Business Incorporation - Why It Is Necessary

When starting a business, the first step should always be to first determine the best ways to protect yourself and your assets from being lost due to unforeseen problems and challenges that could come up when operating a business.

The first and most important step is business incorporation. Business incorporation involves setting up a separate legal entity to be the operator of the business. You can be an owner of the entity and you can also be actively involved as a director, officer and agent of the business. When you incorporate, it is the corporation that is party conducting the business. When you are representing the business, you are acting as an agent or employee. What this does is it creates a layer of protection between you personally and the business activity.

It is business activity that can give rise to liability. Lets say your business enters into a supplier contract and there is a dispute. Or, another example might be if your business has a store and someone slips and falls. Or, say you have a rogue employee who sues the business for wrongful termination. In all these cases, the party that needs to address the dispute is the legal entity business. Without business incorporation, it would be you personally who would be the target of the problems.

And, if in the end of any of these kinds of disputes, you are found liable, then your personal assets are at risk for making good on the liability. On the other hand, if you run your business through a separate legal vehicles such as a corporation or a limited liability company, then it is the company's assets that are at risk- but not your personally.

Because business disputes and challenges are inevitable in almost any entrepreneurial venture, this protection is so important. Furthermore, with the substantial rise of small business lawsuits (a trend that is only continuing), this becomes even more essential for business owners.

Business Incorporation can be handled as an administrative matter with the state agency that processes formations. You can handle it yourself but it is critical that you learn all the specific requirements because an improper incorporation can put your liability at risk. Another option is to hire a lawyer or for a more affordable alternative, you can use a reputable incorporation services provider - just make sure they are experienced.

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Uncontested Divorce - The Basics

If you and your husband or wife have decided that you want to get divorced, you want the legal process of dissolving your marriage to be as simple as possible. If that is the case you will want to know more about uncontested divorces, which have a number of benefits for both of you. Here are some basic ideas and suggestions, as well as information about uncontested divorce that will help you move forward.

First of all you should be aware that an uncontested divorce doesn't necessarily mean you agree on the reasons for the divorce. It is not the same as a 'no fault' divorce. What it means is that you and your 'soon to be ex' have agreed that you want to get through it in a civilised way. It means that you have agreed that the property acquired during the marriage is being divided fairly along with any savings, pensions or debts. You should also both feel that the separation of assets pays attention to the needs of each of you. You may want to get a lawyer to check over the finer points if your finances are complicated but if not, you can get uncontested divorce forms online. If you can negotiate the terms between you it is far less traumatic and much cheaper.

One key point is that you should take your time. You should never rush the process, having an uncontested divorce usually speeds up the process dramatically, even when you take time to negotiate. You can usually sort things out in a few weeks whereas some contested divorces can go on for months with bitter arguments causing upset, especially to any children involved.

There are many advantages to an uncontested divorce, one of which is, undoubtedly, the cost. An 'uncontested divorce' means that both of you agree to all the terms of divorce, which means you don't have to pay for additional court fees or even pay an attorney for the extra time they would have to spend on sorting out the division of y our assets. This can be very helpful if money is tight as you don't have to spend large sums of money going to court. You could perhaps save it towards your living expenses after the divorce or for your children, or some of the larger expenses that you may not foresee when you are first on your own.

If you do decide to opt for a lawyer, you need to remember that your family lawyer cannot act for both of you, even if the divorce is uncontested and fairly amicable. One of the things you should decide early on is which of you will use the family lawyer, unless you both decide to go elsewhere or to do it yourself. Your lawyer will meet with you to sort out all the documents that are involved in getting a divorce. You will the opportunity to see what is in the documents before they go to your spouse and then to the court. The more you can sort out beforehand, the better it will be. There may be times when both of you will have to meet with your respective lawyers to go over the terms of your divorce, even if you have agreed the terms if there are complicated matters to sort out.

The key thing is to keep open the lines of communication so that your divorce can be as simple as possible.

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Will: Does My Will Need A Power Of Attorney?

No, a Will and a Power of Attorney are completely separate and do different things. When creating your Will you will also find that there is no section appropriate for listing a Power of Attorney to carry out your wishes. Instead, you will appoint an Executor to carry out the requirements and wishes under your Will.

On the other hand, a Power of Attorney appoints someone you nominate to take care of such things as some of the financial decisions on your behalf when you are unwilling, unable or just wanting some assistance to manage your affairs. A Will organises your personal affairs after your death. Your Will and any directives or provisions in your Will do not come into effect while you are alive. Any Power of Attorney ceases to exist upon your death so that any directive provided under it will be redundant and it becomes ineffectual after you pass away. Only one document can be in effect at one time depending on your personal state.

Both documents do generally have a similar effect, one operating while you are alive and one operating after your death. It is important to remember that although they seem to have the same function, what is stated in one does not have any effect on the other.

Your Will appoints an Executor who will take an appointed role after you pass away whilst the person you appoint in your Power of Attorney takes on the role and activities you have given them the power to do while you are alive.

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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.

Procedures
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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3 Reasons Why You Should File An Uncontested Divorce

Divorce is one of the most difficult situations that any individual can go through in their lifetime. The situation can actually become significantly more difficult in the event that there are children involved. However, it is a common misconception that all forms of divorce are difficult and only can be handled by engaging a fierce legal battle. Many times if the parties to divorce can agree on several major points they can actually file what is known as an Uncontested Divorce. This sort of legal remedy is not only mutually beneficial but it also is significantly less costly than a standard action that would be filed in the courts. Here are 3 major reasons why you should opt to file an Uncontested Divorce.

1. A significant decrease in costs associated with attorney fees and legal expenses due to the fact that most of the major issues that are typically disputed in the courts are already decided by the parties. It is without a doubt that attorney fees are quite high when it actually comes to cases dealing with a Divorce. As a result, it is always a very good idea to come to terms with the other side in order to taken advantage of an uncontested filing. This will not only speed up the process of the separation but it will also be significantly less expensive had it been a standard disputed case.

2. A very stress free and simple way of dividing the assets of the marital property between the parties. Typically there is a great deal of dispute regarding the splitting of the marital property. There is so much controversy and legal fighting that occurs as to who is really entitled to have a specific asset from the estate. However, when the parties decide as to who is to receive what asset then it makes sense to file an Uncontested Divorce because there will be no need for extra legal expense and headache associated with adjudicating the matter in court.

3. Easy method by which the custody of minor children is divided as well as determination of visitation rights. This is one of the most sensitive topics throughout the whole process because it involves minor children and they can be severely affected by the quarreling of the parents. However, when the matter is solved via an Uncontested Divorce then essentially there is less of a emotional burden on the children.

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Why Everyone Needs at Least a Living Trust

There is one thing we all share in common: our days on this planet will come to an end - probably by surprise. That is about as basic a 'common denominator' as you can possibly get. To protect our loved ones from having to endure years of court procedures and legal fees, the Revocable Living Trust ('RLT') is a widely-used way to avoid the two related court proceedings known as Probate and Conservatorship, and to pass our assets on to one's loved ones with favorable tax planning.

WHAT IS CONSERVATORSHIP?

Conservatorship is court proceeding. It arises when someone cannot manage their financial affairs and it's time to have someone 'step in'. Maybe they've suffered a stroke or are in a coma or some other disabling condition. The court can appoint a 'Conservator' over the person or the estate or both. The conservator's job is to temporarily manage the financial affairs and property of the person they have been appointed for. This is often done by someone who's either a professional (a bank, a CPA, attorney, etc.) but sometimes it might be a family member who has the experience to warrant a court appointment. The conservator is given legal powers by the court that remain in place until the person recovers and is able to regain control over their financial affairs, or until death, whichever occurs first. Many times a person who has undergone a conservatorship proceeding may be placed in a residential treatment facility and the person who has been appointed as their conservator will manage their finances, bills, obligations, contracts, housing and other financial decisions on their behalf.

WHAT IS PROBATE COURT?

Probate is also a legal proceeding. When a person has died with no will the court supervises the estate, ordering property distributed according to the deceased person's instructions, or if there is no will, then according to local state law. An executor or personal representative is appointed by the court and he or she has the responsibility to report back to the court as matters are accomplished. Tax returns are prepared and filed. Bills are paid. Mortgages are satisfied. When the court is satisfied that all of the heirs have been identified, the bills, taxes and debts paid off, the remainder is distributed to the persons entitled under the Will. Dying without a will is dangerous. It can trigger distribution of assets that you do not control and may not have wanted.

LIVING TRUSTS AVOID THESE PROBLEMS.

With a Living Trust in place, you avoid both Probate and Conservatorship proceedings. That's because once you execute the trust and transfer ownership of your checking account, savings account, home and other property into the trust's ownership, the trust is in fact the 'owner' of the property. You of course are both the trustee (administrator) and the beneficiary during your lifetime. Under the trust, you decide who will take over as trustee afterward, and you alone decide who gets what and when. The successor trustees may be your most responsible child, a grandchild, a trusted fiend or relative or even a financial institution such as the trust department of a bank. With the Living Trust in place, you can simply bypass the need for either Probate or Conservatorship altogether.

If you are concerned about someone 'contesting' the trust, there is a way to avoid that problem. One way is to specifically disinherit someone by name so they can't later claim to a judge that you 'forgot them'. Another way is a way that I personally think is better. You leave that person a much smaller amount (say one dollar or five dollars) but no more, and you include a provision in the Living Trust that if any person contests your trust instructions, they are to be treated as if they died before you and are therefore entitled to nothing at all. This is an easy way to avoid having someone try to tie up your estate in litigation and at the same time penalize them completely if they choose to cause you any problems as to how you wanted to distribute your estate.

WHAT SHOULD THE LIVING TRUST OWN?

The Living Trust is a separate 'person' under the law and can own various kinds of property. Typically the kinds of assets that go in to a Living Trust include: your Personal Residence, Personal (not business) bank accounts, credit union accounts, certificates of deposit, brokerage or trading accounts, stock of subchapter 'S' corporations, personal furniture, tools and furnishings, and collections such as art, sculpture or other kinds of collections that may be of value. Basically, anything you want to avoid probate.

TAX PLANNING and THE LIVING TRUST.

There are some good opportunities for tax planning with the Living Trust. Using your Unified Credit, as of 2006 you are able to pass up to $2,000,000 (per person) down to your children. That's the number for single people. Married persons can each pass the same thing, so for a couple that means up to $4,000,000.

AVOIDING MISTAKES.

The most common mistake made with a Living Trust is the failure to properly 'fund' it. That means actually changing the ownership of your personal residence, personal checking accounts, etc. over to the legal name of your Trust. Some will establish a Living Trust, sign the appropriate documents (including the Power of Attorney for Health Care, the Pour-Over Will, Directive on Artificial Life Support, etc.) but never actually change legal ownership of their assets into the Trust.

Funding the trust means that you will record a new deed on your home in the county where the property is located. You'll also visit your bank or credit union and sign new signature cards as the 'trustee' of your Living Trust. If the bank or credit union needs a copy of your trust, remember that it is a private legal arrangement. So instead of allowing them to copy all the private provisions, simply provide them with a photocopy of the 'Abstract' (sometimes called the 'Certification') which sets forth the powers of the trustee and indicates who established the trust, etc.

Your Living Trust can literally save your surviving family members thousands of dollars in legal costs, probate fees, conservatorship fees, and months and months of administrative time. With a Living Trust as the owner, assets may be transferred relatively quickly and with a minimum of involvement by outsiders who might otherwise disrupt your plans for the loved ones you wish to benefit.

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How to Add an LLC Member to a Limited Liability Company

Adding a member to an LLC involves several steps and it is important that any limited liability company business do it properly. Mistakes can be disastrous. The process can vary and be very simple or extremely complex depend on each circumstances. However, here is the general 4 step process:

Step #1: Determine Whether the New Person is Eligible to be Added as an Owner

The good news is that the laws for this kind of legal entity are very lenient when it comes to member admission matters. There are no limitations or conditions when it comes to the residency, citizenship, location, affiliation or any other characteristic for a member. In addition, members don't have to be individuals. They can be corporations, partnerships, trusts and even other limited liability companies.

However, the laws also allow for an LLC business to impose its own set of restrictions, exclusions and processes for member admission. Because of this it is every important that you first consult the operating agreement of the business and review, in detail, the membership related provisions for conditions, limitations and other requirements. Step one is ensuring the specific person qualifies to be admitted in the first place.

If the LLC is being taxed under the S corporation structure, it is also essential that the member admission not cause your S election to be disqualified. Many of the S election requirements are directly related to the number and type of members in a company.

Step #2: Get Member Approvals and Meet All Process Formalities

In most cases, the operating document will require that a certain percentage vote be obtained by the existing members. This is usually done at an owner meeting or by using a standard governance form document called a Written Consent.

You should strictly obtain all voting approvals and meet any other conditions required and, even more importantly, you should document such approvals and actions in written consent documents. File these documents with the other official paperwork of the LLC.

Step #3: Have a Written Membership Issuance Agreement Documenting the Member Admission

This document does not have to be long and complicated if you have a straightforward transaction where a member is admitted in exchange for providing a cash contribution to the LLC. This document is typically called a Membership Issuance Agreement or a Member Subscription Agreement. For most small businesses, it is a simple one page document.

However, if there are other involved deal terms, then your issuance agreement must properly address them legally. One common example is if the ownership of the new member is subject to vesting or to promises in the future. I strongly recommend you use a lawyer to represent you or the LLC in these cases as the potential consequences of improperly addressing additional matters can be significant. I have seen businesses go under as a result of member disputes that could have been easily avoided.

Step #4: Ensure the new LLC Member Agree to the Operating Agreement

The operating agreement is so vital. It not only addresses how the business will be operated but it also defines the rights and obligations of each owner.

When you admit a new member to an LLC, that person needs to sign a written document agreeing to be bound by the operating agreement and all of its provisions. Hopefully your operating document imposes this as a condition to completing a member admission transaction (every one should have this). Regardless, this should be a required step every time.

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Will Vs Living Trust: Which Is Right For Me?

You have worked very hard during your lifetime and it is only natural that you would like to leave a legacy to your loved ones. It would be wise to find a way to retain some control over the assets. No one wants the IRS, creditors or even a divorce to prevent loved ones from enjoying the benefits of your legacy. Even if you are a person of modest means, you have an estate. Your estate consists of all your personal and real property, such as, retirement accounts, a home, jewelry, rare collections, etc. There are many strategies to ensure your property is distributed according to your wishes and in a timely fashion. The most basic methods to transfer a legacy are Wills and Living Trusts but, which is better for you?

So What Is a Will and How Does It Work?

A will is a document that directs the distribution of the property owned by an individual at the time of death. To be effective, a will must be executed according to your state's statutory requirements. Generally, it must be in writing, signed by a person of sound mind and by competent witnesses. It can be revoked or amended at any time during your life but, any change to the will requires that both you and your witnesses sign again. After your death, the executor you have chosen must petition the court to start a probate process. As part of the process, your property must be valued for estate taxes. The probate process can range from six months for a small uncontested will and can last for years if there are delays in the court proceedings. As with any court proceeding, probate becomes part of the public record and is available for anyone to see.

...And What Is a Living Trust and How Does It Work?

In a living trust, the grantor transfers the assets to the trust but can retain the power to manage or revoke the trust. The trust also allows the grantor to decide who will be the successor trustee and the beneficiaries of the trust after death. If you are serving as your own trustee, the trust instrument will provide for a successor upon your death or incapacity. Therefore, upon death the court does not need to intervene and no probate is required. A trust can also be beneficial if you are disabled by accident or illness; the successor trustee can manage the trust property without a lengthy court proceeding. Because court proceedings are not required, the expense, publicity, and inconvenience of court-supervised distribution of your estate can be avoided.

A properly written and funded trust will:

• Avoid probate on your assets;
• Plan for the possibility of your own incapacity;
• Control what happens to your property after your death;
• Prevent your financial affairs from becoming a matter of public record.

Trusts also can include provisions to care for family members with special needs. It may be in the best interest of beneficiaries with special needs to have limited access to their inherited property. With a standard will your property will be passed on to those heirs but a will alone does not allow you to exercise much control over their use of the property.

A trust can also be established in a way that minimizes estate taxes. If the value of your estate exceeds the current estate tax threshold, you may wish to consider setting up a trust with tax planning provisions. An attorney will be able to advise you depending on your specific situation.

So the Bottom Line is...

A will is easy to establish, it requires minimal time and money but may leave your loved ones with a heavy burden due to court proceedings. A trust is more sophisticated than a will and enables you to accomplish much more than a will but do not overlook the fact that it involves more upfront effort and expense. A trust, however, allows you to establish provisions for that allow you to feel peace of mind and know that although you are no longer with your loved ones, they will enjoy your legacy exactly the way you intended them to. When choosing between a will and trust, remember that one size does not fit all. What is right for one person may not be right for everyone. Consult your attorney; your estate plan should be prepared in a way that best meets the needs of you and your family.

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Application For Citizenship

Citizenship is the status given to a legal member of the country. It involves rights, duties and privileges. Naturalization is the process by which a citizen of a foreign country becomes a United States citizen. People want to become citizens for a number of reasons. US citizens have the right to vote in elections, help family members immigrate, work in certain state and government jobs, and lastly they cannot be deported.

An application may be filed by a lawful resident of at least 5 years who has made a home in the U.S. for at least the past 5 years (or 18 months out of the past 3 years if married to and living with a U.S. citizen). Applicants must be at least 18 years old, have good moral character and be able to pass tests on English and U.S. History & Government. As part of the process the customer will be provided with an Eligibility Test to ensure they are eligible to apply.

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.

Tax Advantages of a C Corporation

As you may know, a C-Corporation is what most people generally think of as a corporation. The owners (called shareholders) are not generally liable for the debts of the corporation. The corporation is taxed as a separate entity under the Internal Revenue Code based on specific provisions applicable to C-Corporations, including special C-Corporation graduated tax rates.

The shareholders are again taxed only if the income of the C-Corporation is distributed to them in the form of dividends. This is referred to as the "double C-Corporation tax" and is sometimes the main disadvantage of the C-Corporation as a form of business enterprise for some small businesses. In addition, a C-Corporation is liable for the accumulated earnings tax that is designed to prevent a C-Corporation from avoiding the payment of dividends to shareholders.

The Accumulated Earnings Tax is an additional business tax that is paid by corporations who choose to retain accumulated earnings rather than pay out the earnings in the form of dividends to investors. As a tax on earnings that are to be diverted into settling outstanding debt or investing in some aspect of the company operation, accumulated earnings taxes are calculated in addition to the usual corporate income taxes that I have outlined below. It is important to remember that the amount of accumulated earnings may impact the total amount of income tax due in a given quarter.

The Tax Advantages of a C-Corporation:

1. C-Corporation Graduated Tax Rates: Click on this link to see the graduated tax rates.

NOTE: For any successful business, these tax rates may be significantly lower on income up to $100,000 than the individual tax rates imposed on the shareholder of an S-Corporation or LLC.

2. Fiscal Tax Year: A C-Corporation may adopt any tax year it elects, even if this year is different from the tax year of its shareholders. This allows flexibility with the accrual of income and the payment of owner's salaries and bonuses. An S-Corporation or LLC must generally adopt a calendar tax year.

3. Employee Fringe Benefits: Shareholders of an S-Corporation or members of an LLC who own more than 2% of the corporation's stock are not allowed tax-advantaged fringe benefits available to the employees of a C-Corporation. These benefits include accident and health plans, group-term life insurance, and employer provided meals and lodging.

A Note on Double Tax on C-Corporation Liquidation: If a C-Corporation sells its assets and liquidates, there is generally a tax at both the corporate and shareholder level. When it comes time to sell the company in the future, you can discuss ways to significantly reduce this and or eliminate them completely through proper exit planning.

One way a C corporation can lessen the impact of double taxation is by paying you (the shareholders) who are employed by the firm reasonable salaries and bonuses on a tax-deductible basis. I like to review your corporate and personal tax situation annually to determine an appropriate level of compensation.

I believe that in many instances, the optimum tax and legal solution is achieved by the use of multiple legal entities. For example, combining a C-Corporation operating entity that conducts the active day-to-day business of the company with an S-Corporation (or LLC) leasing and management company to hold the land and fixed assets of the business and is responsible for overall management.

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