Father’s Day: Protecting the Ones You Love
Dads are the best. They protect us, help us, and teach us new things. Even when we’re adults, our dads still are the leaders of the family. If your father doesn’t have an estate plan, give him the gift of a planning session, as that might help repay some of the amazing things your dad has done for you.
In the spirit of protection, in this article, we’ll discuss who and what your estate plan can protect. If you or your dad don’t have one, it’s time to get going on that process ASAP. Contact an attorney to discuss your options in setting up an estate plan.
Estate Plans Protect Beneficiaries
Once upon a time, estate planning was thought of as something only rich people needed, as it was their wealthy beneficiaries who would benefit from having a place in plan. However, that conception has totally changed, and there are a lot of middle-class families who can seriously benefit from having an estate plan in the event something happens to the breadwinner(s) of the family.
No matter what you’re leaving behind, if you don’t have a plan for what happens when you pass away, you will have no control over where it goes—it might even be sold and the proceeds given to creditors. Beneficiaries are protected with estate planning, as the major component of estate planning involves designating who you want to receive your assets. Without a plan, the court will decide who gets what, and that process can not only rack up fees, it can also get ugly. The court doesn’t know your family history, so it doesn’t know who should and shouldn’t be receiving any money.
Heirs Get Spared the IRS (Kind Of)
Sometimes, when setting up an estate plan, there are legal ways to minimize and shrink your tax burden. If estate planning is about protecting loved ones, what better way to do so than to keep them away from the IRS? One essential of estate planning is transferring assets in a way that creates the smallest tax burden for heirs. Though it’s foolhardy to say taxes will be wiped out totally, they can be reduced with savvy planning.
Even just a little foresight can enable people—especially married couples—to reduce federal/state estate and state inheritance taxes. Without a plan in place that has been developed by a professional, your beneficiaries might end up shelling out quite a bit of cash to Uncle Sam.
Keeping Kids Safe
Another major benefit to estate planning is that it helps plan for the unthinkable. No one thinks something bad will happen to them, but you never know, in this crazy world. If you have minor children, setting up guardianship for them will keep them in a stable home if you and your spouse die before they turn eighteen. Without a will naming guardians for your kids, courts step in and decide who raises them. An impartial judge who has never met your family really is not the best person to decide such an intimate, life-changing decision.
Even if your dad’s kids are grown now, yours might not be. Protecting kids is what dads do—and estate plans can help.
Say Goodbye to Messy Family Situations
We’ve all seen or heard these horror stories, and we might even know of them occurring in real life—perhaps in our own family. When someone dies without a will, the war between family members begins. It gets really ratcheted up if the person has a considerable amount of money. Someone always thinks they deserve money the most, even if they’re notoriously irresponsible. The result is ugly squabbling that can even end up in litigation, racking up not only family animosity, but also a ton in legal fees.
Bypass that mess by having an estate plan. The plan will stop fights before they begin, as you decide who controls your finances if you become incapacitated, and you decide what happens to your assets (money, property, etc.) after you die. You can even come up with individualized plans for your relatives, such as a trust fund for someone who isn’t responsible to inherit a lump sum but still should get something. Telling your family situation to a lawyer, who is bound by client confidentiality, will help the practitioner decide what is best for your family.
As you can see, there are some major benefits to having an estate plan in place. Don’t try to set one up yourself, as there are a lot of minor technicalities to legal documents, and a lot can go wrong. Instead, discuss options with an estate planning attorney, who will help you get the necessary documents together. Schedule an appointment and find out more on our website.
Mid-Year Estate Planning Evaluation
Can you believe that we’re already in June? 2021 is flying by and things appear to be looking up (at least, when compared to what happened in 2020—knock on wood). Now that half the year has passed, it is time to do a mid-year evaluation of your estate plan. This guide will provide a few simple questions for you to ask yourself when determining whether your estate plan covers everyone and everything it needs to cover.
1. Do I have a will?
A will is a final statement of your intentions when it comes to your assets. It determines where your assets will go after you pass on, and it is a vital step in the estate planning process. Dying without a will leads to intestacy, which will force your family into a painful and unexpected court process. Having a will as a cornerstone of an estate plan is extremely important.
2. Do I have a trust?
A trust is a three-party fiduciary relationship set up in a legal document. You, the donor, transfer title to a trustee, who holds the title until they are instructed to transfer title to the beneficiary. A trust is useful for someone who wants to and is able to pass on title to an asset immediately. A trust can also help you avoid probate court, which makes it an attractive option for many.
3. Do I have beneficiary designations?
There are a few possessions that can pass to heirs without you dictating them in the will (such as a 401[k]). Maintaining a beneficiary and contingent beneficiary—someone to take the account if the other beneficiary cannot—will allow the person you want to receive your assets without the court stepping in. Not naming a beneficiary to these assets means that a court will be left to decide the funds’ fate, and the court’s decision could run counter to your wishes.
4. Do I have a letter of intent?
This one is easy to complete, but it’s still vital. The letter of intent is a document that you leave to your executor. It defines what you want done with a particular asset or assets after you die or get sick. The letter of intent can also provide details on your funeral. It will also make a statement of your intent, which can help if there are murky parts of your will.
5. Do I have a healthcare power of attorney?
A healthcare power of attorney (POA) makes decisions for you if you’re too sick to make them yourself. This trusted person—usually a spouse or family member—will step in on your behalf, ensuring your wishes are followed. Though you might feel fine now, anything can happen.
6. Do I have a financial power of attorney?
Similar to a healthcare power of attorney, a financial POA makes monetary decisions for you in the event that you’re too sick to make them yourself. Again, even if sickness doesn’t seem like it’s looming on the horizon for you, it’s best to be prepared, just in case.
7. Is my business taken care of?
Some of us are business owners, and businesses must be included in estate plans as well. Having a succession plan and plan of action for your business after you die will keep your company from falling into disarray when you’re gone.
8. Do I have guardianship designations?
Those with minor kids should have guardianship designations, in the event that something happens to them and their spouse. Make sure to talk to your proposed guardian before you make the decision, as you want to ensure the guardian is on board before potentially saddling them with a huge responsibility.
9. Have I acquired any new major assets?
Estate plans change, and sometimes those changes are due to new assets that need to be incorporated into the plan. If you’ve acquired something major, you’ll need to include it in your estate plan, sooner than later.
10. Has anything major changed in my life?
This update applies to pretty much any major event in your life. If there are new births, deaths, or weddings, they need to be reflected in your estate plan.
These brief questions will put you on the right path to ensuring that your estate plan covers what it should cover. Visit our website to learn more and contact an estate planning attorney.
Memorial Day: Think Ahead, Leave a Legacy
Memorial Day is one of America’s longest-standing, most-honored holidays. It was first instituted in 1868, when General John A. Logan, the commander in chief of an organization honoring Union Civil War veterans, wanted to commemorate all that the Union soldiers did for America.
It’s hard to tell exactly where the first Memorial Day celebrations originated. Over twenty-five locations have laid claim to the holiday. Even before the Civil War, soldiers’ graves were often decorated, and the decoration continued during the American Civil War. Scholarly efforts have tried to detangle myth from legend and discover the exact origin, but it has been difficult. Either way, the holiday is now federally-observed and an important part of the fabric of the nation. Every Memorial Day, Americans all across the country visit the graves of soldiers who died while serving in the Armed Forces.
Now, Memorial Day is a way to honor and remember the sacrifices of those who died for our freedom. In the spirit of Memorial Day, it’s important to think ahead and leave a legacy for you and your family.
Thinking Ahead
“Thinking ahead,” in this context, refers to planning for life’s possibilities and eventualities. Sickness, as we all know from these COVID-19 times, can loom large on the horizon. However, there can also be real issues that pop up even when you’re perfectly healthy.
In Sickness
A healthcare directive is a document that will specify your wishes to doctors, nurses, and other medical personnel in the event that you’re too sick to communicate your wishes yourself.
A power of attorney is someone you entrust with the responsibility to make financial and healthcare decisions on your behalf if you’re incapacitated. Both a directive and a POA are two documents that, in sickness, can keep you from losing more than just your health.
And in Health
Tragedy can strike even when you’re healthy. The importance of insurance cannot be overstated. Life insurance will provide your family or business with a source of income after you pass away, bridging an important financial gap.
Estate planning for SBOs (small business owners) is also vital, even if there are no storm clouds on the horizon. Your business is your life’s work, and you want to make sure it is protected, through insurance and from creditors, if something happens. Estate planning attorneys and financial advisors can help protect what you’ve worked for.
Leaving a Legacy
Though a gloomy topic, what will happen to your assets after you pass away? You do not want to die without a will, as dying intestate ensures a lengthy, painful court process that will be hard on your family. Using estate planning to leave a legacy for your kids and, if applicable, your business, is extremely important.
For Your Kids
Your last will and testament is the final say on where you want your assets distributed. You can also consider a trust, which will transfer legal title to a trustee until you want your kids to receive the asset in question (property, money, etc.).
For Your Business
You should create a succession plan for your business. It’s extremely important, especially for family-owned businesses, to contact an attorney about laying down the groundwork for what will happen to your business when you pass away.
Celebrating Memorial Day means reflecting on both the past and the future. While we should definitely commemorate what has happened, we also should look forward to leaving a legacy.
Visit our website to learn more and contact an estate planning attorney.
Protecting Your Small Business in 2021
Time is flying by in 2021, and is that really such a bad thing? If you’re a small business owner, you know that the past year-and-a-half has been difficult. Though there are government programs that have helped keep small businesses afloat, things are not completely back to normal.
Luckily, there are various legal ways you can protect your business assets, even in these troubled times. Use this guide as a reflection tool. It’s almost mid-year—how are things looking for your business? What steps have you taken to protect what you have built?
What the Surveys Are Saying
Bill.com conducted a survey of small business owners, asking them about their forecast for 2021. The survey found that, while a majority of SBOs are optimistic, they are also making changes in how they run their businesses. 75% are introducing new products and methods of conducting business as we enter the second year of COVID-19.
New innovation is a necessity for an SBO. However, it is, obviously, not the only necessity. Estate plans are a must-have. In the next section, we’ll discuss several key components of small business estate planning.
Estate Planning for Your Small Business
If you’re a small business owner, you probably have a million things to focus on each day. It’s imperative to carve out time in your schedule, however busy, to create an estate plan. Around one-third of small business owners have no estate plan (Fundera), which means they have no written-down plan for succession.
Basic Planning
A will and power of attorney are two basic must-have documents for any SBO. A will states how you want your business to be distributed (succeeded, liquidated, sold, etc.) after you die. A power of attorney will handle financial and business transactions, such as paying bills, handling insurance claims, and such, if you are unable to do so yourself.
Tax Considerations
This is where it is especially important to hire an attorney, as tax laws are always in flux. Estate planning attorneys might be able to help minimize estate taxes, which are an issue for estates exceeding a certain amount of money (currently, $11.18 million). Other tax considerations include withdrawal of 401(K)s, IRAs, and/or other retirement accounts.
Buy-Sell Agreements
Buy-sell agreements are optional and really only apply to businesses that have multiple owners. Buy-sell agreements are legal documents that specify who can purchase an owner’s share of the business. BSAs also specify the conditions and price of the sale. This document lays out what should happen if one of the owners dies, retires, or becomes disabled.
Insurance
Insurance is one of the most vital tools an SBO can possess. While business insurance is obvious, life and disability are two other insurance policies you should think about. Life insurance coverage will provide your family (or another named beneficiary, like your business) with income when you die. The insurance can also guarantee income to your business, keeping the company operating when you are gone.
Disability insurance will provide coverage in the event of a short- or long-term disability. Again, it will give your business much-needed cash flow. You can purchase these policies with your family and/or business as the beneficiary.
Succession Plan
Succession planning specifies exactly how you, your company, and family will prepare for the ownership transition. Succession plans are written documents that lay out what will happen to your company when you die. They include much of the same information as business plans, just with an added section on succession. You’ll want to keep the succession plan document and will consistent with one another, so as to prevent expensive litigation or court battles down the line.
Family-Owned Issues
Family-owned businesses often face a host of issues that other small businesses don’t. For example, one child of a business owner might want to take over the business, while the other doesn’t. There also might be concerns about keeping family business assets within the bloodline. An estate planning attorney, as well as a financial advisor, will be able to help you find legal pathways to structuring your business estate plan in the way that best fits you and your family.
Updating the Plan
You’ll want to update your estate plan regularly. When you experience major life or business changes, or when tax laws (both federal and state) change, you’ll want to take another look at your documents.
This guide isn’t the be-all, end-all of protecting your business, but it should hopefully give you a chance to reflect on what you have done and have yet to do for your company. Contact an estate planning attorney to learn more and visit our website for details on how we can help.
Protecting Your Mom This Mother’s Day
Mother’s Day has been around since the early 1900s, and we’ve cherished it for over a century. In 1907, a woman named Anna Jarvis held a memorial for her mother, Ann Reeves Jarvis, and announced her intention to create Mother’s Day as a way for all maternal figures to be celebrated for all they do for their children.
It didn’t take long before Mother’s Day became a full-fledged holiday, and, every year, we celebrate it with flowers, brunches, and spa days. But, what if the gift for this holiday was a little different?
Though you shouldn’t skimp on all the usual Mother’s Day presents, consider setting up an estate planning meeting for your mom. This gift might seem a little unorthodox, but it will have long-term benefits that will last for years to come.
How Estate Planning Can Help Moms
Estate planning has several key elements. Though there are a million and one documents and legal tools that can go into an estate plan, this article will cover the basics. If your mom needs any of these key documents, contacting an estate planning attorney will be the perfect gift this season.
Last Will & Testament
When you think of estate planning, the idea of a “last will and testament” is probably what you picture. Last wills and testaments date back thousands of years, and they are still an important aspect of estate planning to this day.
The will outlines what you want to happen to your assets after you pass away. Though a bit morbid for a Mother’s Day gift, it’s far less dreary than dying without a will (AKA, dying “intestate”). In that case, the state takes over your assets in the probate process. The state’s division of assets focuses on creditor repayment, which is likely far different from what your mom would want to have happen to her most prized possessions.
Drawing up a will is not difficult, but it’s best to have an attorney do it, as there are a lot of minor technicalities that an untrained eye can overlook. Wills also do not have to be updated constantly. The rule of thumb is to check them every three to five years or after a major life event.
Living Will & Healthcare Power of Attorney
A living will is also called an advanced medical directive. It outlines what you want doctors and nurses to do or not do if you are seriously ill and incapable of communicating your wishes yourself. A living will often relates to personal decisions about life support and life-sustaining medical intervention.
A healthcare power of attorney, by contrast, is a trusted individual that you appoint to manage your healthcare affairs if you’re unable to do so yourself. This healthcare POA signs a legal document swearing to act in your best interests if you need someone to make your healthcare decisions for you.
So, why are these legal tools important? Being sick or incapacitated means you are experiencing one of the most vulnerable points of your life. Having a healthcare directive and power of attorney ensure that you (or your mom) are well-taken-care-of, even in such a diminished state.
Financial Power of Attorney
Similar to a healthcare power of attorney, a financial power of attorney is a trusted individual who signs a legal document swearing to act in your best interests. This financial POA exercises his or her decision-making powers as they pertain to your finances. Should you become seriously ill, the financial POA handles investment decisions, bill-paying, and other major and minor financial matters.
If your mom attends an estate planning session, it’s likely that the document pertaining to the financial POA will be created at the same time as the last will and testament. It is especially important to nominate a financial POA if there are a lot of financial assets or specifications regarding the estate.
Trust
Last but certainly not least is a trust. A trust is a legal document that transfers legal title of property to a trustee, who holds it for the benefit of a third-party beneficiary. Trusts do not have to go through probate court, and you can set restrictions and guidelines for how you want beneficiaries and trustees to manage your assets.
A trust is an especially good idea for those with sizable insurance policies, large estates, and/or a lot of kids. If these characteristics apply to your mom, talk to an estate planning attorney about setting up this legal entity.
We want to protect the ones we love and, of course, our moms are no exception. Estate planning is a long-term gift with long-term benefits. Consider setting up a meeting for your mother this holiday and visit our website to learn more about our services.
Florida Probate: FAQs and Steps to Take
Florida does a lot of things differently, and legal affairs are no exception. One area in which Florida differs from other states is probate. Probate court is the legal mechanism by which a judge distributes the assets of an estate after the estate’s owner has died. The judge might distribute these according to an authenticated will, or, if the owner dies intestate, probate court can distribute the assets as it sees fit, keeping in mind the goal of repaying creditors.
The text governing Florida probate is contained in Chapters 731-735 of the Florida Statutes. Florida Probate Rules, Parts I and II, contain the rules for Florida Probate Court. In this article, we’ll discuss the ins and outs of the Floridian probate process.
The Types of Probate Administration
When talking about Florida probate court, there are two main types of administration to know: Formal and Summary. Formal administration is the court-supervised, traditional form of probate that begins with a petition to open and an appointment of what Florida calls a “PR” or “Personal Representative.” In other states, the PR is known as an “executor” or “administrator.” This type of administration is required when the estate owner has been deceased for two years or less, and the probate estate’s value is above $75,000.
Small administration, by contrast, occurs, when the decedent has been dead for over two years, and the estate’s value is under $75,000. Any beneficiary or person the decedent has named a PR can act as the petitioner for summary administration, filling out a form to get the process going.
There is a third type of administration in Florida, but it is not common, nor is it widely applicable. This administration is known as a “Disposition of Personal Property without Administration.” The DPPA releases the assets of the deceased to the individual who paid the deceased’s final medical bills and/or for the deceased’s funeral. Again, the circumstances in which a DPAA applies are very limited.
What Counts as Probate Assets?
The most common types of probate assets include bank or investment accounts owned solely by the decedent (meaning that there are no other names on the account[s]) and life insurance policies, individual retirement accounts, or annuity contracts that are payable to the decedents estate. Real estate that has been titled in the decedent’s name also counts as probate assets. This list isn’t exhaustive, but those three are the most common probate assets the court sees.
Examples of non-probate assets include trust property, beneficiary designations, joint property owned with rights of survivorship or through tenancy in the entirety, and life estate deeds. These items do not require probate court to distribute them.
Why is Probate Necessary?
If the decedent dies intestate (without a will), probate is required to transfer ownership of the decedent’s assets. It is also required to complete the financial affairs of the decedent even after they die. If the procedures are followed correctly, creditors will be paid off during the process, and beneficiaries will be given the assets they are owed.
Overview of the Process
To start, a petition to open proceedings must be followed by the circuit court clerk. Filing occurs in the county where the decedent lived when they died. The court will charge a filing fee. The filing fee varies depending on the county, but you should expect to pay $200-$500.
Every case is different, but the process will usually include establishing the validity of a last will and testament. A valid will in Florida must be in writing, signed by the testator (the name for the person writing the will), and the testator’s signature must be in the presence of two (2) witnesses. Then, the two witnesses have to sign in the testator’s presence, as well as the presence of each other. When the testator dies, the will must be “proven.” You prove a will by presenting evidence to the court that the will was executed properly. Some wills are self-proving, which is allowed under §732.503 of the Florida Statutes.
After the will is proven, letters of administration will appoint a PR. The decedent’s assets will be gathered and listed, and outstanding debts will be paid. After the debts are repaid, the remainder of the assets will be distributed to the heirs at law or beneficiaries, depending on the situation.
Contact an estate planning attorney to learn more about this court-supervised process, including ways around it. There are financial tools at your disposal that allow for the transfer of assets before death, so your family doesn’t have to go through the Florida probate process.
How Will Tax Changes Affect Your Financial Situation?
Everyone’s financial situation is different, so it can be a little difficult to determine exactly how your financial situation will be affected by the tax changes in place for 2021. However, what is important is knowing what these changes are, as there’s a good chance you might end up with more money in your pocket at the end of the day.Changes range from deadline adjustments to increases in income tax brackets and deductions. A lot has changed, and it’s important to be aware of changes to not only maximize your savings, but also reduce mistakes. No one likes to have the IRS contact them about fixing paperwork. As always, you can contact a tax attorney if you need assistance.
Big Changes to Note
COVID has caused some pretty big changes, including this main one: the tax deadline has moved. The IRS extended the federal tax return deadline to May 17, 2021. Another big change revolves around the standard deduction, which increased to $12,400 for singles and $24,800 for couples filing jointly. Income tax brackets have also gotten an increase, thanks to inflation.
Below are some other changes of which to be aware.
Standard Deduction Changes
When you’re doing your taxes, you have the option to take itemized or standard deductions. These deductions lower your taxable income. The former is more of a pain that the latter, but, if itemized deductions save you more money, then the hassle is worth it.
Note that the standard deduction has changed. If you’re single, it has changed from $12,200 to $12,400. Married filing jointly has changed from $24,400 to $24,800. Married filing separately has changed from $12,200 to $12,400, and head of household has changed from $18,350 to $18,650. Other deductions, including charitable, medical, business, EITC, and child tax credit, have seen changes as well.
Changes to Other Deductions
The CARES (Coronavirus Aid, Relief & Economic Security) Act is responsible for many of the changes below.
Charitable
With the CARES Act, you can deduct up to 100% of your AGI (Adjusted Gross Income), in qualified charitable donations if you itemize deductions. If you take the standard, you can write off up to $300 of donations made in cash.
Medical
Medical bills are nothing new, but the pandemic made them even more prominent, as costly COVID-19 hospital visits put many Americans into the red. You can deduct medical expenses over 7.5% of your AGI, if you’re itemizing your deductions. So, if you make $150,000 per year, you can deduct out-of-pocket medical costs above $11,250.
Business
Self-employed workers know that they can claim a lot of deductions on their tax returns, such as home offices and travel expenses. However, if you were working remotely, you are not able to claim this home office tax deduction. It is only reserved for those who are self-employed.
EITC
The Earned Income Tax Credit helps out people earning up to $56,844 during the tax year. 20% of taxpayers don’t file for the EITC, which is crazy, as it can save you a lot of money. Make sure to file for the EITC if you earn up to that $56,844 mark.
Child Tax Credit
Families can claim a tax credit of a maximum of $2,000 per qualified child. The income limits for claiming the credit are $200,000 for singles and $400,000 for married parents. The credit is refundable, which means families can get up to $1,400 for each kid as a refund. The American Rescue Plan will change this number in 2021, increasing the child credit to $3,000-$3,600 depending on how old the kid is.
COVID: What’s Taxable?
Plans like the CARES Act provided a lot of aid for Americans struggling to pay bills. However, which of this aid is taxable, and which is not?
Stimulus Checks
If you received any of the three stimulus checks sent out, you’ll be happy to know that that money is not taxable income. It’s treated the same way as a refundable tax credit. Consider it an advance on your refund.
PPP Loans
Paycheck Protection Program loans are designed to be forgiven, as long as you used them on business expenses. Money from the PPP loans that you used to pay off your expenses can be deducted from AGI. But, make sure you fill out your Small Business Administration loan forgiveness application. Otherwise, you won’t be off the hook to repay the PPP loan.
Unemployment
The first $10,200 of unemployment benefits are tax-free, as long as your household income is under $150,000. This means that you might owe less than you originally thought on your taxes. If you have unemployment benefits of over $10,200, you have to report any excess as taxable income. For example, if you got $11,000 in unemployment benefits, you must declare that $800.
This list isn’t exhaustive, but it does hit on some of the biggest changes for the upcoming tax season. Our recommendation is that you contact a tax attorney or other tax professional to make sure you’re doing your taxes correctly and maximizing your savings.
Stay informed and read more useful facts on our website.
Taking Charge During Stress Awareness Month
April is Stress Awareness Month (ironic, considering that both April Fool’s Day and Tax Day fall during April). Stress can have an enormously negative effect on your body, causing problems ranging from high blood pressure to depression. Financial problems are one of the main causes of stress.
In 2019, before COVID-19, 70% of Americans said that they were in financial trouble. It stands to reason that that number has only increased since the pandemic hit, causing financial hardship for millions of Americans and their families. Financial stress ranges from debt repayment, high costs of living, and lack of emergency savings to overall poor financial health. In this article, we’ll discuss possible ways to reduce financial stress.
What Happens When You Die?
When you die, your assets will be distributed, whether to your creditors or to family and loved ones. If you don’t want your estate to go through the hassle of probate court, considering setting up trusts as a way to avoid that process. Whichever financial vehicle you choose, you should make sure that it is comprehensive, providing both a way to distribute your assets to your loved ones and satisfy debts with creditors.
If you die intestate, which means you have no estate plan, your estate will go to probate court, and a judge will pay off creditors and give your family what is left at the end of the repayment process. Probate likely will add a lot of stress to your family, as the entire ordeal is quite unpleasant. To avoid that potential source of stress, contact an attorney to set up a comprehensive estate plan.
Protecting Your Business from Creditors
No one is immune to a lawsuit, no matter how careful someone thinks they are America is a litigious society, and millions of lawsuits are filed every year. Asset protection for business owners is something that every single business owner, from a huge corporation to a small mom-and-pop shop, needs.
Consider changing the structure of your business to a corporation to protect yourself from personal liability. Assets receivable financing, trusts, and insurance are other ways to safeguard your company against creditors. Insurance is especially vital if you are a doctor, lawyer, or other professional. Check with an attorney to make sure you’re doing as much as you can to protect yourself within your state’s particular laws.
Fixing Tax Issues
A huge source of stress for Americans is running afoul of the IRS. IRS penalties range from fines to imprisonment, and it’s fair to say that the U.S. has a healthy fear of the Internal Revenue Service. However, all is not lost if you owe back taxes or make a mistake.
If you owe back taxes, still make sure that you file your tax return by the deadline. Immediately contact the IRS to discuss payment options. The IRS will respond far better to someone who is reaching out proactively than to someone trying to hide from them. Whatever your issue, call 800-829-1040 to speak with a representative. You will likely find that the IRS is far more flexible than their fearsome reputation. The worst thing you can do is try to ignore or avoid the situation.
Dealing with Ill Family Members
A sick or elderly family member puts a huge strain on family members, especially if that family member is unwilling or unable to take charge of their financing. If you’re in that position, try to convince them to at least set up a power of attorney. This power of attorney will oversee financial and/or healthcare decisions if the elderly or ill person is too incapacitated to handle these decisions themselves.
Another important financial document for a sick or elderly family member is a healthcare directive, which will communicate end-of-life wishes to the doctors and nurses in charge of their care. Even if the patient cannot voice their wishes themselves, the healthcare directive will act in their stead.
This list is by no means exhaustive. We all lead different lives, and our sources of financial stress vary from person to person. Hopefully, this article at least covers some of your financial health stressors. As always, you can contact an attorney to learn more about protecting your financial well-being.
Visit our website to find out more, stay informed and reduce stress when you know how to take charge of your financial future.
What You Need to Know About Corporation Formation
Corporate law is a complicated field, and there is a lot to know about this sector of law. If you’re considering forming a corporation, you will definitely need to hire an attorney. It’s not advisable to try to go through the process yourself, as there are so many technicalities. You want to do it correctly the first time to avoid excess hassle and cost.
In this guide, we’ll discuss the benefits (and drawbacks) of forming a corporation. We’ll go through the basic steps of forming a corporation, providing an overview of what the process will look like. It might seem confusing, but corporate formation could have excellent advantages for your business.
Benefits to Forming a Corporation
The main reason that people form corporations is to limit their liability. If you own a sole proprietorship or a partnership, you (and your partner[s]) are on the hook for the business’ debts and liabilities. In many cases, creditors will go after your personal assets when collecting on business debts.
Personal asset attacks are almost always not an option for creditors if you have a corporation. Advantages include personal liability protection, easier access to capital, and business security and continuity.
Drawbacks to Forming a Corporation
As with anything, there are drawbacks, even in the face of the aforementioned benefits. Disadvantages to corporate formation include how time consuming the process is. There are also rigid formalities and protocols to follow, and corporations are subject to what’s known as “double taxation.”
“Double taxation” occurs when the corporation’s profits are taxed, and then the profits are taxed to the shareholders after being distributed as dividends. There is no tax deduction when distributing dividends to shareholders, nor can shareholder deduct any of the corporation’s losses from their taxable income.
The IRS Definition
The Internal Revenue Service describes corporate formation as a process by which prospective shareholders exchange property or money (or both) in exchange for capital stock in a corporation. The corporation takes the same deductions as a sole proprietorship when calculating its taxable income, but it can also take special deductions.
Corporate Formation: A Step-by-Step
Though by no means exhaustive, and every single step has sub-steps of which to be aware, this step-by-step corporate formation guide is an overview of the process, giving you some idea of what to expect. In general, you will have to follow the steps below.
First, you should hire a transactional lawyer. This lawyer will walk you through the process of forming a company. Laws vary by state, and they are always changing, so hiring an experienced attorney will get your formation process off to a great start.
Second, you must appoint a registered against. This individual can be a person or a company—called a registered corporate agent—and he, she, or it will accept the service of process on behalf of the corporation. If your corporation is party to a lawsuit, the agent will get the mail. The agent should file the articles of incorporation. After these articles are filed, you can move on to the next step.
Third, you must create the corporation’s bylaws and appoint the corporation’s directors. The bylaws are rules and regulations your corporation must follow. These laws lay out the responsibility of shareholders, officers, and directors, and ensure there is no confusion or blanks left missing. In some cases, banks might want to see your bylaws before giving you a loan or letting you open a corporate account.
Fourth, it’s time to issue stock. Shareholders are entitled to stock when they contribute cash, property, and/or services to the business. They have an ownership interest. Shares are classified as securities, which usually fall under state and federal law pertaining to them.
Fifth, you should file anything else that’s necessary with your secretary of state. An attorney will help you clean up loose ends and get in documents before the deadline. Annual reports are an example of required documents you must submit in Florida.
Sixth and finally, you should apply for an EIN (employer identification number), which is sort of like a Social Security number for your corporation. You’ll use your EIN when you file corporate taxes and apply for bank accounts. Filing usually takes a month, though you can apply online and get an EIN almost immediately. You should file any other necessary IRS forms at this point, too.
Once again, you should hire an attorney to complete this process. An attorney will also be able to advise you on whether the process is right for your business, considering your industry, financial situation, tax liabilities, and other pertinent information.
Visit WFP’s website to find out more about corporate formation.
Staying Lucky This St. Patrick’s Day
Have you ever wondered where the phrase “Luck of the Irish” comes from? Historians have revealed that the phrase isn’t as old as some may think—it’s not as old as St. Patrick’s Day itself, a holiday first recorded in 1601. “Luck of the Irish” dates back to the 1850s, when gold and silver mining was in its heyday. Some of the most successful, famous miners were Irish or Irish-American. The Irish ability to find gold led to the use of “Luck of the Irish.”
In law, we believe there’s no such thing as luck, only strong preparation and careful planning. Take your luck into your own hands through careful asset protection.
What is Bad Luck?
Obviously, there is no legal definition of “bad luck,” and we doubt attempting to come up with one would hold weight in court. However, there are certainly some negative events that might lead you to feel blighted. We’ll cover ways to prepare for these unlucky times, including death, sickness, and accidents and lawsuits, below.
Death
There’s no way to prevent death, but you might have thought about what will happen to your assets after you die. There might be important things that you own that you want to keep in the family (and out of probate court).
Last Will and Testament
A last will and testament will not get you out of probate court—it still has to pass through the court process—but it is often peoples’ starting point when they think about how to structure their affairs after they die. A last will and testament is a final document arranging your asset division.
In Florida, for a last will and testament to be valid, it must meet several requirements. These include:
(1) The will must be in writing.
(2) The person making the will (known as the testator) must sign it.
(3) The testator’s signature must be at the bottom of the will.
(4) The testator must sign the will while in the presence of two witnesses.
(5) The two witnesses must sign the will in the presence of each other and the testator.
As with anything in law, there are a million sub-rules for each of those five categories, which is why it is important for you to hire an attorney. The attorney will make sure the will is compliant with the law, avoiding any problems in court when it comes time to validate the will.
Trust
A trust is a three-party relationship. You, the donor, transfer assets and/or property into a trust. The trust is controlled by the trustee until you give the trustee permission to hand over the assets to a third party, the beneficiary. The beneficiary is the final person you intend to receive the assets. A trust is a way to avoid probate court.
Sickness
If it’s not death that’s considered the unluckiest of ailments, sickness is certainly a strong contender. And, if you’ve been alive in the past year, you know that sickness is everywhere. More than ever, it’s important to have safeguards set up in the case of illness. Examples of these safeguards include a healthcare directive and power of attorney.
Healthcare Directive
A healthcare directive is a set of instructions for the doctors and nurses taking care of you if you are sick. You might have specific wishes for your care, and you will want to communicate these wishes, no matter how sick you are. A directive lays out these instructions in advance, protecting you even if you’re too incapacitated to tell the doctors and nurses what you want.
Power(s) of Attorney
A power of attorney is a trusted person that you place in charge of your financial and/or healthcare affairs in the event that you’re too sick to take care of yourself. This person will act as your agent, making decisions about your finances and healthcare until you recover.
Accidents and Lawsuits
Lawsuits can be the Grim Reaper for your personal assets. Personal asset protection is a way to place assets out of reach of creditors.
Personal Asset Protection
One common example of personal asset protection is the creation of an irrevocable trust. You place your assets into this trust, and they will be shielded from creditors and controlled by a trustee. You will not be able to remove the assets from the trust, but they will be safe from lawsuits and kept for your family.
Umbrella Policies
Another common way to protect your personal assets is to purchase an umbrella policy. This “just in case” insurance policy provides more coverage than your regular auto or home policy in the event of personal injury (for example, if you are in a car accident or someone is injured on your property). Umbrella policies cost extra, but they will give you peace of mind, which is priceless.
As you can see, the way to have the “Luck of the Irish” is to simply be prepared. Bad things happen, and the best offense is a good defense. Contact an attorney for more information on boosting your own “luck” through careful estate planning.
Visit our website to get even more details on how to take cover.