Protecting Your Small Business in 2021

Posted by on May 14, 2021 in Legal News | 0 comments

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.

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Protecting Your Mom This Mother’s Day

Posted by on May 9, 2021 in Legal News |

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. 

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Florida Probate: FAQs and Steps to Take

Posted by on Apr 21, 2021 in Legal News |

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. 

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How Will Tax Changes Affect Your Financial Situation?

Posted by on Apr 14, 2021 in Legal News |

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.

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Taking Charge During Stress Awareness Month

Posted by on Apr 6, 2021 in Legal News |

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. 

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