Estate Planning/ Wills & Trusts
Much more than just “making a Will or Trust,” Estate Planning is planning for the various stages of your life. Of course, this includes deciding what will happen to your property when you die. But because life is about so much more than your “stuff”, so is Estate Planning.
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Trust Administration
A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death, can control all of your assets, and prevents the court from controlling your assets if you become incapacitated.
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Asset Protection
Asset protection planning can take many forms. In the business context, the form of the business entity can be an effective asset protection device. Effective estate planning can result in asset protection. Last, but not least are state law exemptions which protect certain assets or an amount of equity in those assets. Retirement funds and certain pensions are either already subject to protection from creditors or can be made so. Thus, to the extent that you can legally add funds to your retirement accounts, you are better protected from creditor attacks than if the money were in a bank account.
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Non-Profit & Tax Exempt
Probate Law
Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will. If you don't have a valid will, your assets are distributed according to state law.
Probate is a public process, so any "interested party" can see what you owned, whom you owed, who will receive your assets and when they will receive them. The process "invites" disgruntled heirs to contest your will and can expose your family to unscrupulous people and people that are just plain nosy.
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Probate is a public process, so any "interested party" can see what you owned, whom you owed, who will receive your assets and when they will receive them. The process "invites" disgruntled heirs to contest your will and can expose your family to unscrupulous people and people that are just plain nosy.
For more information click here.
Business Formation
The rule is to always put business activities into an entity with a liability shield. This puts a liability shield between your personal assets and claims arising from those business activities. Below we discuss the three (3) most common entities used.
The Limited Liability Company (“LLC”) is the newest and perhaps most common form of business entity. Unlike the Limited Partnership, which has liability protection for only some of the partners, the Limited Liability Company protects everyone – the members and the managers.
The LLC can be taxed as a partnership, a C Corporation, an S corporation or a disregarded entity (proprietorship). This flexibility and a minimal amount of annual filings required make it the most commonly used entity type.
Another option is a Corporation. Creating a Corporation is like creating an artificial person. Because Corporations are legally separate entities and they also have a much different tax structure. They pay their own separate taxes at a corporate tax rate instead of a personal tax rate.
In addition to the separate tax structure, Corporations have an unlimited life, flexibility in ownership and management structures. These benefits can make corporations an ideal choice for businesses but, with all of the recordkeeping requirements, can require annual paperwork to maintain.
An S-Corporation is subject to the same filing requirements (annual paperwork) as a regular Corporation (also sometimes called a “C-Corporation), however has a pass-through tax status that is similar to a partnership, and reports its earnings on your personal return. This makes life a little bit easier because you can avoid paying taxes at the corporate and personal level. However, S-Corporations have ownership limitations. Non-U.S. citizens and other entities cannot own shares in an S-Corporation and the number of shareholders is limited to 100. Also, all stock must share equally in profits.
Which one is best? It depends on your situation.
The Limited Liability Company (“LLC”) is the newest and perhaps most common form of business entity. Unlike the Limited Partnership, which has liability protection for only some of the partners, the Limited Liability Company protects everyone – the members and the managers.
The LLC can be taxed as a partnership, a C Corporation, an S corporation or a disregarded entity (proprietorship). This flexibility and a minimal amount of annual filings required make it the most commonly used entity type.
Another option is a Corporation. Creating a Corporation is like creating an artificial person. Because Corporations are legally separate entities and they also have a much different tax structure. They pay their own separate taxes at a corporate tax rate instead of a personal tax rate.
In addition to the separate tax structure, Corporations have an unlimited life, flexibility in ownership and management structures. These benefits can make corporations an ideal choice for businesses but, with all of the recordkeeping requirements, can require annual paperwork to maintain.
An S-Corporation is subject to the same filing requirements (annual paperwork) as a regular Corporation (also sometimes called a “C-Corporation), however has a pass-through tax status that is similar to a partnership, and reports its earnings on your personal return. This makes life a little bit easier because you can avoid paying taxes at the corporate and personal level. However, S-Corporations have ownership limitations. Non-U.S. citizens and other entities cannot own shares in an S-Corporation and the number of shareholders is limited to 100. Also, all stock must share equally in profits.
Which one is best? It depends on your situation.
Private Foundation
What Is a Private Foundation? There are three types of private foundations. The most common type is the grant-making foundation. This type of private foundation is primarily funded by one individual or married couple.
Unlike a public charity, a private foundation typically makes donations, called grants, to other charities. It does not conduct its own charitable operations (private operating foundations, not discussed in this article, are an exception). They can also make grants to individuals if they follow IRS rules.
One reason for starting a private foundation is permanence. A foundation can consistently fund a select cause or group of causes and provide cumulative benefits to the recipients over many years of donations. A second reason is to create a legacy. A foundation established in a loved one's name is a way to honor that individual even after he or she has passed away. Tax benefits are another reason for starting a private foundation. When organized as a 501(c)(3), private foundations are tax exempt. They can collect contributions of cash and appreciated property without paying taxes on those contributions, and the contributors can claim their donations as tax deductions (with restrictions).
How to Establish Your Foundation? First, you'll need to define your private foundation's purpose. Next, you'll need to decide whether to structure your foundation as a charitable trust or a nonprofit corporation. Nonprofit corporations are more common than charitable trusts since they limit personal liability and have more flexibility in how they may use their funds. You'll need to apply for an employer identification number (EIN). The next step is to file organizing documents with the IRS. You'll need to fill out Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and prepare all of its required supporting documentation.
Unlike a public charity, a private foundation typically makes donations, called grants, to other charities. It does not conduct its own charitable operations (private operating foundations, not discussed in this article, are an exception). They can also make grants to individuals if they follow IRS rules.
One reason for starting a private foundation is permanence. A foundation can consistently fund a select cause or group of causes and provide cumulative benefits to the recipients over many years of donations. A second reason is to create a legacy. A foundation established in a loved one's name is a way to honor that individual even after he or she has passed away. Tax benefits are another reason for starting a private foundation. When organized as a 501(c)(3), private foundations are tax exempt. They can collect contributions of cash and appreciated property without paying taxes on those contributions, and the contributors can claim their donations as tax deductions (with restrictions).
How to Establish Your Foundation? First, you'll need to define your private foundation's purpose. Next, you'll need to decide whether to structure your foundation as a charitable trust or a nonprofit corporation. Nonprofit corporations are more common than charitable trusts since they limit personal liability and have more flexibility in how they may use their funds. You'll need to apply for an employer identification number (EIN). The next step is to file organizing documents with the IRS. You'll need to fill out Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and prepare all of its required supporting documentation.