT. Creditors can reach the assets if the transfer was a fraudulent transfer under the Tennessee Fraudulent Transfers Act. Even if the transfer was not fraudulent, creditors can reach the trust assets if the creditor files suit within four years of the creation and funding of the trust. Basically, this means that four years have to pass for the assets to be fully protected from even legal transfers.

The DAPT created by Tennessee has potential, but it is probably best suited for residents of Tennessee, especially those with most of their assets in Tennessee. The trust should be funded early, to avoid any possible problems with regard to the four-year minimum limitation for any transfer. Also, someone who is considering bankruptcy would find the DAPT to be an ineffective means of protecting assets.

The term of the trust can currently be extended for 360 years, as long as certain other guidelines are met. No other trust can come close to the DAPT in terms of longevity. If the preceding parameters fit your estate plan, a DAPT should be considered in any future planning.

By Ryan Owens

When many people think of someone “hacking” their passwords, they think of a person sitting in front of a computer randomly attempting passwords that they believe will work. This is not always the case. There are computer programs that are capable of discovering your password by searching through thousands of passwords using words from dictionaries, Encyclopedias, and information from the Internet in a matter of minutes. Many security firms, such as Trustwave will make a list of the “most used passwords,” and the results are often shocking. The most popular passwords are “password,” “iloveyou,” and “12345.” Using your own name is also very common. Anyone trying to hack into your account will check for these right off the bat. Here are five tips to think about when creating your passwords:

1.    Change your passwords regularly

Very few people change their passwords regularly (every four to five months). Changing your passwords ensure that you are less likely to be hacked. Try setting an appointment in your calendar to remind you to change your passwords.

2.    Use a password manager

A password manager will help you organize your passwords. The manager will hold all of your passwords in one database that will make it easy to remember and manage your passwords. There are plenty of password managers out there. Among them are two favorites: KeePass and 1Password.

3.    Do not make your passwords too short

The longer your password is — the more secure it is. Period!  There are websites that force a minimum password length and other requirements. However, you should never settle for just the minimum. Every additional letter makes the password harder to crack. It is ideal to have 12-14 characters in your password. Even a simple password such as “AAAAA!!!!!!!!!!” is just as effective due to the length of characters.

4.    Do not use the same password everywhere

With so many websites requiring a logon and password, it is often easier to use one password for any website or program you use. Using the same password for multiple websites and applications helps to cut back on remembering several different passwords. However, if someone gets a hold of your password for one site, they will also have a good chance of gaining access to other websites you use. This can be avoided by using multiple passwords, combined with a password manager to remember them all.

5.    Do not be obvious

Using obvious choices such as your name, your hometown, your phone number, or you birth date will likely result in your passwords being in jeopardy. Do not use information that can be associated with you and do not use simple terms. Simple terms can easily be hacked by using a computer that will search terms from a dictionary. Also, do not store your passwords in obvious places such as post-it notes under your keyboard or on papers near your computer. It is best to not write them down at all, but instead use a password manager.

Options for creating a strong password:

• Use the first letters in a phrase or song that is familiar to you. For example, you could use Nirvana’s song “Smells Like Teen Spirit.” Your password would then be something like “SLTS.” To remember the password, all you have to do is sing the song to yourself. You can use this with any song or phrase.
• Use a mixture of upper/lower letters, numbers, and punctuation marks. You can even substitute numbers for letters. Examples of this include:

8 = B

3 = E

5 = S

0 = O

This would mean the word “scuba” would become “5cu8a.”

Use a master password and a site rule. This technique is very popular – create one secure password, then use a rule for each different website. For example, your master password could be “55itigt8” and your rule would be to place the first and last letter of the website at the beginning and end of your master password, respectively. In this case, your Facebook password would become “f55itigt8k” and your Yahoo password would become “y55itigt8o.”