October 20

Thirteen Estate Planning Terms You Need to Know

Estate planning—it is an incredibly important tool, not just for the uber wealthy or those thinking about retirement. On the contrary, estate planning is something every adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate on to when you pass away.

While it should be at the top of everyone’s to-do list, it can be an overwhelming topic to dive into. To help you get situated, below are some important terms you should know as you think about your own estate plan.


Assets

Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.

Beneficiary

A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.

Distribution

A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.

Estate

All assets and debts left by an individual at death.

Fiduciary

A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith.

Funding

The process of transferring (re-titling) assets to a living trust. A living trust will only avoid probate at the trustmaker’s death if it is fully funded, meaning it contains all of the decedent’s assets.

Incapacitated/Incompetent

Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.

Inheritance

The assets received from someone who has died.

Living Probate

The court-supervised process of managing the assets of an incapacitated person.  Conservatorship is another term used for this process.

Marital Deduction

A deduction on the federal estate tax return, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.

Settle an Estate

The process of winding down the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to beneficiaries) after someone dies.

Trust

A fiduciary relationship in which one party, known as the trustmaker or settlor, gives another party, known as the trustee, the right to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement, outlining how the trust assets will be distributed to the beneficiary.

Will

A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. A will can also contain the nomination of guardian for minor children.


If you have any additional questions about estate planning, or would like to consult an estate planning professional, please contact our offices. We can make sure you have a comprehensive plan that is tailored to your unique needs and goals.

September 3

Four Things Business Owners Should Know about Trademark Infringement

August 17

It’s Time to Say Goodbye: How to Close Your Business

The decision to close a business is not to be taken lightly. Although most business owners hope that the process of closing their business will be quick and easy, that is often not the case. Business closures involve complex procedures that require time, energy, and organization. Failure to carefully adhere to these procedures could result in additional expenses and extensive problems. As you consider closing your doors, keep the following steps in mind.

  1. Provide notice. Informing other interested parties—creditors, vendors, customers, and employees—about the pending closure is an essential aspect of shutting down your business. You should carefully consider how and when you communicate with each of these parties. Various local and federal laws impose rules regarding notification. For example, in some states, businesses are required to notify creditors of their intent to close by publishing notice in the paper for a specified period of time. Adherence to these mandates can help protect your business if a creditor demands payment. If a creditor has missed a deadline for demanding payment, the creditor will have limited grounds for recovery because you provided notice as required by law.
  1. Review your governing documents. Another critical step is following any requirements for liquidating and closing your business that are outlined in your governing documents. These provisions can help guide the order in which your business distributes the remaining funds after ending business activity. The governing documents may also provide guidance regarding the process for determining the current fair market value of your business. Moreover, reviewing these documents can ensure that in situations where there are multiple owners, the various owners follow the proper procedures.
  1. Complete required state filings. Many states require certain filings with the secretary of state or other governmental entities. For example, in some states, companies that are closing must file a document called a Certificate of Dissolution. In addition, businesses should cancel any licenses and permits that will no longer be necessary. Completing all of these filings will ensure that you avoid unnecessary charges and fees.
  1. Determine your collections strategy. As you close your business, you must determine the best way to collect outstanding balances. Closely related to providing notice, you must implement your collections strategy in a way that does not disincentivize your current clientele from paying any amounts due to your company.
  1. Sell the company’s assets. A critical aspect of closing your business is identifying the assets and inventory that your business owns. Once identified, you must sell these assets or distribute them in alignment with your closing procedures. Before the owners of the business receive any of the funds, you must first use the money recouped from the sales of these assets to pay final creditors.
  1. Pay taxes. The federal and state governments are serious about tax collection. Upon winding up your business, calculate the taxes due and pay them off. Additionally, be sure to indicate on any tax forms that it is your final return.
  1. Distribute remaining funds to owners. Once all creditors, outstanding balances, and taxes have been paid, then and only then should the remaining funds be distributed to the owners of the business.

Call Us Today

As you close down your business, an attorney can help you make the right choices to reduce unnecessary burdens, minimize risks, and successfully turn the next page of your life. They can advise you about the best practices and legal requirements for notifying interested parties, assist with review of documents and filings, and discuss strategies. Call the office today to schedule your free consultation.

July 29

Recordkeeping Requirements for Business Owners during COVID-19

As state leaders attempt to develop guidelines for reopening safely, you may have questions about the requirements for maintaining a safe environment for your business. Specifically, you may be wondering how to document the steps you have taken if someone in your workforce is exposed to COVID-19 and tests positive for the virus.

The Occupational Safety and Health Administration (OSHA) is responsible for establishing and enforcing safe working environments for employees through the use of training, outreach, education, and assistance. On May 19, 2020, OSHA released a revised memorandum on recordkeeping in the midst of the coronavirus pandemic.[1]

OSHA generally requires business owners with more than ten employees to keep records of and report all serious work-related illnesses. OSHA recognizes COVID-19 as a recordable illness. As a result, even smaller businesses may need to report certain work-related COVID-19 illnesses if a work-related COVID-19 illness causes an injury requiring in-patient hospitalization, amputation, loss of sight, or a fatality.  This means that businesses should create and maintain records at the worksite for at least five years in compliance with OSHA standards. As an employer, you are required to record a COVID-19 case in your workplace if it meets the following three criteria:

  • – The employee has a confirmed case of COVID-19.
  • – The employee’s case is work-related.
  • – The illness resulted in death or significant injury and restricted work for the employee.

Note: The mere existence of a work-related COVID-19 case does not establish a violation of OSHA standards in and of itself.

Because of the nature of COVID-19, tracing its origin is challenging, and OSHA acknowledges that fact as it seeks to enforce these regulations. This flexibility in enforcement is not a free pass for employers, however. OSHA expects employers to investigate the origin of the illness without infringing on the employee’s privacy. An investigation is especially important to determine whether the illness is work-related or not. For instance, if an employee has tested positive for the virus, multiple cases of the virus exist in the workplace among employees who work closely together, and alternative options do not explain its occurrence, OSHA guidance permits a finding that the COVID-19 case is work-related.

In enforcing these regulations, OSHA pays close attention to the reasonability of an employer’s origin investigation. In addition to observing trends pertaining to contact between workers who are sick, OSHA advises employers to examine the employee’s work environment for possible exposure to the COVID-19 virus. Moreover, an employer who is aware of an employee’s case may ask where the employee believes the virus was contracted in order to gather more information. In making such inquiries, employers are encouraged to respect their employees’ privacy rights.


Let Us Help You

As this pandemic continues to impact businesses around the world, the legal risks surrounding the decisions you make increase. Do not make uninformed decisions. Our firm is here to keep you apprised of the regulations that most impact your business and how to comply with them to minimize your risk. Call our office today to schedule a virtual meeting with one of our trusted attorneys.


[1] U.S. Dep’t of Labor,  Occupational Safety and Health Admin., Revised Enforcement Guidance for Recording Cases of Coronavirus Disease 2019 (COVID-19), https://www.osha.gov/memos/2020-05-19/revised-enforcement-guidance-recording-cases-coronavirus-disease-2019-covid-19.

July 23

Asset Protection for Entrepreneurs

Going into business for yourself is a risky endeavor. From investing in goods and services and hiring employees to simply carrying out the daily tasks related to your business, each step is fraught with risks. This is especially true given the litigious nature of our society. As a result, many entrepreneurs employ asset protection strategies. Asset protection is a form of strategic planning aimed at minimizing risk and protecting assets from creditors’ claims and litigation.


Careful asset protection can help you retain and sustain the value of the property and accounts you own. As an entrepreneur, here are a few strategies you can use to protect your assets:

  1. Separate your personal assets from your business assets by establishing a limited liability business entity. The default structure for an individual starting a business is the sole proprietorship; the default structure for multiple people starting a business together is a partnership. These entities, though simple to create, do not legally protect the business owners’ personal assets. However, business structures like the limited partnership, limited liability company, and the corporation provide limited liability. This means that the owners of the business are not personally liable for the company’s debts or other liabilities—for example, if a judgment is obtained in a lawsuit against the business. A properly established and maintained limited liability business structure restricts liability to assets belonging only to the business. Creating a separate legal entity is one of the first steps every entrepreneur should take to protect personal assets. Subsequent practices like opening a separate business account, complying with legal requirements such as paying state filing fees, and not commingling personal funds with business funds further establish the legal separation between personal assets and business assets.
  1. Keep multiple business ventures separate. Many entrepreneurs are serial business owners who wear many different hats and run a variety of businesses. In these cases, another way to protect your business assets is to ensure that you keep the assets of each business separate. This requires setting up different legal entities for each of your businesses, ensuring that they incur separate liabilities and debts. Failure to legally separate your diverse endeavors will expose all of your businesses to each business’s creditors if litigation arises and one of your businesses is found liable. As a result, it is important to separate these business interests as soon as possible and to ensure that the documentation, banking, accounting, and record-keeping for each business reflect the separation.
  1. Obtain sufficient business and personal insurance. Problems and accidents are inevitable, and when they occur, having insurance in place helps insulate you and your business from paying for any losses directly. Various types of insurance are available to you as an entrepreneur; the types you should obtain depend on the type of business you conduct and your unique preferences. Once you have obtained insurance, diligently review your insurance policies to ensure that your insurance coverage remains adequate to cover the value of your assets.
  1. Avoid personal guarantees. As an entrepreneur, you may encounter vendors who request personal guarantees. A personal guarantee is an agreement that you will be held personally responsible for the debt your business incurs in the event the business is unable to satisfy it. If you are asked to sign a personal guarantee, consider negotiating a higher payment to the vendor to eliminate the need for the personal guarantee. Despite the short-term discomfort that may be involved in such negotiations, they can provide long-term benefits to business owners.
  1. Transfer some of your assets to a trust. A trust is a legal tool that allows a third party, the trustee, to hold assets for the benefit of another, the beneficiary. There are various types of trusts available to individuals. For business owners, one of the preferred types is an irrevocable trust because the business owner relinquishes ownership and control of the business assets, and therefore, the assets are not subject to the risks of loss associated with a revocable trust. A revocable living trust, on the other hand, does not provide protection to business owners against personal liability for the business’s debts or lawsuits because the business owner, who is typically also the trustee, can change the terms of the trust at any time before death and is still treated as the owner of the property held in the trust. However, a revocable living trust can protect from creditors assets that pass to your spouse and children after your death. Entrepreneurs interested in asset protection should strongly consider setting up an irrevocable trust early in their business development. If a trust is created after litigation arises, the trust may be viewed with suspicion by a court as a tool of liability avoidance.

The protection and preservation of the wealth you create as an entrepreneur does not just happen on its own. It involves strategic planning and intentional execution. Hire an experienced attorney to help you assess how best to reduce your risk and maximize asset protection for yourself and your business.

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