Thursday, May 31, 2012

Forming an LLC - Choose a Business Structure With Maximum Benefits

You will enjoy many business benefits when you form a limited liability company (LLC). This company model is one that many start-up and growing companies choose. An LLC helps you avoid double taxation issues encountered by corporations. It also protects you from unforeseen complications such as bankruptcy and lawsuits. If you want to form a company that lets you enjoy executive freedom, lesser taxes and legislative protection, then forming an LLC is right for you.

The Basics of a LLC

A limited liability company combines the traits of three other company models - sole proprietorship, partnership, and corporation. It takes the best characteristics of each and puts these together. This allows companies to maintain their small business structure while still enjoying the benefits of being a corporation.

There are no partners or shareholders in this type of company structure. Instead, participants go by the name of members. The members do not need to hold regular shareholder meetings or implement any corporation bylaws. You only have to create operating agreements, but that depends on whether or not your state requires it. This easy and flexible structure makes forming an LLC perfect for small and medium-sized businesses.

How to Form a Limited Liability Company

Location is the first thing you need to establish when forming your own LLC. This is important because states have different regulations regarding the formation and registration process. Make sure you are fine with the laws of a state before selecting to register your company.

Think of a name that complies with state regulations. It has to be unique and it must contain any of the three designators of a limited liability company. These are LLC, L.L.C., and Ltd. Liability Co. Ensure that the name you select does not violate any trademarks. Check with your selected state regarding forbidden words as well. Your chosen state may prohibit words like Bank, City or Insurance.

You can make the registration process easier by finding an LLC registered agent. This is especially useful if you want to register your company in a state different from yours. Your agent will be your representative and contact person throughout the entire registration process. All you need to do is to prepare all articles of organization and disclosure documents the state will require. Your agent will file these; you only have to pay the registration fee afterwards.

Benefits of Forming an LLC

The most obvious benefit of forming a limited liability company is in its name. You receive protection from unexpected circumstances and members only have limited liability. Sole proprietorship and partnership business models entail personal liability in case something like a lawsuit comes up. This leads to bankruptcy. This is not the case with an LLC. Your assets will be separate from the company's assets, and only your company will be answerable for any shortcomings and unexpected events.

You will also avoid double taxation problems. When you form a limited liability company, you can choose whether the government will treat you as a sole proprietorship or as a corporation. The government usually treats LLCs as a sole proprietorship. You can then choose whether the IRS will tax you as a corporate entity or as an individual. This leads to bigger savings and protection of your personal assets.

Article Source:

Wednesday, May 30, 2012

Updating Your Will - There May Be More Reasons to Do So Than You Realize

Your Last Will and Testament is your only chance to decide what happens to your estate assets upon your death. It is the cornerstone of your estate plan -- the document from which all other estate planning tools flow. Once you have taken the time and effort to create your Will, don't make the mistake of failing to update it when necessary. Some reasons that a Will needs to be updated are obvious; however, consider the following, not so obvious, reasons as well when deciding if it's time to take another look at your Will.

Death: People think to update a Will when a parent, spouse or child dies, but the death of the person named as executor or guardian of your minor children can also prompt a review of your Will. The death of a business partner or even an in-law may also warrant a Will update.

Marriage or Divorce: Clearly, your own marriage or divorce calls for a revision of your Will; however, other marriages or divorces may also necessitate a change. The marriage or divorce of a parent, child or guardian, for example, can call for a review of your Will.

Birth: Although it is easy to rely on a generic term, such as "issue", to cover all of your children or grandchildren, it may be preferable to name each beneficiary by name in your Will to avoid any possible future confusion. As such, take the time to update your Will when there is a birth in the family.

Beneficiary Reaches the Age of Majority: Minors cannot inherit directly in your Will. As such, you likely named a trustee for any minor children when you made your Will. If a child has reached the age of majority, you will need to remove the trustee and provide for the direct transfer of those assets to the beneficiary in your Will.

Change in Assets: Although you may have a general provision in your Will for any asset not specifically named, if you acquire an asset worth a significant amount of money, or sell one, you may need to update your Will to address that asset for clarification.

Change in Location: In the confusion of a move, people typically don't think of how residency can affect a Will. State laws, however, can directly impact provisions in your Will, warranting a review and possible revision.

Change in State or Federal Laws: Laws change on a regular basis. Federal tax laws, for example, seem to continuously change. A significant change in either a state or federal law can result in the need to make a corresponding change to your Will.

You Reach the Age of Required Distributions: IRAs and 401(k)s typically require you to start taking distributions around the age of retirement. If you have significant funds in one of these accounts, the required distributions can change your asset structure enough to warrant a Will update.

Change in Guardian: This is a big, yet often forgotten, reason to update your Will. Regardless of the reason why you wish to change the named guardian for your minor children, if you wish to do so you must make it official by revising your Will.

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Tuesday, May 29, 2012

How to Write a Promissory Note

When writing a promissory note, be sure that the date the money is borrowed is prominently indicated. Write a promissory note, identifying the borrower and terms of the loan, with advice from a certified family mediator in this free video on legal self-help

Monday, May 28, 2012

How Does A Promissory Note Work?

A promissory note is a legal document that allows companies and also individuals to get financing from a source other than a bank. Thankfully, here in the U.S. banks don't have a monopoly on lending, you can legally loan some one money with a promissory note. Any one can become a lender.

Promissory notes are debt instruments that are like a legal IOU. Terms are drawn up and agreed upon by both the lender and the recipient. The recipient signs the document and is from there on legally binded to uphold his/her end of the bargain. Money owed from a debtor who refuses to pay can be easily collected in small claims court, or a general civil suit. The terms agreed upon can include things like interest rate, a repayment schedule, and the consequences of default (failure to uphold obligations).

Promissory notes are often times used by companies to create additional corporate credit when they can no longer get additional lending through a bank. Lenders who issue these notes can even turn around and sell them to another buyer. Investors can even have these notes reviewed by the Securities and Exchange Commission to ensure the company is able to repay its debt.

Another popular use for promissory notes is to get a loan for a home when there is no credit or not enough credit available to them from a bank. This is used mainly by people who are self-employed with a widely varying income from month to month. Creditors tend to discriminate against these types of people. If your income has dropped creditors will definitely discriminate against you no matter how much income you've saved. For those who have these conditions then they have no other choice.

When creating a promissory note, it is a good idea to get it notarized so that the obligation is publicly recorded and legal. This will make all the terms and conditions legally binding, and any violation will not be tolerated in court.

Article Source:

Sunday, May 27, 2012

Saturday, May 26, 2012

Overlooking a Health Care Power of Attorney Can Be Costly

A very important estate planning tool that is not given the same attention as a Durable General Power of Attorney is the Health Care Power of Attorney (HCPOA). A HCPOA is a document that gives someone you trust the ability to make your medical decisions for you when you are unable to do so yourself. Once drafted, signed and witnessed, the patient advocate (person appointed) appointed is essentially filling the shoes of the principal (person signing the document) with respect to all health care decisions; thus, physicians are expected to respect and abide by their decisions as if they were being made by the principal individual himself.

Appointing someone to act as your HCPOA plays a significant role for not just the principal, but also for the patient advocate. Without a properly drafted HCPOA, and in the event you have a loved one (e.g. spouse) in the unfortunate situation of being admitted into the hospital, you would have no authority to make medical decisions on your spouse's behalf. The proper procedure would be to file a petition with the court and be appointed as their Guardian/Conservator. This process can be time consuming and even costly.

When drafting your personal HCPOA document there is a particular section that deserves close attention. In the event you are in a persistent vegetative state or an irreversible coma, you will have to select who it is that you want to weigh the burden of your treatment versus the benefit. The three choices are: (1) Allowing your patient advocate to decide whether the burden of treatment outweighs the benefit; and based on that decision, your patient advocate has the authority to stop further treatment; (2) Allow the doctor to reasonably conclude that the burden of treatment outweighs the benefit; and based on the doctor's decision, the doctor will decide whether to stop further treatment; and (3) Allow you to live as long as possible regardless of the burden and cost of treatment.

These are three important choices that need to be carefully addressed. By making such a decision it allows your patient advocate to know beforehand that they are responsible for your medical treatment. Through careful planning and by appointing a trustworthy patient advocate, it can bring significant ease to your personal estate. It is advised to appoint someone who is close to you and who knows your wishes, whether religious or personal, as that person can then make the proper decisions with your specific intent in mind.

Rather than going through the stress of probate, a HCPOA is the simple document that can protect your wishes as the principal and provide your patient advocate with the convenience that they would not otherwise have.

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Friday, May 25, 2012

LLC, Corporation, or Sole Proprietorship?

What type of business is best for you: LLC, corporation, or sole proprietorship? This article takes a closer look at several factors and how they relate to each of these entity types so that you can make the best decision for your situation.
Startup costs
Filing fees always depend on the location, but in general, filing fees are going to be higher for corporations and LLCs than for sole proprietorships.
Sole proprietorships will generally file with the county in which they are located, though in some locations filing is done at the state level (and in just a few locations, at the city level). Filing fees could be as low as $5 or as high as $120, depending on your location.
Corporations and LLCs, on the other hand, could have a filing fee that's anywhere from $30 to $300, depending on location. Nonprofit corporations typically have a reduced filing fee.
Limited liability protection for owners
An LLC (which stands for Limited Liability Company) and a corporation both provide limited liability protection to its owners; if the business defaults on a loan, provided the company has obeyed all local, state, and federal rules and regulations and acted properly, the owners are not financially responsible for the debts or obligations of the business, and those owners' corporate assets cannot be seized by the courts to pay for them.
A sole proprietorship, on the other hand, does not provide this type of protection. There is no legal separation between the business and the person; if the business defaults on a loan, since it is really the sole proprietor him- or herself whose name is on the loan paperwork, it's that individual that is responsible to pay it back.
Tax structure
An sole proprietorship must pay a self-employment tax of 13.3% (reduced in 2010 from 15.3%); a portion of this tax goes toward Social Security, and a lesser portion goes toward Medicare. Only the first $106,800 of your income must pay the Social Security tax.
LLCs and corporations, however, are not required to pay a self-employment tax. Each of these business structures have a decision to make. There are two different tax structures for a corporation: C corporation, and S corporation, and LLCs similarly have tax structure choices to make (though for LLCs, the options depend on whether the business is a multiple- or single-owner LLC).
The tax responsibilities are extremely important to understand, as choosing the wrong organizational structure for your business can negatively impact your bottom line. It's always best to discuss your business choices with an attorney or legal advisor.
What should I do?
At the end of the day, it's important to weigh all of these options carefully before making a decision. It's easy to look superficially at the filing fee involved and go from there, but since this isn't your only true business expense, acting on filing fee alone is only looking at part of the picture.
As with every business decision, it's best to consult with your legal advisor before making any rash decision so that you know you're weighing all of the factors.
Good luck!
Article Source:

Thursday, May 24, 2012

5 Reasons to Have a Power of Attorney

A Power of Attorney is a legal instrument which allows a nominated person to make legal and financial decisions on behalf of someone else. You can imagine the problems that occur with administering the financial affairs of an ageing parent, who suffers from the onset of dementia. They are incapable of making rational decisions and are in danger of losing assets with a simple signature on a document they no longer have the ability to understand.
You can avoid the added problems which can arise as one grows older, especially in cases like dementia, by granting a power of attorney to a trusted family member. It is not just a matter of common sense, it can be vitally important for the peace of mind of the family, and can bring some rationality to an otherwise trying period of life.
But before going any further let's list the major reasons for having a Power of Attorney in the first place.
  • Loss of Mental Capacity. As outlined above, dementia in old age is a common occurrence and one that should be planned for far in advance. Having a Power of Attorney in place can circumvent the problems that arise and safeguard the assets of the affected person. When a family sits down and discusses all the ramifications it is easy to come to an agreement as to how a Power of Attorney can be set up to satisfy everyone's concerns.
  • Ramifications when there is no Power of Attorney. In the event of loss of mental acuity in old age for example, if a person is deemed to be incapable of making rational decisions then control of that person's assets will have to be determined by a court of law. In such cases, where there is no Power of Attorney instrument to rely upon, the court may appoint a government department to administer the person's affairs. This can place hardship on other family members and cause great distress and delays in day to day of management issues.
  • Financial and Legal Matters. A Power of Attorney not only covers the control of financial matters but also any other legal issues that may arise. This can involve the signing of contracts or assigning beneficiaries to a superannuation fund payout or other such matters. A Power of Attorney is a flexible instrument that makes everyday life as easy as it should be.
  • Timing Matters. An enduring Power of Attorney can only be signed, when a person is of sound mind and health. After the onset of a mental disability, a Power of Attorney can no longer be signed, so it is important that you make the decision as early as possible, to avoid these difficulties.
  • Another important benefit is that the power to sign documents can be granted by people of sound mind, when they are unavailable to do so themselves. For example, having someone empowered to sign mortgage documents, whilst you are unavailable overseas.
By granting a Power of Attorney, a person does not lose control over their assets, rather they just ease the process of decision-making in the event of later mental illness or incapacity. The benefits that accrue far outweigh any other concerns and your solicitor will explain everything to you, so that there is no misunderstanding. That way you can live with the peace of mind that comes from knowing your affairs will always be under control.

Article Source:

Wednesday, May 23, 2012

The Probate Process in California - What to Expect!

Probate Process in California?

The probate process in California begins with a legal request or petition that opens the estate and names a PR or personal representative who takes care of the deceased's property. An official Notice for Creditors is published in newspaper and a notice of same is sent to all the involved parties. Creditors are then given a set amount of time to file their claims depending upon the estimated time published in the notice. The PR then clears all the debts and dues remained in the name of deceased person and distribute the remaining estate to his close relative. Finally, the petition for discharge is filed and the estate is closed.

This is the normal process of probate in California. The process involves many smaller steps which had to taken care of during the whole legal process. In many cases when the property balance is more than speculated or has some tax liability to it then a tax consultant or a CPA is to be hired who estimates the overall pricing of the estate.

Below we show you how the legal procedure of Probate in California runs:

Probate - First Phase
- Original Will and Codicils are filed
- Legal Notice of Petition is published to the Administer Estate
- Notice of Petition is filed and published in the local newspaper
- Proof of Will and Codicils are filed for further enquiry
- A letter is issued to all interested parties.

Probate - Second Phase
- Application for Employer Identification Number
- Income tax return and other legal taxes are filed
- Opening estate bank account and arrange for tax returns
- A mail with legal notice is sent to debtors and claims are cleared
- Approval or refusal of claims are made
- Property is listed for sale
- A petition is filed for Confirmation of Property Sale
- Court hearings are made and any final federal taxes are cleared

Probate Third Phase
- Final petition is filed for distribution
- A notice is sent to heirs and beneficiaries
- Proof of mail is filed with court
- Final order of petition is filed
- Transfer of assets and properties is cleared

If in case there are any living spouse or relatives of the deceased the property is distributed in a legal way among them without giving benefit to a single person. The California state law has the rules according to which the reaming estate is distributed. The court has the final verdict on the sale or distribution of property. If a bid is overbid by any person during the hearing then the property is transferred to the highest bidder.

This is a simple explanation of probate process in California.

Article Source:

Tuesday, May 22, 2012

LLC vs Corporation: What Entity Is The Right One For You?

Choosing the right entity

You finally decided to form your own legal entity. However, how would you know which one is the best choice for you particular needs?

To make this choice wisely it is important to understand the basic differences between various types of legal entities. This article focuses on comparison between LLC (limited liability company), one of the most popular business entities today, and various forms of corporation, namely C- and S-Corporation.

C-Corporation vs. S-Corporation

All corporations start as C-Corporations and are required to pay income tax on taxable income generated by the corporation. An C-Corporation becomes a S-Corporation by completing and filing federal form 2553 with the IRS.
  1. Taxation: An S-Corporation's net income or loss is "passed-through" to the shareholders and are included in their personal tax returns. Because income is NOT taxed at the corporate level, there is no double taxation as with C corporations.
  2. Difference in income allocation: Subchapter S-Corporations, as they are also called, are restricted to having no more than 100 shareholders, and cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens.
LLC vs. C-Corporation

There are three principle differences between LLC and C-Corporation:
  1. The entities are taxed differently: An LLC is a pass-through tax entity, meaning that the income is not taxed at the company level (however, LLC is still required to complete a tax return). The income or loss as shown on this return is "passed through" the business entity to the individual shareholders or interest holders, and is reported on their individual tax returns. C-Corporation is a separately taxable entity, and pays tax on the income prior to any dividend distributions to shareholders. If and when corporate earnings are distributed to shareholders in the form of dividends, the corporation does not receive the reasonable business expense deduction, and dividend income is taxed as regular income to the shareholders.
  2. The entities differ in their structure: LLCs are less rigid in their structure than corporations, so you have more flexibility in adapting the LLC to your unique business. The Operating Agreement of an LLC can be structured in a limitless amount of ways.
  3. Formality: A corporation is a formal entity with officers and directors (at least one of each) required. An LLC, on the other hand, can be "member managed" and run in a less formal way. For small, start-up businesses, less formality means you can focus on making money rather than administrative work.
LLC vs. C-Corporation

Even though LLC and S-Corporation have a lot in common, those two types of entities differ on the following:

  1. Difference in income allocation: While S-Corporation special tax status eliminates double taxation, it lacks the flexibility of an LLC in allocating income to the owners. An LLC may offer several classes of membership interests, while an S-Corporation may only have one class of stock.
  2. Ownership restrictions: Any number of individuals or entities may own interests in an LLC. However, ownership interest in an S-Corporation is limited to no more than 100 shareholders, and S-Corporations cannot be owned by C-Corporations, other S-Corporations, many trusts, LLCs, partnerships, or non-resident aliens. Also, LLCs are allowed to have subsidiaries without restriction.
Those are just the principle differences between the three most popular entities. However, when choosing to organize a business one should consider other less popular types of legal entities, as those might answer to particular needs of the business. Consider discussing your situation with a licensed attorney or a CPA, familiar with your situation and whatever requirements your state might have for forming various business entities.

Article Source:

Monday, May 21, 2012

About Qualified Domestic Retirement Orders

You may be wondering what qualified domestic retirement orders are. Qualified domestic retirement orders, or QDRO, are domestic relations orders that assign the benefits of someone's retirement plan to an alternate payee. In short, a party other than the party named in the retirement plan gains the financial benefit of that plan. The order is made pursuant to that jurisdiction's marital relations law and may concern alimony, child support, or other issues stemming from a marriage. As a result, the alternate payee may only be a current spouse, former spouse, child, or some other dependent of a participant. If the child is a minor, then the QDRO may need to be paid to that child's parent or legal guardian.

Qualified domestic retirement orders need not necessarily be ordered by a court. If a state agency has been granted the proper authority to issue such an order, it may, as long as that authority has been given by the proper governing local statutes. Ultimately, the final authority on determining what is and is not a QDRO, if such a determination is required, is the United States Department of Labor.

Pursuant to ERISA § 206(d)(3)(C)(i)-(iv) and IRC § 414(p)(2)(A)-(D), in order to be properly executed, there are several provisions that a QDRO is required to have regardless of what else is on it. The first requirement is that the QDRO contain the name and last known mailing address of the participant and each alternate payee. The second requirement is that the qualified domestic retirement order contains the name of each plan to which the order applies. The third requirement is that it have the dollar amount or percentage of the benefit that will be paid out to each alternate payee. Finally, the order needs to spell out the number of payments or the time period to which the order applies.

Just as there are certain requirements that qualified domestic retirement orders are required to have, there are also things that it cannot have under any circumstances. First, the order may not require a plan to provide an alternate payee or participant with any type or form of benefit, or any option, not otherwise provided under the plan. Second, it may not require a plan to provide for increased benefits. Third a qualified domestic retirement order may not require a plan to pay benefits to an alternate payee that are required to be paid to another alternate payee under another order previously determined to be a QDRO. Finally, it may not require a plan to pay benefits to an alternate payee in the form of a qualified joint and survivor annuity for the lives of the alternate payee and his or her subsequent spouse.

Of particular importance to individuals involved in a divorce is that a QDRO may be included as part of a divorce agreement or property settlement, as there is nothing in federal law that would preclude such an act. An order may also be ordered as part of a child support payment obligation.

Article Source:

Sunday, May 20, 2012

Details of Making a Will

If you have any assets, you want to make sure that they are cared for after your death. Leaving beneficiaries that are responsible for taking care of every item that you own ensures your final wishes are met. Making a will that provides details about your final wishes allows all beneficiaries to have a clear understanding of what is supposed to happen with the assets and other components that are left behind with your need.

When you begin making a will, you will need to consider the different pieces to put together the final wishes you have. A will requires you to first list what your assets are and which beneficiaries should receive these assets. You will also need to have a mediator that divides the assets and ensures that all divisions are made correctly. This is continued with what happens with other divisions of responsibilities while combining legalities to help with the wishes of the individual which is deceased.

The legalities that are associated with the paper work you include not only are inclusive of the wishes you have after you have deceased. There are other speculations which are included from the lawyer and witnesses that are responsible for your will. You want to make sure you understand the legalities behind inheriting assets and giving these to beneficiaries. This is inclusive of concepts such as inheritance tax. This is a death duty which taxes those who own the assets but have passed away.

The inheritance tax ties into the other aspects of the will to make sure that everything is clarified before your death. The amount of tax combined with the assets needs to be defined by those who are beneficiaries to your assets. This needs to be clarified with the approach you take to the final will and testament that you take. You can further this by clarifying the death duty to the beneficiaries while making sure there is clarity with the assets and legal attachments that bind individuals to the inheritance.

Preparing for your death is important at any age, specifically to avoid confusion with your final wishes. Making sure you have the right approach to the inheritance you are leaving behind can help to avoid disputes and future problems. Combining the right legalities with the basic outline for your testament allows you to get the right approach to creating your final wishes while making sure all beneficiaries understand the expectations and legalities associated with this.

Article Source:

Saturday, May 19, 2012

Incorporation 101: What Is C-Corporation?

What Is a Corporation?

Corporation is a legal form of organization of persons and material resources, chartered by the state, for the purpose of conducting business. Corporation is owned by shareholders, the Board of Directors governs the business, and elected officers manage the day-to-day activities. Corporation must adhere to corporate tax laws and file corporate taxes regularly.

A Corporation, also referred to as Standard Corporation, C-Corporation, or Regular Corporation, may have an unlimited number of shareholders, including foreign citizens, may be public (when shares are offered for sale to the public) or privately held (when shares are not sold to the public). Usually shares of the corporation are held by the founders, board members and private investors, such as venture capitalists, who may or may not sit on the board of directors.

C-Corporation is the most common type of incorporation. C-Corporation is considered to be a for-profit, state-incorporated business. Registration is done with state authorities and must abide by corporate laws in the state where it is incorporated.

Corporation provides protection to its shareholders from the corporation's liabilities, thus the term "limited liability". However, C-Corporations also have what is called "double taxation" - first the corporation is taxed on its profits, and then shareholders are taxed on the distributions they receive, such as profit sharing payments or dividends. 
To incorporate you will need to register your business name, file a certificate of incorporation or articles of incorporation, and pay a fee. You will also need to draft corporate bylaws and hold a board of director's meeting.

Why Should I Incorporate?

Incorporating is one of the best ways to protect your personal assets while doing business. Most people choose to incorporate solely for this reason, but its not the only advantage of incorporation.

For example, owning a corporation can save you tax money, allows for a greater business flexibility, reduces your chances to be audited, provides tools for better itemization, and makes raising capital less complicated.

Advantages of Incorporating

Limited Liability: A corporation is a legal entity that exists separately from its owners or shareholders. With some exceptions, shareholders are not liable for the debts and obligations of the corporation or from any litigation where the corporation is the defendant. Some form of insurance may still be necessary, but incorporation contributes an added layer of protection (also called "corporate veil").
Tax Savings: Careful planning of your business expenses can result in lower overall tax rates. There are many tax benefits for doing business under incorporation, depending on your business income. Even if your young business becomes quite profitable soon, a corporation is entitled to many deductions otherwise not available to you, resulting in significant tax savings. An example of such tax-deductible expense would be salaries of your employees and yourself.
Reduces Likelihood of IRS Examination (Audit): Non-incorporated businesses, particularly of higher gross income levels, are targets of many IRS Audits. Incorporated businesses have a much lower audit rate, even if they have high income levels.
Anonymity: Depending on the state where you choose to incorporate in, a corporation can be established in such a way that shareholders/owners remain anonymous. Often same level of anonymity can be provided for officers and directors.
Added Credibility: A corporate structure communicates permanence and credibility. Even if its a company with only one stockholder and employee.
Easier Access to Capital Funding: With a corporation it is much easier to attract investors through the sale of stock.
Easier Transfer of Ownership: Ownership of a corporation may be transferred without substantial disruption of operations through the sale of stock. This way the need for complex legal documentation is reduced.
Flexibility of Share Ownership: Owning shares gives you the flexibility needed, among other things, to effectively capitalize your business, or to retain key employees. To further capitalize the business successful C-Corporation can be taken public in a process called Initial Public Offering (IPO). You can also issue stock or stock options to your key employees, "binding" them to the business and thus retaining them (common in hi-tech industry among others).
Longevity: The board carries on the corporation, not the owner. That means that a corporation formation can last longer than an owner-based company such as an LLC.

Main Disadvantages of C-Corp.

C-Corporations have certain disadvantages. The main disadvantage is the fact that the profit of a C-Corporation is taxed to the corporation when earned, and the corporation does not get a tax deduction when it distributes dividends to shareholders. Then when dividends are distributed to the shareholders they are taxed again at the shareholder level. This phenomenon is called "double taxation".

Similarly, when C-Corporation has a loss, its shareholders cannot deduct it from their personal income.

C-Corp. vs. S-Corp. vs. LLC

Other forms of incorporation of business organization include S-Corporation and LLC. Each of those types of entities have certain advantages and disadvantages when compared to the common C-Corporation, but a more detailed comparison between those entities goes beyond the scope of this article.

Article Source:

Friday, May 18, 2012

What Every Homeowner Needs to Know About Quitclaim Deeds

Defined in its most elementary form, a quitclaim deed is a document a home owner uses to pass along legal and financial ownership of their home to another individual. Quitclaim deeds can also be used as a means to remove a homeowner from the title to that home. 
Sometimes - though incorrectly - called "quick claim deeds" or "quit claim deeds", quitclaim deeds possess several key uses, including: 
  • Having a former spouse removed from title after a divorce
  • Adding a new marriage partner to a title
  • Assigning a home to a trust or entity
Whatever your reasons for using a quitclaim deed, you must have the legal right (as a grantor) to assign your home to a another person (the grantee).  Otherwise, your quitclaim deed is not going to be worth the paper it is written on.
Here is an example: 
Say you quitclaim your interest to the Brooklyn Bridge to your best friend.  It is highly unlikely that the quitclaim deed you write will be worth anything, seeing as how it is likely that you likely do not own the Brooklyn Bridge. 
This is where quitclaim deeds are different from warranty deeds (otherwise known as grant deeds), which represent the types of transfers that take place when real estate is sold. 
As always,prior to issuing a quitclaim deed on your own home, consult an estate planning or real estate attorney. Transferring real property can wreak havoc on a will.  It can also trigger taxes.  As such, you may also want to ask your accountant to take a look at the transaction.

Article Source:

Thursday, May 17, 2012

Elderlaw - When Parent Loses Capacity

Long-term planning experts always suggest that you bring legal and financial matters up to your parents or loved ones before any crisis or major illness occurs. Unfortunately, not everything is set in stone for people. Or, they may go about planning for long-term care, but for whatever reason, whether they get busy with life or Mom and Dad don't want to cooperate, they never get around to it. Then, as one would expect, the inevitable happens. Mom falls and needs 24-hour care or Dad develops dementia from Parkinson's. All of a sudden, neither of them can make decisions on their own. You are suddenly faced with paying their mortgage, their nursing care, and other bills, only you do not have any rights. So, what do you do? Your choice is a conservatorship.
What is a Conservatorship?
A conservator is appointed through a court supervised hearing to manage financial or personal affairs for someone who is unable to do so on their own. There are 2 types of conservators: The Conservator of the Estate and the Conservator of the Person.
* The Conservator of the Estate deals with the financial aspects.
* The Conservator of the Person deals with decisions on behalf of the conservatee.
A conservator may or may not be the same person and can be different people. They can be selected by a person before they lose mental capacity and hopefully the person selected is someone well-trusted. The conservatee also has the right to fight a conservatorship in court if they feel they have the capacity to make financial or medical decisions.
An attorney will be appointed by the court, should the conservatee become afflicted with a brain-impairment such as dementia.
Conservatorship without an Attorney
You can obtain information and forms to file a conservatorship through the probate clerk. A court hearing will be scheduled to determine if a conservatorship is granted. The local senior advocacy group in your town or city should be able to help you or your loved one file the appropriate forms.
1. The person affected should be informed if they need a conservatorship.
2. If the person does not understand what a conservatorship is and they have been diagnosed by a physician, the conservatorship should be put into place.
3. Once an investigation is conducted (prior to the appointment) and the proper papers have been filed, the court investigator will determine whether the person affected is suitable for a conservatorship.
The investigator is required to fill out a form stating why a conservatorship is needed and the investigation has to take place in no less than five days prior to the hearing. If the investigator recommends a conservatorship, the judge will probably follow the recommendation.If the individual is diagnosed with dementia, an attorney will represent the conservatee. To ensure this is a proper conservator for the proposed conservatee, all documents filed are reviewed by a probate examiner who posts on the internet, any corrections needed to be made a the probate court website. Any corrections must be filed 3 days prior to the hearing.
Follow-up investigations will continue after the first year has passed, and then every two years thereafter. Once the conservatorship papers have been completed and a capacity form as been signed by a physician, the conservatorship can take up to 2-3 months from filing. If limited paper work has been filled out, or there are many corrections to be made, a conservatorship can take up to 6 months.

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Wednesday, May 16, 2012

Elder Law - Conservatorships

This brief article describes conservatorships in California. In general, a conservatorship is established over an adult, while guardianships apply to minors.

There are generally two kinds of conservatorships: over the person and over the estate. Many times, one conservatorship case includes both types.

To establish a conservatorship over the person, the court must find that the proposed conservatee is substantially unable to provide for their food, clothing and shelter. The petition to create a conservatorship is usually filed by a loved one or family member who recognizes the elder's inability to provide for these personal needs. In Riverside County, California, for example, the petition may be filed by the Public Guardian's Office when no family member or other interested person is available to assist.

A conservatorship over the person should occur only when no reasonable alternatives are available. A future article will discuss such alternatives, but these include informal assistance from loved ones and powers of attorney for health care decision making. Sometimes, an elder unquestionably needs assistance but will not voluntarily agree to accept it. Their deteriorating mental faculties prevent them from recognizing the need and they simply refuse any help.

When the court orders the establishment of a conservatorship over the person, it will appoint a conservator and grant that person the authority to make all necessary decisions to properly provide food, clothing and shelter for the conservatee. Often, these powers will also include the authority to make medical decisions.

To establish a conservatorship over the estate, the court must find that the proposed conservatee is substantially unable to make sound financial decisions or to resist fraud or undue influence. The circumstances necessary to show this condition usually involve an elder who fails to timely pay bills, open the mail, or respond to bank notices. A conservatorship over the estate can also be necessary when a perpetrator manipulates an elder and wrongfully takes money or property.

Alternatives to a conservatorship over the estate must also be explored. If the elder still possesses legal mental capacity, then a financial power of attorney can be created that provides a trustworthy agent the authority to assist with banking needs, bill payment and other financial decisions.

When the court appoints a conservator of the estate, then that person will be granted all powers necessary to marshal the elder's assets, receive income and make disbursements - all in accordance with the reasonable steps required to care for and maintain the elder's estate.

It is not necessary that the conservator live in the same county or state as the conservatee. Logistically, this would be the preferred choice. However, the court recognizes that the conservatee's family members may not live nearby but would still be the best choice to carry out the conservatorship duties on behalf of their loved one.

The court will require certain periodic reports and accountings by the conservator to make sure that all tasks are being performed for the sole benefit of the conservatee. This ensures that the conservator does not take advantage of the elder and allows the court to make recommendations when necessary.

Conservatorships are often a necessary legal procedure to assist those who can no longer sufficiently care for themselves. An elder law attorney can assist to make the process as easy to navigate as possible.

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Tuesday, May 15, 2012

What is a Quitclaim Deed and Who Needs One?

When two parties need to transfer a title on a piece of real estate, the transaction will eventually have to be filed with some government office. That office has no way of knowing that all actions have been completed unless they are presented certain documents.

This document is commonly the Quitclaim Deed. This document essentially shows that the seller no longer has an interest in the property in question.

Sometimes, however, there is not an actual sale of real estate, yet one party must yield their claim in the property to someone else. A common situation where this might occur is divorce. If one party must transfer their claim in property to the other, a quitclaim deed may be required.

Also, often if a trust has been created to control property, a quitclaim deed may be required in the transfer of ownership to the trust.

There are actually three types of these documents which may be used:

1. The quitclaim deed itself can be used if the transfer does not need any other representations. Sales of property "as is" often need only this document.

2. If there is a need to "warrant" that the property is being transferred without any encumbrances other than those which are already a matter of record, you may require a "warrant deed".

3. Sometimes, the buyers feel that it is necessary to assure a seamless transfer of the property to a surviving partner in the event one should die. In this case, a "survivorship deed" may be necessary.

While the quitclaim deed itself can be easily created by most people by using do it yourself legal software, it can be part of a complicated process, as are most real estate transactions. While many people are attempting to sell their homes themselves these days using "for sale by owner" (FSBO) methods, that too can be a complicated and daunting experience.

While you may want to handle the sale of your home yourself, it is best to be honest with yourself as to your abilities to handle it all, even with the help of do it yourself legal kits. Once you have made an honest evaluation, you may find that the best course of action is to simply hire an attorney who is experienced in real estate transactions.

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By The People, Fairfield CA does over 80 different legal forms to help you get what you need done effectively and efficiently. Give us a call at 707-428-9871. Let us know how we can help you. If it isn't something that we do, we certainly know places to direct to you.

Monday, May 14, 2012

Contested Divorces Vs Uncontested Divorces

Divorce proceedings are linked inexorably in the public imagination with bitter, vitriolic court battles over ownership of the house, custody of the children and alimony payments. However, despite this image's pervasiveness of this image, it is largely untrue for modern divorces. While many contested divorces can end in acrimonious court battles, this form of divorce makes up only 5% of modern divorces. Uncontested settlements - in which the couples come up with their own agreement without the courts - make up the other 95%.
If you're considering ending your marriage, it can be beneficial to understand the differences between contested and uncontested divorces. Knowing what separates the two and the realities you face when you file for divorce can be crucially important.
Uncontested Divorce
An uncontested divorce is one in which the courts never have to get involved, because the spouses are able to come to an agreement themselves concerning:
· Division of property
· Child custody arrangements
· The amount to be paid in spousal support (alimony)
· The amount to be paid for child support
The divorcing couple then presents the agreement to a judge. If the judge believes that the arrangements are fair and equitable, and have been signed and agreed to freely and without duress, then the divorce is finalized. While lawyers technically aren't necessary, it may be a good idea for both spouses to be represented by attorneys, who can ensure that everything is done legally and in both people's best interests.
Contested Divorce
A contested divorce is one in which the spouses are unable to come to an agreement on their own, and need the courts to intervene to come to a decision. These divorces can be difficult in a different way than uncontested divorces: while it may be difficult to work out an agreement with your soon-to-be ex-spouse, it may be even more difficult to go through the process of battling them in court.
If you can't work out your differences with your spouse, expect to go through the court battles that go along with a contested divorce. It is often a good idea to engage the services of an experienced divorce attorney, as the process may get acrimonious.

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Sunday, May 13, 2012

Which Is Best, A Will Or A Living Trust?

You don't have to be wealthy to need a will in regards to your personal property. After you're gone, legal wrangling can become time consuming for family members left behind and often creates indecision and fighting amongst potential beneficiaries as your wishes may not be clear. A will is usually straightforward and simply put is a legal document that specifies how your property will be dispersed at the time of your death. It can be revoked or amended at any point in your lifetime, and can be used to appoint a guardian for any children that are not yet of legal age.

Another option to be considered is a living trust. A living trust handles property management of all assets and all of these assets are transferred to the trust. Typically, you will act as your own trustee while specifying who will act as trustee upon your death. A living trust has the added benefit of avoiding probate after you die and preventing public disclosure of all your private financial matters. A living trust does have some drawbacks. It must be maintained and any new property acquired must be transferred to the trust or it will not be under the protection of the trust. A living trust is also more expensive to initiate and must be managed. Generally a living trust is recommended if your estate exceeds a specific dollar amount, you have minor children, you're willing to manage the trust, and if you want control of when your beneficiaries receive any assets.

A simple will might be a better option if there is informal probate available where you live. Informal probate is a greatly expedited form of probate and is generally available to those whose estate is under a certain dollar amount. If you are single without children, and you don't own a business, it probably isn't necessary to set up a living trust and a simple will is sufficient. Upon your death, the executor of your estate will submit your will along with a petition to the probate court. The petition requests that the will be accepted as legal and valid and request that the executor named in the will be legally appointed. Any heirs, beneficiaries, or creditors must be notified of the submission of the will and have a specific amount of time to challenge it or submit claims against the estate.

This process does not apply to living trusts, which is why many people opt for a living trust versus a will. Each person's situation is unique and should be evaluated by an attorney who is familiar with estate law. Talk to your family and determine who will handle your affairs after your death. With everyone understanding who will handle which aspects of the estate and what to expect, the loss of a family member is a less stressful one.

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Saturday, May 12, 2012

Six Ways To Avoid Probate - Save Time, Money And Headaches

Many people are worried about probate. What exactly is probate? How can I avoid the headaches, time delays and estate shrinkage that it causes? If you have ever asked any of these questions or heard your parents or friends ask them, here is a simple plan to follow.
What Is Probate? It is the formal process of proving someones Last Will and Testament. It entails filing with the county surrogate court office, appointing an executor to administer the terms of the Will and proving that the Will was properly executed if necessary. In some states there is a mandatory minimum waiting period during which the executor pays final expenses, contacts potential beneficiaries and creditors, then begins organizing the deceased's assets for distribution and/or liquidation. All these actions can cost your beneficiaries money and this is where the estate shrinkage comes into play.
How Can I Avoid Probate? The easiest way to bypass the probate process is to take steps in advance that will contractually establish a distribution plan upon death of the owner. This can take on many forms, but if an asset is left to be distributed by the Will, it will be exposed to probate. (Note: If a deceased person's estate is required to file an inheritance or estate tax return, some or all of the assets below may be included in that filing.)
Six Ways To Avoid Probate:
1. Joint Accounts With Rights Of Survivorship: Owning your accounts with someone else as a joint tenant is the first and easiest way to potentially bypass the probate process. If one tenant passes away, the other is automatically the new and sole owner of the asset. No administration is needed to pass this account on, but a problem will arise if both joint owners pass away simultaneously. Number 2 can take care of this situation.
2. Designated Beneficiary Plans: The next way to avoid probate is to use a Designated Beneficiary plan on any brokerage or bank accounts that you have. If they are already joint accounts, that is even better as the joint tenancy will take precedence over the beneficiary designation, but both will bypass probate.
3. Payable On Death Plans: If a designated beneficiary plan is not available, a payable on death plan may be offered as an alternative. It is basically the same type of instrument, but some credit unions, banks and other financial institutions prefer this option. If you have an account in question, ask about both.
4. IRA And Retirement Plans With Beneficiaries: Most retirement plans allow for a specific, primary and contingent beneficiaries to be designated. These designations are a legal and contractual way to bypass probate and administer your wishes.
5. Life Insurance Proceeds: The proceeds of a life insurance policy can avoid probate if the beneficiary designation is listed as a person, multiple persons or other legal entity. These proceeds will bypass probate if done properly and are usually income tax-free to the beneficiary.
6. Annuity Proceeds: An annuity contract can also bypass if the beneficiary designation is filled out correctly. Annuities are a contract from a life insurance or annuity company that will bypass probate, but some or all of the proceeds may be taxable to the beneficiary depending on how they were established.
Summary: Please note that having a detailed structure on each of the above beneficiary designations is vital to avoiding probate. If you designate a primary or a contingent beneficiary with the following - "As Per Estate", you will force that asset back through your Will and into the probate system. Always place specific names, addresses and percentages (or amounts) on each designation. If you need more room, prepare a notarized attachment to the form that spells it out in detail.

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Friday, May 11, 2012

LLC, Corporation, Partnership: What's the Difference?

Many new businesses start out as sole proprietorships because this is the simplest form of ownership and requires very little paperwork or expense to start up. But for businesses with multiple owners or those needing outside funding, this usually isn't sufficient.
The three most common forms of ownership are Partnerships, Corporations and Limited Liability Companies (LLC's). There are other options, but most businesses use one of these operating forms and each has different treatment of taxes and legal issues for the owners.
This is a relatively easy form of ownership to set up as it only requires an agreement among the partners, which can be verbal or written. In a partnership, the owners manage and control the business and all revenue flows directly through the business to each partner, each of whom are then taxed based on their portion of the income.
The partners are personally liable for debts and any liabilities that result from the operation of the business. When one partner leaves the business, it is dissolved unless there is an agreement in place that allows it to continue.
A business continuation agreement will typically stipulate the terms under which a partner can transfer his or her share of the business for some financial consideration. The same agreement should provide for the transfer of a deceased partner's share so the surviving family receives fair compensation from the remaining partners.
Limited Liability Company (LLC)
The creation of an LLC requires an operational agreement and a filing of articles of organization with the state. Similar to partnerships, owners of an LLC control and manage the company. The company files an information tax return which reports each owner's share of the profits, but does not pay taxes directly. The owners report and pay tax on their personal returns based on their ownership share and the profits reported.
A primary difference between a partnership and an LLC is that LLC's can provide limited liability protection for the owners. This helps to insulate the owners from the debts and liabilities of the company. It is becoming a very popular alternative, as it is relatively easy to set up, usually has lower set-up costs than a corporation and avoids issues around dividends and the double taxation of profits that can occur in corporations.
LLC's are governed by the states in which they are formed and this means that the regulations around setting them up may vary from state to state.
Corporations are legal entities that are created by filing articles of incorporation with the state. Corporations provide protection from liability for the owners and do not have any restrictions on who can own shares or the number of shareholders you can have. This is usually the best bet when you have a large number of investors or for a business considering going public somewhere down the road.
There is a lot of confusion around the question of Sub-S corporations vs. C corporations. They are actually the same type of entity - the difference is in the way they are taxed. All corporations are C-corporations unless you file and receive approval from the IRS to be treated as a Sub-S for tax purposes. This is called electing Sub-S status. There are limitations on the number and type of owners you can have for Sub-S status, so not all corporations are eligible to file taxes on a Sub-S basis.
It is possible to switch from C corporation tax status to S-corporation tax status or vice versa, but there are time limitations about when you can and can't do so. A C corporation is a tax entity in and of itself, so it files a tax return and the corporation is taxed based on business profits. An S-Corp is similar to a partnership or LLC in that it files an information return (Form 1120S) and then the taxable income flows directly to the shareholder owners in proportion to their ownership.
In a C-corporation, an effective "double-taxation" can occur when the corporation pays dividends to owners out of profits which have already been taxed and then the shareholder owners pay tax on the dividend income reported to them.
Which Type is Best?
There is no right answer to that. This article summarizes key differences based on taxation and liability limitations, but there are many factors including your type of business, whether you are seeking funding, how many owners are anticipated, etc., that need to go into your decision. You can consult with an attorney and tax advisor to make the decision or use a specialty online service to get more information if you wish to do it yourself.
Ultimately the form of business ownership selected comes down to the owners' level of concern over management control, liability exposure, tax issues and business transfer issues. Because of the tax and legal implications involved, it is important to do the necessary due diligence before selecting an ownership form.

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Thursday, May 10, 2012

A Court Probate Of A Will

Probate is a legal process of solving any claims of property on a valid will. The process involves dividing the property of a deceased person to the beneficiaries. This process underscores the relevant functions of a court by ensuring effective management of the estate of a deceased person. This involves validation of the will by a surrogate court through interpreting the instructions of the deceased. The legal process declares the executor as the personal agent of estates and the interests of parties that have claims against the property. The court must adhere to the following steps in administering any legal administration.

First of all, all the creditors must be notified on the legal process. They should be notified through publication of legal notices by the responsible, legal administration. This ensures that they are fully aware of the whole process and how they are going to recover the debts that they deceased borrowed from them.

A petition should have a personal agent filed in court for effective ruling. This accomplished by obtaining documents of administration that can guide the court in choosing a reliable person in the legal process at hand. That is why a competent person who shared important information with the deceased is the one who is chosen as a personal representative.

Taxes that are involved in running estates, inheritance and gifts should be taken into consideration whenever the estates go beyond certain thresholds. Effective validation and taxation is done on the property before distribution of assets. This ensures that any taxation rates are deducted or added before a court ruling is given on the estate of deceased.

The appointed personal representative has the responsibility to govern the estate before a court ruling. This essentially involves gathering all the assets of the deceased and identifying all the outstanding liabilities. This process ensures that all the debts, remainders and disbursements are made effectively to compliment legal distribution of estates.

The executors must be given effective guidance on how to distribute assets. This entails taking into account the rights of creditors and the process of executing the property at hand to the beneficiaries. This gives the executors and creditors a clear time frame for the process and duration that would be taken to resolve the problem.

Lastly, a clear ruling can be given by the surrogate court when all the above steps are followed before any probate action. This ruling should be substantial to favor the beneficiaries of estates and other property of deceased.

The information you obtain in this article is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

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