Why Partnerships Can Be Beneficial for Your Business

Posted by on Jan 12, 2021 in Legal News |

business planning

There’s no denying that 2020 was been tough on businesses. Nearly everyone’s business sustained some form of loss, and the governmental assistance, though helpful for many, could only do so much. Looking forward to the future, there is a light at the end of the tunnel. This means that it’s time to talk about things that don’t involve mitigating or preparing for disaster. 

Namely, this article will discuss partnerships. This structure might be beneficial for your business, and, if you think a partnership is something that interests you, you should contact an attorney about filing any necessary paperwork. 

What is a Partnership? 

A business partnership shares the business between multiple owners (two or more). The partnership is a formal arrangement by the parties to share the business’ profits and manage and operate the business together. In a partnership business, partners might share in the losses and profits together. Or, they might have limited liability. 

What are the Main Types of Partnerships? 

General 

General partnerships are the most informal arrangement that you can have in Florida. A general partnership means that each partner is personally liable for not only the debts of the business, but also the actions of their fellow partners. In Florida, it is not difficult to start a general partnership. Choose a business name, trade name, draft a partnership agreement and sign it, and then apply for the appropriate licenses, permits, zoning clearances, and EID.

Limited

A limited partnership is similar to a general partnership, though it does have a few distinctive features. For example, a limited partnership must have at least one general partner. This partner must be personally liable for the business’ debts and claims, and the GP must manage the business. Other partners can be “limited” partners, who contribute capital and investments to the business but are not involved in management. If the limited partner is not involved in management, they aren’t liable for debts or claims. 

Limited Liability

A limited liability partnership is often preferred by medical, legal, or accounting practices. These LLPs are distinctive because, though they have the same basic structure and tax advantages as other partnerships, they have liability protection. An LLP partner’s personal assets are protected if there are claims against one of their partners. An LLP partner is not personally responsible for their business partners’ actions. Though assets held in the partnership can be liable for claims or debts, the LLP offers more personal protection to its partners. 

Advantages of a Partnership 

A good partner can bring things that you might lack, including specialized expertise and cash. A partner also allows you to share the capital expenditures and expenses necessary for your business, lessening the financial burden on you. Additionally, a partner can provide access to new business opportunities and inroads with investors or communities to which you alone might not have been connected. 

There are tax advantages to certain types of partnerships. According to the IRS partnership page, a general partnership might not have to pay income tax, as it “passes through” its profits and losses to the partners themselves. Partners might be able to deduct certain business losses from their tax returns. Note: it is important to contact an attorney for more information on what, if any, tax benefits you can get through a partnership. 

Disadvantages of a Partnership 

As with anything, there are drawbacks, even in the face of benefits. A partnership does somewhat involve a loss of autonomy, as you now have to consult with another person about at least some decisions (especially true in a general partnership, where everyone’s involved in management). 

Also, a partnership entails sharing losses. Though LPs and LLPs prevent personal losses, there is still always at least some extent of loss incurred together. In the future, you could also have issues if you want to sell your business and your partner(s) refuse. 

Lastly, there is always the chance of conflict. Though states have some laws about this (in the event of fraud or “insanity,” usually), these regulations are only put into use in extreme situations. Bickering and disagreement could be enough to sink a business, but it likely won’t be actionable in court. Choose your partner wisely.

As you can see, a lot goes into a partnership, and this article serves as only a brief overview. If you’re feeling a little overwhelmed or confused by this information, that’s perfectly normal. Law isn’t easy, but, luckily, lawyers exist. If you want to learn more about partnerships, consider booking a consultation with an attorney to talk about your options and visit our website.

Read More

New Year, Old Habits

Posted by on Jan 5, 2021 in Legal News |

Well, we can finally say (with no small amount of relief) that 2020 is over! The bar is low, which means that all 2021 has to do is be better than 2020—an easy feat. Now that the New Year is starting, everyone is making New Years’ resolutions. Though these resolutions might be as simple as, “Survive,” they are still an important commitment to avoid falling into bad habits. Just making the resolution is the first step.

In this article, we’ll talk about some of the bad habits that often affect the legal aspects of your life, especially your estate plan. Being aware of these habits is the first step to changing them. 

Bad Habits to Watch 

Procrastination

Procrastination is a problem for a lot of people. It might be a small comfort to know that probably over half the population struggles with putting things off that they shouldn’t. In estate planning, procrastination can be really damaging. 

The damage in this field is caused by the fact that you can wait too long to do something. If you procrastinate on picking a power of attorney or setting up a healthcare directive, and you get sick, things will become much more difficult for you than they would have been, had you gotten around to it earlier. 

Here are five tips from Inc.com to beat procrastination: 

1. Start easy. That helps you build momentum, and you’re more likely to finish a job if you get over the beginning hump than if you never start at all. 

2. Break it down. Big tasks get easier when you disassemble them into smaller steps. 

3. Be nice to yourself. Strictness doesn’t always help—what’s done is done, it’s time to move on. Don’t beat yourself up for past procrastination.

4. Know “why.” Is there a particular reason you’re procrastinating this task? Getting an answer to that question might make it easier to finish. 

5. Be mindful. Don’t dwell on perfectionism or fear of failure. Doubt the doubts.

Don’t Ignore Your “Future Self” 

Particularly if you’re currently in good health, it can be easy to ignore a future where you are sick or bedridden. That is not a good idea. As 2020 taught us, you can’t disregard the unexpected by assuming it won’t happen to you. Picking a power of attorney and getting together an estate plan will benefit a “future” you…but that future you might not be so far off as you think.

“Wait and See” Attitude

A good example of this one relates to marriage and divorce. If you have an estate plan and someone marries into your family, you might decide to wait and see if the marriage works before you add them into your asset division. 

While that is a sensible approach, we have a word of caution. “Wait and see” can easily lead to forgetting or procrastinating. Ten or fifteen years down the line, you might forget that you planned to return to the estate plan, and that could leave your new family member in a bind. 

Not Taking Estate Planning Seriously

This habit is commonly seen among younger people. If you’re under fifty, you might view estate planning as something that’s only good for older generations. However, that’s not the case. As we have said earlier in this article, 2020 proved that anything can happen. Betting on your current healthy status is not quite such a sure thing as you may think. It’s best to spend the money necessary to meet with an attorney and get an estate plan together. This is doubly important if you have or are planning to have kids.  

DIY-ing It

Sites that allow you to fill out your own legal paperwork are, arguably, convenient, but are they accurate? The law is filled with little technicalities. On these websites themselves, they acknowledge that, often stating at the bottom (in small print), that they’re “not a substitute” for an actual attorney’s legal advice. 

These main bad habits might not be too hard to break, but, if you’re not aware of them, they definitely will be. In estate planning, these five are all too common. In 2021, let’s leave these back with the rest of 2020.

Want to learn more about planning? Visit our website and get more details. 

Read More

The Light at the End of 2020’s Tunnel

Posted by on Dec 18, 2020 in Legal News |

Well, we’ve almost made it out of 2020. Now what? 2021 brings with it a lot of potential, not only for America to make it out of this pandemic, but also for life to restart. Job opportunities and career changes that have been sidelined can now begin, and any plans that were scrapped on account of the pandemic can possibly be revived. 

2020 has been a big year for all of us, whether positive or negative. It is important, at the beginning of the New Year (if not now), for you to take this opportunity to review and update your estate plan, if necessary. In this article, we’ll give you a brief overview of that reviewing and updating process. 

The General Rule of Thumb

Most people remember to review their estate plan at least semi-regularly. The general rule of thumb is to review your estate plan at least every three to five years, as something big is bound to have happened within that time frame. Also, you should review your plan when you have experienced a major life event, which we will discuss in the next section. 

If you don’t have an updated estate plan, you might find yourself legally unprepared, which could lead to expensive and time-consuming fixes. It’s best to keep ahead of any possible changes, especially after a wild year like 2020.

Major Life Events

Discussed below are some of the most common examples of major life events that could possibly require estate plan changes. 

New Family Members 

To start on a happy note, new family members are always a cause for celebration. If your family has welcomed a new child—adoption or biological, it doesn’t matter—it might be time to update your estate plan to include them in asset distribution. Or, you might want to set up a tax-advantaged 529 savings plan to get a head start on your child’s college. 

Illness & Death

If someone in your family has fallen ill or died, you might need to reflect that in your estate plan, whether that requires you to remove the deceased family member or sign on as power of attorney for another. If you are the one experiencing illness, you will want to get your healthcare in order through the use of legal tools like a healthcare directive, power of attorney, and guardianship papers. 

Marriage and Divorce

Marriage and divorce are two other major life events that should set off an alarm bell in your head that you need to change your estate plan. The most common change that comes from marriage/divorce is adding or removing someone as a beneficiary. 

Everything Else 

Perhaps there have been changes in the circumstances of the estate plan. For example, if the proposed guardian of your kids or the proposed executor of your will has died, you will need to select a new one. If you have purchased a home or had a salary increase, you might also need to change your estate plan. Changes in the law and tax code are also common reasons that people need to change the plans they’ve made. A new career in a different field might lead you to the same conclusion. Only you know what goes on in your life, and it’s important to act quickly after an event has occurred. 

To change your estate plan properly, you’ll need to contact your estate planning attorney. Explain that there have been some changes in your life, and you need to make additions, subtractions, and updates to reflect those changes. It’s advisable that you avoid sites like LegalZoom. Though convenient, these sites don’t have the ability to address all the nuances and quirks of the law. It’s best to get the process done correctly the first time, as that will save you time and money. 

Check out our website for more info on estate planning and how to review your estate plan. 

Read More

True Giving: Caring for the People Already There

Posted by on Dec 13, 2020 in Legal News |

The holiday season is the season of giving, whether you’re handing out gifts or donating your money or time to charity. No matter the holiday you celebrate, the end of the year always gives people time to think about what is most important to them. In some cases, true giving is caring for what you already have, and one way to do that is through a trust. In this article, we’ll discuss how a trust can help you care for the people closest to you.

What is a Trust? 

A trust is a three-party fiduciary relationship. You act as the donor (or grantor), and you transfer an asset (money, property, a valued item, etc.) to the trustee, who holds legal title of said asset. When you transfer the asset to the trustee, you no longer hold legal title. At your direction or upon your death, the trustee will transfer legal title to the beneficiary. The beneficiary is the person that you always intended to possess the asset in the end.

Trusts are beneficial, when compared to wills, because they do not have to pass through probate court. Another benefit of trusts is that there are many, many different types from which to choose. Below are just a few of the main kinds of trusts, as well as a brief definition of each and what they entail.

Revocable

A revocable trust is a type of trust that has provisions which can be altered or canceled should the grantor choose. These trusts usually provide that the property be maintained for the benefit of the grantor. After the grantor dies, the trust functions like a will. These trusts are beneficial because they ensure that your trust is for your own benefit, and it holds true to that purpose even if you are incapable of managing your affairs.  

Irrevocable

By contrast, an irrevocable trust’s terms or provisions cannot be modified, terminated, or amended without the permission of the intended beneficiary. The main downside is the lack of flexibility. If you change your mind, you’re out of luck. One of the main upsides of an irrevocable trust is that it can potentially offer asset protection from possible lawsuits or future creditors. 

Asset Protection

Also called an ATP, an asset protection trust is a type of trust that holds your assets with the intent of shielding them from current or potential creditors. This financial-planning trust vehicle offers very strong protection against lawsuits against you or your estate. ATPs are set up to legally mitigate the effects of things such as bankruptcy, divorce, or taxation. 

Charitable

If there’s a charity that means a lot to you, consider a charitable trust. This trust, which is irrevocable for public policy reasons, are established for charitable purposes. The set of usually-liquid assets are signed over by the donor. They are managed and held by the charity for a predetermined period of time. Usually, some or all of the assets’ produced interest goes to the charity. These charitable trusts are defined in IRS Code §4947(a)(1), though they are not tax-exempt.

Constructive

The constructive trust differs from the other trusts on this list because it is not a trust by the same legal definition. Instead, a constructive trust is an equitable remedy. The court imposes this remedy to benefit a party that might have been wrongfully deprived of its rights. The deprivation may have been caused by a person holding a property right that they stole, or it could have been caused by a breach of fiduciary duty. This trust is worth a mention because it shows that there are equitable remedies in court—a bad trustee does not mean that all hope is lost. 

Requirements in Florida 

Each individual trust has its own requirements in Florida, as in any state. The requirements to create a trust generally include the duty of good faith, which states that a trustee must act in good faith. The trustee must act in accordance with the trust’s terms and purposes and the beneficiaries’ interests. Secondly, a trust must have a lawful purpose that is not only legal, but also not “contrary to public policy.” The trust’s purpose must be possible to achieve as well. § 736.0105 of the Florida Trust Code governs trust requirements. 

The small list we have given you is just the tip of the iceberg when it comes to trusts. Trusts are a way to care for the people who mean the most to you, all while avoiding the court system that could be time-consuming and expensive for everyone involved. This holiday season, remember that, especially in these trying times, true giving means caring for those already around you.

Visit our website and get more details on trust administration

Read More

Short- vs. Long-Term: How to Plan

Posted by on Dec 9, 2020 in Legal News |

When it comes to estate planning, the word “planning” can mean many different things. There are two main categories into which estate planning falls, and that is short-term and the long-term. How you plan for the short-term differs from long-term planning, and, in this article, we’ll discuss the tools and documents behind both. The goals for each also vary.

Short-Term Planning 

The Goals 

Short-term goals include providing for the needs of you and your family in the present and near future. This means looking at what is currently affecting or will soon impact your family and planning the steps necessary to protect your loved ones. 

The Tools

No one “plans” to fall ill suddenly and, unless there are extreme circumstances, the idea of falling suddenly ill is not something that people often worry about. Until now. With the coronavirus pandemic still coursing through the nation, it’s important to have your healthcare in order. This includes a healthcare directive, power of attorney, and guardianship, among other documents. A brief definition of each is given below.

A healthcare directive lays out your specific orders for healthcare providers in the event that you become too sick or incapacitated to tell these providers yourself. This directive can include Do-Not-Resuscitate orders or religious preferences. It is a deeply personal document that requires a lot of thought. 

Your power of attorney is a trusted individual that you select to handle your financial and/or healthcare decisions if you are unable to do so yourself. Talk to your proposed power of attorney to make sure he or she is on board with this role. 

Guardianship papers are necessary for people with minor children. The worst-case scenario for any disease, be it Covid-19 or something else, is death. If you die, make sure that you and your spouse have selected a guardian for your kids who will take care of them on the day-to-day level. 

The End Result 

The end result should be peace of mind. There is a lot going on in the world right now. Health-wise and finance-wise, it has become more and more common for families to struggle or be unsure about their future. Short-term planning will ease some of that burden and prepare you for what will happen in the long-term. 

Long-Term Planning 

The Goals

Long-term planning, both financial and otherwise, concerns the end-game after you have passed away. You will want to leave future generation(s) with financial support, and there are specific long-term tools that you can use to provide that protection. Long-term strategizing can also encompass plans for after you retire.  

The Tools 

There are a lot of estate planning tools that cover the long-term, and the ones defined below are only talked about briefly. These tools include wills, trusts, and insurance. Each topic could have (and has had) entire books written about it, but this is just an overview. Talk to an estate planning attorney to learn more about what each of these can do for you. 

Your last will and testament is your definitive statement on where you want your assets to go after you die. In Florida, there are several requirements for a will to hold up in probate court and be declared “valid.” First, the will must be in writing. It has to be signed by the testator (you) or another person at your direction at the end of the document. At least two witnesses must be presence, each of whom must sign in the presence of you and the other witness. 

A trust is a three-party relationship. You hand over legal title of an asset to a trustee, who keeps the asset in their care for the benefit of a beneficiary. When you tell the trustee to do so (or upon your death), he or she will hand over the property to the beneficiary, relinquishing legal title. Unlike a last will and testament, a trust avoids probate court. 

Thirdly, insurance is vital. Life insurance and business insurance are enormously important. While people are used to the requirement of having car and health insurance, they may not think about life and business insurance, or any of the other types that are out there. Talk with an attorney about adding more insurance-related safeguards to your finances. 

The End Result

The end result will be a life protected at key, long-term points, including death and retirement. Neither death nor retirement are cheap, but neither need to be arduous, if you know how to handle them. 

As you can see, you have many different things to think about when it comes to short-term and long-term financial and estate planning. Your strategies and legal tools will vary for each, and it’s important to contact an estate attorney to set in motion plans to achieve your short- and long-term goals. 

Visit our website to learn more about planning and estate planning

Read More