In a recent news release, The Federal Housing Financing Agency gave word of new short sale guidelines for Fannie Mae and Freddie Mac servicers.  The changes are set to go into affect November 01, 2012 and are meant to clarify and expedite the short sale process.  The announced alterations are as follows:

1)      Homeowners with a Fannie Mae or Freddie Mac mortgage will be permitted to sell their home in a short sale even if they are current on their mortgage if they have an eligible hardship, such as death of a borrower or co-borrower, divorce, disability, or relocation for a job, unemployment, business failure, etc., all without special approval from Fannie Mae or Freddie Mac;

2)      Fannie Mae and Freddie Mac will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes, whereby servicers will evaluate borrowers for additional capacity to cover the shortfall between the outstanding loan balance and the property sales price as part of approving the short sale;

3)      Special treatment will be provided to military personnel with Permanent Change of Station (PCS) orders; and

4)      Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale.

All of the changes hint to incredible strides forward for borrowers, especially the provision that indicates borrowers will be considered without default and the limit on contributions to second lien holders.  They are claimed to create a single, uniform short sale procedure, with specific rules or timelines when a foreclosure sale is looming. Borrowers that short sell will not be eligible for a Fannie Mae or Freddie Mac loan for two years thereafter.

Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to: or calling 800-7Fannie (8 am to 8 pm ET) or 800-Freddie (8 am to 8 pm ET)

Kristy Black, JD MBA

FATCA Seminar at Black & LoBello

Black & LoBello will be hosting a seminar about FATCA regulations Friday, May 4th at 2:00 PM. FATCA regulations primarily deal with “foreign financial institutions” (FFI) and what they must do to be IRS compliant.  However, the proposed regulations impact US advisors and intermediaries in many ways.   The proposed regulations mandate a 30% withholding from any US source payment made to a non-compliant FFI (and many other types of entities).  Any time a US payor or trustee makes a payment to a non-US beneficiary or non-US entity, compliance with the FATCA rules should be considered.

In many cases, US trusts with foreign beneficiaries or with foreign grantors, and trust companies, will be treated as FFIs.  One can anticipate that advisors will be shocked in the first quarter of 2013 when the compliance rules are scheduled to take effect and when a trust, trust company or beneficiary receives a payment from a US source investment that was subjected to 30% withholding because the trust or trust company was considered an FFI  even though it may have been domiciled in the US.  In some cases, there is no ability of an FFI to seek a refund for the withholding.

Aaron Schumacher and Jeffery Morse will be leading this seminar.  Mr. Schumacher has headed up the FATCA group at Withers Worldwide for some time and is quite knowledgeable on the subject.  Please RSVP at and be sure to include “FATCA Seminar” as your Area of Legal Interest.

Black & LoBello On the Radio

Click here to listen to the Legal Hour on KDWN AM720 from October 26th, 2011 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Ty Anderson from Swarts & Swarts, CPA.  Ms. Black Chernine and Mr. Anderson discuss taxes regarding real estate, tax implications on home purchases, tax consequences for short sales and foreclosures, tax relief legislation, the purposes and how to use tax forms 1099-c and 982, mortgage debt relief and the Mortgage Forgiveness Debt Relief Act.

Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.


Black & LoBello on the Radio

Click here to listen to the Legal Hour on KDWN AM720 from October 19th, 2011 in which Managing Partner, Tisha Black Chernine, Esq., discusses  chain of title problems, how to stop a foreclosure, 1099 tax forms, how AB 273 helps short sellers against creditors, renting a pre short sell property and issues with notary fraud.

Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

Black & LoBello on the Radio

Click here to listen to the Legal Hour on KDWN AM720 from October 17th, 2011 in which Christopher J. Philips, Esq., discusses how to avoid probate on bank accounts, how to add a name to a house deed, taxes on estates, early distributions vs. gifts from a trust, Nevada asset protection trust, short sale negotiation, joint tenancy in a trust, protecting out of state assets and the Nevada Homestead Protection Act.

Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

10 Useful Tips for Taxpayers Who Owe the IRS

While many taxpayers get a refund from the Internal Revenue Service each year, there are those who owe.  Furthermore, some taxpayers are unable to pay the tax all at once.   Therefore, the IRS has announced a campaign to an effort to help struggling taxpayers get a fresh start with their tax liabilities.

Below is a list from the IRS of ten suggestions for taxpayers who owe money.

  1. Tax bill payments If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any penalties and interest.  If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full rather than making installment payments to the IRS.
  2. Additional time to pay Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at or by calling 800-829-1040.
  3. Credit card payments You can pay your bill with a credit card. The interest rate on a credit card may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. To pay by credit card contact one of the following processing companies: Link2Gov at 888-PAY-1040 or, RBS WorldPay, Inc. at 888-9PAY-TAX or, or Official Payments Corporation at 888-UPAY-TAX or
  4. Electronic Funds Transfer You can pay the balance by electronic funds transfer, check, money order, cashier’s check or cash.  To pay using electronic funds transfer, use the Electronic Federal Tax Payment System by either calling 800-555-4477 or using the online access at
  5. Installment Agreement You may request an installment agreement if you cannot pay the liability in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all required returns and be current with estimated tax payments.
  6. Online Payment Agreement If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at
  7. Form 9465 You can complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope you received from the IRS.  The IRS will inform you (usually within 30 days) whether your request is approved, denied, or if additional information is needed.
  8. Collection Information Statement You may still qualify for an installment agreement if you owe more than $25,000, but you are required to complete a Form 433F, Collection Information Statement, before the IRS will consider an installment agreement.
  9. User fees If an installment agreement is approved, a one-time user fee will be charged.  The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account.  For eligible individuals with lower incomes, the fee can be reduced to $43.
  10. Check withholding Taxpayers who have a balance due may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. A withholding calculator at can help taxpayers determine the amount that should be withheld.

For more information, please visit the IRS website at

Tisha Black Chernine, Esq.

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On November 16, 2010, the Senate Committee on Banking Housing and Urban Affairs held a hearing on Mortgage Services and Foreclosure Practices which included, Bank of America, among other lending institutions, along with consumer advocates and academics. Coincidentally, the Congressional Oversight Panel has recently produced a 127-page report, “Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation” which also examines lending and foreclosure practices. Now that our elected officials are beginning to understand the depth of the securitization issues, let us all hope that the curtain will continue to draw back on the practices that have lead to the complicated mess we know as the “foreclosure crisis.” More importantly, let’s hope that our elected officials respond to this enlightenment, as they should, in the best interest of their constituents and the nation.

Both inquiries gave insight to the convoluted foreclosure and securitization (pooling and repackaging of loans into an entity, stocks of which are sold to investors) practices. The goal of politicians is to avoid foreclosure and keep those people who can afford to, and desire to, in their homes. Unfortunately, the fact that only 1 in 6 loans can be modified under bank and federal programs was lost on the Senate committee. More importantly, far less than 1 in 6 borrowers will ever receive an offer to modify.

Nevada consistently holds top rankings in:

  1. Foreclosure rates;
  2. Loss of property value;
  3. Unemployment and wage reduction; and
  4. Bankruptcy filings.

Given our dire circumstances, even a meager modification ratio of 1: to 6 would be a blessing to Nevadans. Alternatively, many financially capable owners are unmotivated to attempt to modify their loan due to the loss in real estate values in Nevada, residential and commercial alike, which are staggering compared to the rest of the nation.

Currently, Nevada has suffered a loss of more than 50% in property values, with experts projecting an additional loss of 10% in 2011. Since most of the modifications merely defer the principal, reduce interest rate and extend the term, the economic result of a typical modification is that the borrower will ultimately pay more for their property, over a longer period of time, than the “bubble rate”. For this reason, even if the banks were cooperative in granting modifications, a standard modification is not the answer for Nevadans.

What Nevadans are looking for is a meaningful principal reduction, but that is not on the table. The concern, according to the lenders and their servicers, is that principal reductions would result in actual losses to the banks and servicers. Moreover, banks do not want to write down principal because they would have to recognize the loss at the time it is reduced.  The loss recognition could cause the bank to be deemed insolvent, a fact which exists regardless. Therefore, according to servicer banks, principal reductions cannot be granted as they pose yet another “systemic risk.”

As a nation, we are wrapped in “systemic risk”: the fall of the dollar, lack of manufacturing, foreign wars, terrorism, low standards of education, and more. However, at some point, our elected officials are going to have to select one of our many problems and start dealing with it, as Americans have historically done, head on. There is no better place to start than at home, as in American homes.

Nationally, it is estimated that 40% of all mortgages are securitized. However, and amazingly, regulators who govern the industry do not know the exact number of securitized mortgages. Regardless, this 40% is valued at nearly $7.4 Trillion Dollars. Though I was not able to determine the relevant value of securitized loans in Nevada, we do know that approximately 80% of our real estate market traded (was sold or refinanced) between 2003 and 2007. A historically large amount of those loans were packaged as securities and sold to other banks or investment funds for profit.  Most importantly, the servicing of a majority of the securitized loans was retained either by the originating bank or its affiliate. This servicing element is an important profit engine and document control opportunity that the politicians are just beginning to examine.

On a performing loan, one where the borrower is paying, the servicer’s job is to collect monies from the borrower and pass them to the beneficial interest holder (owner of the note). In a non-performing loan, where the borrower is not paying, the servicer is paid for assessing penalties and fines, monitoring files to make sure that the paperwork is proper, foreclosing on the loan or following the borrower through bankruptcy. Servicers are paid to deal with the payment or non-payment of a loan, they are not paid to modify a loan and they are not concerned with the quality of the borrower’s service, or lack of service, as the borrower is not the default servicer’s client. The beneficial interest holder is the default servicer’s client.

Unlike servicers, the beneficial interest holder has a keen financial interest in the willingness and ability of a borrower to pay the note. Servicers are therefore in conflict with their client. The long term health and participation of the borrower is of no matter to the servicer as the servicer’s business model is not based on long term relationships but short term profitability. The fact is, servicers make more money when the loan is not performing, as they are able to collect more fees and penalties when a borrower is in default or is foreclosed upon. Taking this business model into account, it is not a stretch to think that a servicer would counsel a borrower to quit paying and push a foreclosure. Politicians now recognize that this compensation structure is contrary to promoting performance or modifications.

The long held cultural belief that banks are sophisticated and organized lends a credibility to their securitization and foreclosure processes that is not warranted. Bank procedures and information are rarely questioned.  Moreover, it is the rare individual that can afford to hire counsel for protection. Borrowers’ lack of financial ability to defend themselves or prosecute, coupled with outdated cultural beliefs that banks are above suspicion for the fees and fines they charge, has produced an “above the law” culture that motivates servicer banks to cut corners and employ unchecked trickery. For years, consumer and bankruptcy attorneys in nearly every state have filed and won cases against servicers for abusive practices related to their default fees and practices. However, the abuse has not abated. The robo-signing is but another example of such manipulation.

The servicer banks claim the robo-signing was a “technical issue.” It can hardly be called a “technical” error when a “sophisticated” party to a legal proceeding manufactures false affidavits, counterfeits mortgages and assignments, reverse-engineers documents to support foreclosures, and forecloses. Given the history of instances where courts have fined banks for these practices, the consistent and constant fines for fraudulent documents are hardly an “error”.  These practices are the affect of a lawless servicing culture that has yet to be held accountable. It is more like organized crime than a technicality.

The problem, unfortunately extends beyond the bogus fees and bad documents typical in a bankruptcy or judicial foreclosure proceeding.  In a lien theory state, such as Nevada, there is no system to police the servicer banks. Before securitization, the Trustee marshaled the process. The trustee is supposed to be an independent party that insures the foreclosure process is conducted pursuant to the law. This is no longer the case. Trustees are often owned by, or an affiliate of, the default servicer.

In a foreclosure, whether it is judicial or non-judicial, only the mortgagee (the beneficial interest holder) has the authority to direct a foreclosure. Because the banks, now servicers, originated these loans and perhaps disregarded the requirements of transferring the loans, they have an additional conflict of interest with the securitized investors to whom they sold the loans. Recall that servicers are supposed to protect the process and call out problems with documents. In many cases, the servicers are hesitant to point out document defects as they often would be blowing the whistle on themselves or their affiliates, hence robo-signing.  Document defects would also allow the new beneficial interest holders (owner of the note) to force buy-backs to the originator (now servicer) bank which sold them the note.

The securitization process, failures in documentation and other serious matters were discussed in the Congressional Oversight Panel’s report. The report noted that property and ownership documents may not have been properly transferred in the securitization process. The sheer volume of mortgages securitized resulted in the fall of the underwriting quality, and the failure to abide by the strict transfer requirements mandated by the trusts that bought the mortgages. The failure to properly document and transfer the mortgages could result in the trusts either not owning the loan or not having the ability to foreclose. Again, be reminded that the banks and servicers invented and controlled the securitization process making it possible in large volume. If the trusts have botched paperwork or no paperwork at all due to assignment failures, the trust investors would be profoundly impacted causing investor claims against servicers and those in the security chain and demands for put-backs to skyrocket. The “if” is a big and very well protected “if.” Such losses could put tax payers’ bailout money at risk if the banks become insolvent as a result.

There is thought to be nearly $6.2T of securitized debt in default (this does not include second liens). If even a portion of this could be forced back on to the banks because it was not properly transferred to the investor trust (called an “investor put-back demand”), the originator bank (who is likely to now be the servicer bank) could be in dire financial straits as the debt associated with the defaulted loans would greatly exceed working capital of banks. It is therefore in the best interest of the servicer banks to push loans into foreclosure because they can collect the default fees, sweep the document problems under the rug, and avoid put-backs and investor law suits, all while no one is looking.

The documentation problems are widespread in securitized loans. It is nearly impossible to discover who owns a note if it has been securitized. Traditionally, if a note was sold, it was recorded in the public records for the whole world to see. The banks, however, decided that they could do better than what county recorders and court houses have done for hundreds of years.  Instead of following the traditional process, the banks decided to quit recording mortgage related documents in the public records. Their reasoning: the sheer velocity and volume of transactions jammed up the public recorder’s office and prevented them from transferring/selling loans fast enough. So, the banks/securitizers created MERS (“Mortgage Electronic Recordation System”). MERS is a private recordation system which effectively removes from the public record the identity of mortgage owners or those in its chain. With the MERS system, when you want to discover whether the document chain is correct, you must ask the bank or servicer to provide it to you. This document control is more than a convenience; it enables the documents to be manufactured and “corrected” before the public can detect it or claim it as a defense to foreclosure.

But alas, it appears that judges and voters have begun to question the banks with justified suspicion. Let us hope our elected officials continue to do the same. Attorneys across the country have rallied against the crafty practices of the banks and servicers for years with little success. Despite these well-grounded arguments, judges and politicians continue to be swooned by the long held belief that the banks are never wrong. When the general public cannot afford to prove it, we must rely on officials.

Our banking industry holds all of the monetary, infrastructural and political cards necessary to keep the door to their closet locked. Through courts and political inquiries which question the authenticity and accurateness of all documents claimed to support their position, we must pry back the doors and hold banks and servicers accountable for their portion of this catastrophe. Banks and servicers can no longer enjoy the “untouchable” culture.  If we are going to put this economy back on solid footing we must:

  1. Establish a Nevada task force to investigate the foreclosure conduct of trustees and default servicers and conformance with Nevada statutes;
  2. Ban privatized recordation systems and force compliance with traditional recording requirements;
  3. Enact laws that prevent MERS from foreclosing in its name or as a nominee;
  4. Force banks and servicers to demonstrate proof of proper mortgage documentation before foreclosing, regardless of judicial or non-judicial foreclosure;
  5. Punish those banks and servicers who have prepared or filed false documentation or worked in avoidance of the letter of the law in foreclosures, bankruptcy or otherwise;
  6. Force principal reductions where the documentation is faulty or the property is under water by more than 50%;
  7. Create a tax structure that incentivizes investor/owners to modify loans;
  8. Create a mortgage only bankruptcy where formulaic modifications are granted;
  9. Force banks to take the losses on bad debt they created; and
  10. Allocate all mortgage related losses so that not just the government, investors, and borrowers are damaged. (The banks need to suffer the loss for, in fact, they are more than in simple part responsible for creating it.)

With the help of the Congressional Oversight Panel’s report and the recent United States Senate hearings, the nation can begin to identify the hypocrisy of a banking culture that wags its fingers at borrowers who either cannot pay or refuse to pay their mortgages, and cry “moral hazard”. The banks and their servicers created and drove the securitization machine. Now, as our economy suffers from this process, the banks are still at the wheel, avoiding suspicion and pocketing money made from the rise and burst of the bubble.

Tisha Black Chernine, Esq.

To the Boom and Back: Locals debate how rapidly once-thriving Las Vegas will recover

For several years as the economy soared Las Vegas-style, obtaining financing for a business often involved little more than signing a home equity line of credit.
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The Nevada Legislature has enacted a very powerful statute designed to provide support to surviving spouses and minor children when the gross estate is less than $100,000 (after deducting encumbrances) and avoid paying most, if not all creditors.  NRS 146.070 provides that if a person dies with a spouse and no children, leaving a gross estate less than $100,000, the entire estate must  be set aside for the support of the surviving spouse.  The statute operates similarly for the support of a minor child in the event the decedent is not married and leaves only a minor child or children.  This statute directs the decedent’s inheritance to the surviving spouse or minor children even if the decedent left a will leaving the estate to someone else.

This statute can allow heirs to avoid a long and costly probate process in the event that a proper estate plan is not implemented or assets are not titled appropriately at death.  This statute can also be utilized by surviving spouses and guardians of minor heirs to avoid having to satisfy creditors such as credit cards, hospital bills, and other non-secured debt.

For example, if a married person with no minor children dies leaving a house titled solely in the decedent’s name, the value of which is $400,000, but has an encumbrance of $210,000, and the asset is community property, the equity in the house is $190,000, however only 50% of the value is subject to probate.  Therefore, the net estate is only $95,000.  Even if the decedent had $100,000 in separate debt such as student loans, NRS 146.070 provides that the entire estate, i.e. the entire house and all of the equity therein, shall be set aside for the support of the surviving spouse.

By utilizing Nevada’s community property laws and applying Nevada’s support statute in concert, even when an estate initially appears substantial, and probate seems unavoidable, surviving spouses can avoid lengthy and costly probate proceedings and minor children of the decedent can receive the support intended by the Nevada Legislature.  This is yet another benefit in establishing residency in Nevada for estate and tax planning purposes.

Christopher J. Phillips, Esq.

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CoreLogic, a California-based research firm has released its inaugural report, a bimonthly study entitlted U.S. Housing and Mortgage Trends which states that we will be seeing “more distress with distressed home sales.”   CoreLogic defines distressed sales as short-sales and REO sales.
The report claims this is primarily due to the impending expiration of the federal First Time Home Buyers’ Tax Credit on September 30th.  Now that this incentive has run its course, CoreLogic says the share of distressed sales is expected to rise in the fall.
The peak of distressed sales was seen in early 2009, at 35% of overall sales.  The low was seen in June 2010 with distressed sales making up 24% of the nationwide market.
Unfortunately for us, as of June 2010, Las Vegas leads the nation in distressed sales at a whopping 61% of total sales.  In addition to the negative effects of the post-tax credit environment on overall sales, negative equity will continue to be a major factor slowing the recovery of the housing market, with nearly one in four homeowners being underwater nationwide.

Tiffany N. Ballenger, Esq.

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Changes Ahead to FIRPTA

Before convening on its August break, the House of Representatives passed the Real Estate Jobs and Investment Act of 2010.  The bill advances the real estate industry’s goal of increasing foreign investment in Real Estate Investment Trusts (REIT). The Bill doubles foreign investors’ allowable ownership interest in a REIT to 10%.  Anything over that percent ownership is then subject to the Foreign Investment in Real Property Tax Act (FIRPTA).  Congress hopes that increasing the allowable foreign ownership interest will stimulate the US commercial real estate sector with minimal fiscal impact.

Tisha Black Chernine, Esq.

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On Friday, July 2, 2010, President Obama approved the home buyer tax credit extension for more than 180,000 American homebuyers who were at risk of losing tax credits totaling up to $8,000.  These qualifying homebuyers were under contract for a home on or before April 30, 2010 and originally had to close no later than June 30, 2010.  Unfortunately, the banks became overwhelmed with the popularity of the program, leading to a backlog of loan applications.  However, this extension gives those homebuyers three more months to close on their properties while still being eligible for the tax credits.  The final closing date while still being eligible for the tax credit is now September 30, 2010.

Kelle L. Kuebler, Attorney*

*licensed in New York and Connecticut

Home Buyer Tax Credit Extension Passes

The Senate unanimously approved a bill that creates a three month closing extension for the home buyer tax credit.  In summary, the home buyer tax credit extension gives borrowers until September 30, 2010 to complete the sale of the property if the deal was in escrow before the deadline of April 30, 2010.  Qualifying borrowers will be eligible for tax credits of up to $8,000.  If President Obama signs the bill into law tomorrow, it is unclear if the extension will apply retroactively to deals that closed on July 1, 2010.

Joshua D. Carlson, Esq.

“Cancelled Debt” from a Foreclosure May be Taxable

If the bank foreclosed on your house or you abandoned it, and the lender cancelled your debt, you may receive IRS forms from the lender regarding that cancelled debt.  Your lender may send you an IRS Form 1099-A, Acquisition or Abandonment of Secured Property or an IRS Form 1099-C, Cancellation of Debt.  If you used the debt to purchase, build, or substantially improve your primary residence, that debt may qualify as “acquisition debt,” and be eligible for the Home Mortgage Debt Forgiveness Relief program.  If you have received either Form 1099-A or Form 1099-C, the IRS recommends you review IRS Publication 523 and 525 to determine whether you must include the debt amount on your tax return as income.

This article does NOT constitute tax advice.  If you desire tax planning or assistance, seek a qualified professional.

Carlos L. McDade, Esq.

Everyone who wants to accomplish complete estate planning objectives should consider and implement a living trust-centered plan. A living trust-centered plan is the only type of estate planning that can meet all of the elements of our “definition” of effective estate planning.

Black & LoBello’s definition of effective estate planning:

  • I want to control my property while I am alive.
  • I want to take care of myself and my loved ones if I become disabled.
  • I want to give what I have to whom I want, the way I want, and when I want.
  • If I can, I want to save every last tax dollar, professional fee, and court cost possible.

Probate in Nevada starts when you have $20,000 or more in your name which is not much.  For this reason alone, many people should consider a living trust-based model for their estate planning needs.

Reason One: Control

The most important element of Black & LoBello’s definition of estate planning is control. The most important step to gain control of your assets is to create an effective estate plan. If you do not write your own plan, the state will write it for you.

If you die without an estate plan, you are deemed to have died intestate. In this case, state laws direct how your assets are to be inventoried, valued, and distributed. If you should become incapacitated without affecting formal planning for that event, there is another set of states laws that directs what will happen to you and your property.

State laws also control other aspects of one’s life and property. For example, joint tenancy property may be tied up in the courts if one of the joint tenants becomes incapacitated or if there are creditor problems. To exercise estate-planning control, you must take responsible action to implement and use your own estate plan to dictate your wishes, rather than leaving it to the state.

Reason Two: Incapacity

After control, the definition of estate planning addresses incapacity. Statistics show that the odds of suffering a debilitating mental or physical disability are about six times greater than the odds of dying. Because of the great risk of incapacity it is imperative to plan for such a life-changing event.

Through proper and effective planning, you can control how you are cared for during incapacity. Additionally, you may purchase long-term health care and/or disability insurance or implement savings plans. It is also possible to leave instructions about physical care in the event of incapacity.

Estate plans can succinctly direct how property and money should be used for the incapacitated and your loved ones, thereby overruling the state laws. In order to exercise this control, one must do so while still competent.

Reason Three: Giving Your Property to Whom You Want

After you have controlled your property while you are alive, and have planned for your incapacity, you can look forward to giving your property to others at a time or times of your choosing. The trust maker is able to transfer property during life as well as at death through the use of an effective trust plan. Nevada law allows the trust maker to control his property, and to pass it in the manner he chooses to the beneficiaries with amazing latitude and flexibility. However, you must initiate the process while still capable to do so.

Reason Four: Planning for Taxes and Expenses

The final part of Black & LoBello’s definition of estate planning addresses taxes, fees, and costs. One of the most famous quotations about taxes comes from Judge Learned Hand who wrote:

“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” (Gregory v. Helvering, 69-F.2d 809)

While saving on taxes and expenses is an important aspect to effective estate planning, be assured that Black & LoBello will not recommend actions that will compromise the first goal of maintaining control. Even if you do not have a taxable estate, probate costs can run anywhere from between three to twelve percent of the GROSS value of your estate.  The secret of good planning is to reduce taxes and costs while always retaining control.

Tiffany N. Ballenger, Esq.

Ten Facts about Mortgage Debt Forgiveness

If your mortgage debt is partly or entirely forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income.  Here are 10 facts the IRS wants you to know about mortgage debt forgiveness.

1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude debt reduced through mortgage restructuring as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build, or substantially improve your principal residence and be secured by that residence.

5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

6. Proceeds of refinanced debt used for other purposes – for example, to pay off credit card debt – do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

8. Debt forgiven on second homes, rental properties, business properties, credit cards, or car loans does not qualify for the tax relief provision.  In some cases, however, other tax relief provisions – such as insolvency – may be applicable. IRS Form 982 provides more detail about these provisions.

9. If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender.  By law, this form must show the amount of debt forgiven and the fair market value of any foreclosed property.

10. Examine the Form 1099-C carefully.  Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven in Box 2 as well as the value listed for your home in Box 7.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. Taxpayers may obtain a copy of this publication and Form 982 either by downloading them from or by calling 800-TAX-FORM (800-829-3676).

Tisha Black Chernine, Esq.

Claiming the First-Time Homebuyer Tax Credit

Claiming the First-Time Homebuyer Tax Credit on your 2009 tax return might mean a larger refund but it can seem complex. Here are five tips to clarify the documentation requirements:

Settlement Statement: Purchasers of conventional homes must attach a copy of the Form HUD-1 or other properly executed Settlement Statement;

Properly Executed Settlement Statement: Generally, a properly executed Settlement Statement shows all parties’ names and signatures, property address, sales price and date of purchase. However, settlement documents, including the Form HUD-1, can vary from one location to another and may not include the signatures of both the buyer and seller. In areas where signatures are not required on the settlement document, the IRS encourages buyers to sign the Settlement Statement when they file their tax return - even in cases where the settlement form does not include a signature line.

Retail Sales Contract: Purchasers of mobile homes who are unable to get a Settlement Statement must attach a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.

Certificate of Occupancy: For a newly constructed home, where a Settlement Statement is not available, attach a copy of the Certificate of Occupancy showing the owner’s name, property address and date of the certificate.

Long-Time Residents: If you are a long-time resident claiming the credit, the IRS recommends that you also attach documentation covering the consecutive five-year period such as the Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

For more information about the First-Time Homebuyer Tax Credit and the documentation requirements, please contact your CPA or tax professional and visit

Tisha Black Chernine, Esq.

As we enter the second year of widespread foreclosures and short sales in Clark County, we are just starting to figure out how the banks will behave.  Many are unaware that they can take proactive steps to minimize both the possibility and effects of when lenders pursue a deficiency action.

As always, the best defense is a good offense.  The best option available to those with assets is to engage in a preemptive strike: asset protection.  Several strategies can be used to properly protect properties, investments, and savings.

First and foremost, take advantage of state and federal exemption laws.  Homesteads in Nevada are protected up to $550,000 worth of equity in a primary residence with a proper homestead designation.  Other exemptions can be applied to funds in ERISA qualified plans and some of the cash values held in life insurance policies.  This means, if you are sued or have a judgment against you, assets or equity held in exempt resources cannot be collected.

Next, a proper structure using business entities can be used to remove assets from your personal name and place them in the name of the business.  This offers two types of protection; shielding a business from claims of its owners’ creditors and an owner’s assets from the claims of business creditors.  In certain circumstances, business owners may also see tax benefits from proper business formation.

Take, for example, Ann and Tom.  Ann and Tom have a house worth $400,000 that they paid cash for, and own a sole proprietorship business with cash accounts of around $50,000.  Ann manages their business while Tom works as a pharmacist.   They each have $50,000 in their 401(K)s and have about $10,000 worth of cash value in whole life insurance.  They have three children, all under the age of 18.  Unfortunately, they also own a rental property worth about $200,000 less than what they paid.  They both signed on the loan.  Ann and Tom also have about $100,000 in savings in their joint savings account.   They are up to date on all of their mortgage payments but are thinking of a possible strategic default on the underwater investment property.

What can Ann and Tom do to protect their assets (home, 401(K)s, cash value, business assets) from potential claims if they default on their investment property?

There are many possible solutions for every situation. Here are some possible recommendations for Ann and Tom:

  • File a Declaration of Homestead for their primary residence. This quick, inexpensive method may protect all of the equity in their home and involves only a trip to the Recorder’s office and approximately $20.00 in recording fees.
  • Take advantage of state and federal deductions.
    • As long as their 401(K)s are ERISA qualified, all of the funds are protected from any judgment rendered against them.
    • Additionally, Nevada offers protection to Ann and Tom’s life insurance benefits as long as the annual premiums on the policy do not exceed $15,000.
    • They may want to take some of their savings and put it into 529 plans to save for their children’s education, which have various tax and asset protection advantages.
  • Set up a proper business structure.
    • A sole proprietorship offers little or no asset protection for the owners of the business or the business assets.  A better strategy is to form a Nevada limited liability company.  This provides protection of the business’s assets from Ann and Tom’s creditors.  Also, if the business itself is sued, Ann and Tom’s assets may be protected as well.
    • Tom may also want to form a separate company for his pharmacy practice since that particular profession has a high risk of being sued.
  • Pursue negotiations with the bank.
    • Ann and Tom might try to negotiate a loan modification with the bank or work out a short sale.  However, if they do not engage in proper planning before submitting their financial statement to the lender, the outcome could be less than ideal.
    • Again, proper structuring is important.  A short sale has many advantages over a foreclosure and Ann and Tom should sit down with a qualified attorney before deciding which courses of action to take.

Tiffany N. Ballenger, Esq.

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Tisha Black Chernine awarded for
Mountain States Rising Stars 2011

Michele T. LoBello awarded for 
Nevada Super Lawyers 2007

Black & LoBello is an AV® Preeminent rated, locally owned, full service law firm in Las Vegas, Nevada.