Essential Elements of Durable Power of Attorney

Durable power of attorney is used to authorize a person to legally make decisions on your behalf about finances and health care. The 'durable' part keeps the powers in place until death; allowing the attorney-in-fact to carry out duties such as paying bills, making deposits, filing tax returns, or obtaining medical records.

Without a durable power of attorney, relatives won't be able to have any input regarding medical or financial decisions. In order to manage affairs they have to go to court to appoint a person as the attorney-in-fact and obtain permission to act on your behalf. Not only is this inconvenient, it adds to existing burdens of coping with the crisis at hand. This can be averted by setting up financial and medical POA forms.

The simplest way to execute these documents is by hiring a lawyer. Other options include utilizing legal service providers like LegalZoom or purchasing do-it-yourself kits via the Internet or office supply stores.

A financial POA is advisable for everyone that has any kind of personal finance matters. This document grants permission to the designated attorney-in-fact to pay bills; make deposits into bank accounts, financial portfolios, and retirement accounts; file tax returns; and engage in specific transactions documented in the POA form.

Medical power of attorney forms let people state what kind of health care procedures they do or do not want to receive if a life-threatening event occurs. Some states require people to execute a living will in lieu of medical POA, so it's best to obtain legal counsel to determine appropriate forms.

Healthcare directives should include a consent form to release medical records to the attorney-in-fact. Confidentiality laws prohibit medical personnel from releasing personal health information to others without proper consent.

For most people, the logical choice for attorney-in-fact is family members. It's important to realize that the person chosen will have access to sensitive financial and medical information, so it's crucial to choose wisely. In lieu of relatives, attorney-in-fact can also be financial planners, attorneys, or a personal friend.

In most situations it is advisable to designate one attorney-in-fact for both financial and medical durable power of attorney. While not mandatory, having one person in charge can be more efficient. If this isn't feasible, it's best to designate two people that are capable of working well together.

Establishing POA is also an important estate planning strategy. One of the most valuable gifts anyone can provide to their family is making certain their affairs are in order. Settling loved ones estate can be a complicated issue if directives aren't provided in a last will and testament.

Writing a Will helps to expedite the probate process which is used in the U.S. to settle decedent estates. Wills are needed to ensure that loved ones receive the inheritance property you want them to have. They also are used to establish guardianship for minor children and appoint a personal representative to manage estate matters.

Both Wills and durable power of attorney forms grant authority to those charged with specific duties and helps make their job easier. For a nominal fee and a few hours of time, these documents provide peace of mind knowing that everything is in order should the unthinkable occur.

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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.

10 LLC Secrets To Protect Your Assets And Financial Future

Most are unaware that a Limited Liability Company may be taxed in four different ways: disregarded, partnership and S or C corporation.

Let me share with you 10 LLC secrets that will not only keep you out of tax trouble but help you better avoid pitfalls down the road.

1. Can an IRA invest in a Limited Liability Company? There are a couple of major issues with this strategy that could create problems with the IRS. First, if you are the manager of the LLC and you are on the LLC checking account that has IRA funds, that means you have "check book control". There are prohibited transactions in where you can not use that money, but more importantly if the signer on the account uses the LLC money for personal use that is a big problem and could create serious IRS issues. The second issue centers around who can be the manager of the Limited Liability Company. Can it be you? Is that self-dealing? That means you are running the same entity that is owned by the IRA and that is an issue with the IRS. It appears that having a separate self directed IRA only to own the real estate may be a better approach. You do want to isolate the safe and risk investments.

2. What are the advantages of a Limited Liability Company over an S corporation? When you capitalize an S corporation, code section 351 allows shareholders to transfer appreciated assets to the corporation taxfree. But, the shareholder who is transferring the asset MUST own 80% of the S corporation.

3. When should an entity convert to an LLC? Many times if you formed a corporation it may be less steps and cheaper to form a new LLC. Many statutes authorize the merger of an LLC with another entity like a partnership or corporation. Some state LLC acts provide that an LLC may NOT merge with another entity unless there is unanimous consent of the members for such merger.

4. What are the consequences if an LLC is "doing business" in a state but is not registered as a foreign LLC? Typically, the entity will need to foreign register where nexus (or a business presence) is located. Even an internet business can make the argument you can be based from anywhere, but if you are working in your home office in California with a Nevada LLC, you have nexus in California. Besides how do you claim a home office deduction when the LLC is not in your state doing business?

5. When do LLC members have limited liability? No member of the Limited Liability Company is personally liable for the LLC's debts and obligations (as opposed to by individual action, such as by personal guarantee or commission of a tort). A member of the LLC has personal liability if a creditor of the LLC has the right to require a member to satisfy a debt of the LLC to the extent that the Limited Liability Company assets are insufficient to satisfy the LLC's debt to the creditor.

6. How will a single member LLC, taxed as a disregarded entity for federal income tax purposes be treated for state tax purposes? Where state laws follow federal laws, a single member LLC would be disregarded for state income tax purposes when disregarded for federal income tax purposes. At least two states have indicated that a single member Limited Liability Company would be taxed as a partnership for state tax purposes, New York and Wisconsin.

7. How much capital must be contributed to an LLC? Except when required by state law, there is no minimum amount that must be contributed to an LLC in exchange for an interest in the LLC.

8. What type of reporting is required if real estate is contributed to an LLC in exchange for a membership interest? According to the Treasury Regulations Section 1.6045-4(b)(1), a transfer of real estate to a partnership must be reported, even though it is tax-free under Code Section 721 (a).

9. When can a Limited Liability Company make distributions to members? LLCs generally can distribute cash or property, whether income or capital, to the members as provided in the Operating Agreement, or otherwise agreed by the members.

10. What is a series Limited Liability Company and what issues does it bring? The series LLC is similar to a corporate controlled group with several operating corporations, but there is only one legal entity. The benefit is that you could put 10 rental properties into one series LLC and provide protection of each property from the other because each is owned by one cell.


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Why Advance Health Care Directives Are Important

Consider this scenario. You are in a hospital with a terminal illness, unconscious, connected to all kinds of medical machines, and has a very poor prognosis. Who will speak on your behalf during this time of illness? Who would tell the doctors, the nurses and your family members what your medical wishes are if ever you get into this terminal condition? Who would let your caregivers know what you would like to happen to you and your body in such a condition like this? Would you like to be kept alive by all means? Or would you rather decide not to be subjected to futile treatments knowing that this is not a dignified living for you? But how would you let everyone know all these wishes now that you are no longer capable of speaking up for yourself?

This is why Advance Health Care Directives (AHCD) are very important. As a clinical counselor working in a hospital for several years now, I have personally worked with families and witnessed them break apart because they could not agree in making medical and end-of-life decisions for the dying loved ones. Their loved ones, who were unable to speak up for themselves, did not have an advance directive. Remember the Terry Schiavo case?

I have witnessed many cases where, because patients did not have an AHCD, families and caregivers are plagued with guilt and have constantly asked themselves if they were making the "right" decision for their loved one or for themselves. Yet, I have also witnessed many cases where, because patients had an AHCD, their families and caregivers felt at peace, in spite of the pain, just because they knew they were honoring their loved one's medical wishes as reflected on their AHCD.

WHAT ARE ADVANCE HEALTH CARE DIRECTIVES (AHCD)?

AHCD are legal documents that enable you to do the following:

1. Appoint or designate a primary and secondary power of attorneys for health care whom you trust to speak on your behalf and honor your medical wishes in an event that you could no longer speak up for yourself.

2. Appoint a primary physician whom you trust to be your doctor or caregiver.

3. Make your end-of-life wishes known.

4. Make your wishes known regarding organ donation.

5. Make your wishes known regarding pain control.

For an AHCD to be legal, it has to be signed by you (the person creating the document) before two witnesses. These witnesses could not be your designated power of attorneys or your immediate family members or your health caregivers where you receive medical care. Close friends or distant relatives could be witnesses. If you cannot find witnesses, the document could be notarized by a notary. The notary can only notarize an advance directive if you have a valid photo ID (e.g. driver license or passport). This process applies particularly in California. Other states may have different processes.

I would also like to mention that a Living Will is a kind of AHCD. Likewise, an AHCD could also be known as "Durable Power of Attorney for Health Care."

WHAT DO YOU DO WITH YOUR ADVANCE HEALTH CARE DIRECTIVE?

Once you created your AHCD, you keep the original and remember to keep it in an accessible place in your home. If possible, make several copies to give to your designated power of attorneys, your primary physician and to your hospital. I strongly encourage people to always bring a copy with them whenever they go to the hospital so that the hospital will not only have a copy of your document but also will know and honor your medical wishes. While creating an AHCD is not mandatory, it is a Federal Law that hospitals have to ask patients during their admission if they have an AHCD.

WHERE CAN YOU GET ADVANCE HEALTH CARE DIRECTIVE FORMS?

Most, if not all, hospitals have AHCD forms. You can always ask your hospital if they have available forms. You can also ask your doctor if he/she has a form. There are many websites now on the Internet that offer AHCD forms. Just do a search on "Advance Health Care Directives."

I believe that your completed (properly witnessed or notarized and signed) AHCD is legally recognized in states other then your own. However, since each state may have its own froms and probably laws on AHCD, the best thing to do is to always bring an extra copy with you when traveling.

WHO CAN FILL OUT AN AHCD?

Many folks think that an Advance Health Care Directive is only for patients who are terminally ill. Not so. Any competent adult, 18 years old and above, can fill out an AHCD. I remember dealing with the family of a 20 year old woman who ended up on a persistent vegetative state (PVS) as a result of a car accident. Her parents ended up divorcing just because they could not agree as to what to do with her in her grave condition. The mother believed that her daughter loved life so much that she would not like to be living in such a terrible medical condition where there is no dignity of life any longer. The father thought otherwise. This sad break-up of a family would have not happened if, even at early age, their daughter had an advance heatlh care directive.

I strongly encourage you to talk to your physician or family members about this difficult yet very important subject. I just hope that this article has been a source of help.

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Easily Misused Estate Planning Terms

Wills and Living Wills
Wills and Living Wills are key parts of any good estate plan. However, though the two sound similar they serve very different purposes. A Living Will states your choices for the kind of medical care you want to receive if you become sick or injured and are unable to talk. A Last Will and Testament, often referred to as just a Will, deals with your property and how you want it distributed if you should die. Therefore, a will is only effective after you die and a living will is only effective before you die and when you incapacitated.

Advance Directive vs Advanced Directive
A Living Will is a type of advance directive. All advance directives are documents a person creates that state what his or her choices are in the event he or she becomes incapacitated or otherwise unable to communicate with other people. Advance directives, such as Living Wills or health care powers of attorney, typically address financial or medical situations and can state specific choices as well as nominate someone else to make decisions on the incapacitated person's behalf.

These documents are referred to as "advance" directives because you make them in advance or in preparation for the possibility that you become incapacitated. Some people mistakenly use the term "advanced" directive, implying that the documents are somehow more complicated or important than others. This is not true, and anyone can make advance directives fairly easily as long as they ensure the documents comply with state law.

Probate Estate vs Trust Estate vs Taxable Estate
An estate is a general term used to describe an area or amount of property. It is sometimes used when referring to assets that are part of the probate estate at someone's death, or assets that are not payable to another person at the owner's death or not part of a trust estate. If an asset is part of a trust estate, then generally the asset will not be part of the probate estate. Further, when considering the taxable estate of an individual for estate tax purposes the IRS will consider the gross estate of the decedent to include the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. If property is part of a trust estate, it may or may not be part of the gross estate for federal estate tax purposes depending on certain facts about the trust.

Medicare vs Medicaid
Medicare is a federal program attached to Social Security. It is available to all U.S. citizens 65 years of age or older and it also covers people with certain disabilities. It is available regardless of income.

Medicaid is a joint federal and state program that helps low-income individuals and families pay for the costs associated with medical and long-term custodial care. Unlike Medicare, Medicaid has strict eligibility requirements.


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Frequently Asked Questions on LLC Formation

A limited liability company or LLC is technically a new concept in the business world. The United States has only acknowledged this in the late 1970s. So it is expected that many people do not know what an LLC is. Here are the common questions that people ask about the company and LLC formation.

What is a limited liability company?

A limited liability company is a hybrid business structure that features the protection of personal assets of a corporation and tax benefits of a partnership. In this way, the company enjoys a lot of benefits.

What are the requirements in LLC formation?

Only one document is required by law to form an LLC, although some states require other documents. The Articles of Organization is the basic document that states the company's information such as business name, address, names of members and their addresses, name and address of registered agent, and the life of the company. There is a filing fee for Articles of Organization and the fee depends on the state where the business will be established.

What is the business structure of an LLC?

During the LLC formation, the structure of the company will be determined by the owners. One feature of the limited liability company is the flexible management structure. It means that the number of owners (called members) is not limited. The company can have a sole owner, partners, or many members as long as their rights and responsibilities are clearly stated in their documents.
The members can also decide on how the company will be managed. The company can also be run by managers instead of members.

Who can be members?

This is a typical question in LLC formation since the company has flexible management structure. In most of the states, the members are the managers by default but the members can also be owners only and not managers especially if they are not knowledgeable on how the business should be managed.
Since there are no restrictions on ownership, members can be individuals, partnerships, corporations or even another LLC. But this should be verified with the LLC filing office if the state allows such ownership.

How are LLCs taxed?

The federal government classifies limited companies in order to determine how the company will be taxed. Since an LLC enjoys the tax benefits of partnerships, double taxation is prevented unlike in corporations. But there are times when the company files for an election for corporation during or after the LLC formation. In this way, the government will treat the company as a corporation just for the federal income tax purposes.

If the LLC is treated as a sole proprietorship or partnership, the taxation is passed-through. This means that the members of the company will declare the profits or losses of the company in their income tax return. In this way, the company is not taxed at a business level but as income of the owners.

What is a registered agent?

A registered agent should be determined during the LLC formation. This is the designated person to receive legal documents especially for the future lawsuit that involves the company. The name of the registered agent together with his or her address should be included in the Articles of Organization.

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Probate - Understanding The Basics

Probate is a legal process that occurs after a person passes away. It involves the transfer of the assets of the deceased to the beneficiaries and creditors. If there is a will and it names an executor, the executor will be responsible for seeing that the terms are carried out throughout the probate process. The executor must identify and inventory the assets and also have them appraised. This process can take anywhere from a few months to a year. The executor may have to sell vehicles, land, securities, artwork or other property to pay any cash bequests - or pay off any debts left by the deceased. The executor could be a relative or an unrelated person. He or she could ask the lawyer who drew up the will for help with the legal necessities of probate. The cost of the lawyer will be paid directly by the estate of the deceased.

If the deceased did not leave a will, or if an executor is not named in the will, then the probate court will frequently assign the responsibility of handling the probate process to a relative; such as the spouse or child, or to the person who inherits the bulk of the assets of the deceased. This person is called the administrator. If a probate proceeding is not required, the court will not appoint an administrator. Instead, the family members and friends of the deceased will choose a person to serve as an informal administrator.

The probate process has several phases. The executor or administrator must prove the validity of the will and deliver it to the local probate court. The will can be validated with a written statement made under oath by the two witnesses to the creation of the will. The executor or administrator must also present the court with information on all of the property and debts of the deceased and the beneficiaries. Then creditors are informed of the death of the deceased. Creditors usually have six months from the notification of the probate to collect any money that is owed to them.

They must recover the money from the estate and not the heirs. The estate tries to settle these debts out of the available assets. If any assets are left, they are distributed to the beneficiaries. If all of the debts cannot be paid off, then the court decides how to use the available assets to pay off the debts. The heirs are not legally obligated to pay off any remaining debts of the estate. If the deceased did not leave a will, the state laws will decide how the available assets are distributed to relatives. The heirs and the beneficiaries are also notified about the probate proceeding. This is the time when objections to the will are usually made. The objections can be due to accusations that the will was drawn up while the deceased was mentally unstable, or that the will is a forgery.

There are situations where probate is not a necessary action. One situation is when the deceased leaves behind very few possessions which can be distributed to beneficiaries without any judiciary supervision. If there is any money account or property that is jointly owned, then the remaining co-owner will get the money account or property by default.



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The Revocable Living Trust - Advantages and Disadvantages

Many people use trusts as estate planning tools, and an especially popular type of trust is the revocable living trust. It's an arrangement that you make, while you're alive, for the management and distribution of your property. This type of trust offers significant advantages, but it also has disadvantages, so it's not right for everyone. Here are some of the pros and cons:

ADVANTAGES:

• AVOIDANCE OF PROBATE: Probate is the legal process under which your estate is administered when you die. It can be a slow and costly process. If you've transferred all of your property to your trustee before your death, all distributions of your property are handled through the trust, so there's no need for probate. This means that the distribution of your assets could potentially be much quicker and smoother.

• AVOIDANCE OF GUARDIANSHIP: If you become incapacitated to the point that you can't take care of your own affairs, and you haven't planned ahead for this situation, your family will need to go through court proceedings to have a guardian appointed for you. If you have a revocable living trust that's properly funded, then your trustee already has the authority to manage your financial affairs for you, and you should be able to avoid having a guardian appointed.

• PRIVACY: If you have a will that needs to be probated, that will is filed in court and becomes a matter of public record. This is not the case with a trust instrument. Under ordinary circumstances, a trust instrument will not need to be filed in court, so what you do with your property remains private.

DISADVANTAGES:

• EXPENSE: There's an initial cost involved in drawing up the trust document, and there are also costs involved in transferring property to the trustee in order to fund the trust. Once the trust is funded, the trustee actually starts performing his or her duties in administering the trust, and that means he or she is entitled to be paid for those services. You should weigh the cost of establishing and maintaining a trust against the benefit you'll get from the trust.

• POTENTIAL INCONVENIENCE: Certain types of property, such as cars and Subchapter S stock, are more difficult to manage if they're held as trust properties. Also, there is additional bookkeeping involved in maintaining a trust. You should check with an estate planning attorney about what issues your particular situation might present.

• NO PROTECTION FROM CREDITORS: Because you can change or end a Revocable Living Trust at any point during your lifetime, the assets in the trust are not protected from creditors. Once you die, the trust property does not go through probate. If you're worried about creditor claims, this can be a disadvantage. Under probate laws, creditors have deadlines for making claims against an estate. If they miss the deadline, they lose the right to collect on the debt forever.

The revocable living trust is not a one-size-fits-all estate planning solution. 

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Ways to Make Probate Easier on Loved Ones

Probate pertains to a legal process which is necessary for authenticating and reconciling decedents' estates. In the U.S. there are two types of estate settlement proceedings. Testate is the process used when decedents' execute a last Will which is presented to the court upon death. Intestate is used when a person dies without leaving a Will.

Neither form of probate is enjoyable, but the process can be less difficult by participating in estate planning. The types of strategies needed depend upon personal circumstances. At bare minimum, every adult should prepare a last will and testament, durable power of attorney, and healthcare proxy.

Wills provide essential details about estate assets. They are also needed to designate an estate agent to take care of settlement proceedings, as well as set up legal guardianship for minors.

Power of attorney forms are needed to authorize a personal agent to perform tasks on your behalf. POA can be used for many reasons, but the most common are to manage personal finances or run business operations.

In essence, any act that requires photo identification and signature probably needs a power of attorney to give permission to another. This could include signing checks, using credit cards, buying or selling titled property, or entering into business contracts.

Healthcare proxy is very important as it provides directives regarding medical care if a person is unable to speak for their self. Also known as medical power of attorney, this document authorizes an agent to make decisions when a person is declared incompetent by a physician.

Not every estate has to endure the probate process. When estates qualify for state exemptions they can avoid the lengthy process as long as a valid Will is recorded through the court. Exemptions are provided when the estate's gross value meets state guidelines. Although these amounts vary by state, it is usually under $50,000.

One of the best ways to entirely avoid probate is by setting up a trust. Essentially, people transfer ownership of property to the trust and assign a Trustee to oversee their estate. Most often, Trustees are the person who sets up the trust. A successor Trustee is named to reconcile the estate upon death.

There are many types of trusts which offer different types of protection. Nearly all can be customized to suit the needs of each individual. A few of the more well-known include family trusts, children's trust funds, and revocable trusts. It's advisable to consult with a lawyer to ensure the right kind of trust is setup and that it is properly funded.

Anyone who has gone through the probate process will likely tell you it takes a substantial amount of time and can become quite expensive. Avoiding probate isn't difficult, but does require people to be proactive in putting together a complete estate planning portfolio.

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Is a Divorce Quick If It Is Uncontested?

The type of divorce that one seeks may ultimately determine how long the process takes. This can be an ugly and frustrating time in a person's life, so getting the process over as quickly as possible is often of the utmost importance to individuals in the state. If it is uncontested, in which the couple is able to agree on all terms of the settlement without either party contesting them, is often the fastest path to take for couples looking to blow through the process as quickly as possible.

Even with this type of divorce, however, legal counsel is often encouraged to ensure that both parties' rights are protected. In some cases, just one party may hire an attorney who handles the case for the couple, but it is important to understand that the attorney is working only for the party that has hired their services. It doesn't make much sense for an attorney to represent both parties involved in a legal case, does it?

For all of its simplicity, however, the uncontested process must last at least six months from the time in which the Respondent, who is served with papers filed by the Petitioning party, is served. The six month waiting period is mandatory in the State of California for all divorces. This may be unpopular among couples who want to get the process over with and done in the quickest manner possible, but the sooner they accept the time-frame the better off they'll be.

During an uncontested divorce, the couple will agree to the terms of their settlement. This includes the division of their property and assets, any spousal support and other matters. If children are involved, the couple must also agree on child support, visitation rights of the non-custodial party as well as child custody. The couple may choose the type of legal custody (joint or sole) as well as the type of physical custody (joint or sole).

The minute that one party contests any of the items in the settlement, the process becomes of the contested variety. When the couple is unable to agree on all terms of the settlement and if even one item is holding up the process, it may last for much longer. Cases which are more complicated have been known to last for years before the process is finalized. That's why uncontested is the preferred method for many couples because yes it is the quickest way to get a divorce.


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The Will's Executor - Carrying Responsibility

If you have been named as an executor of a will, you may be wondering what your responsibilities are. An executor is typically named as such in the will or in another legal document, and is the person responsible for overseeing that the last wishes of the deceased are carried out. This is not an easy task, and it also includes making sure that all of the assets are disposed of properly, paying off the taxes out of the assets, visiting with family and friends who are named as inheritors, and generally taking care of all of the little details that a death necessitates.

If you were named as the wills executor, then this means that the deceased trusted your integrity enough to put the responsibility of their asset's dispersal in your hands. It is a heavy burden at times, but is also an honor. You may need to visit with an attorney to make sure that you follow the legal protocol properly, as things can be very confusing, particularly if there are many beneficiaries or if it was a large estate. You may also need to be prepared to meet with opposition from the inheritors as well, and so you may need additional legal advice.

Often, the will's executor will be responsible for sending the will to probate, which is where the courts will look over the documentation and decide upon the dispersal of property. The executor must stay abreast of the probate, and may have to oversee the sale of property, pay real estate taxes, death taxes or any outstanding debt out of the deceased person's assets. Usually, these taxes will be paused until the assets have been sold and liquidated, and at that time, the debts and taxes are taken out of that sum. Only then can any money be transferred to inheritors.

If there is no will, but an executor has been named, this may make the job much more difficult, as the executor now has to try to guess what the deceased would have wanted. In addition, without a will, the executor has far fewer legal rights and may have more of a burden on their hands when it is time to disperse the assets and property. Even under the best of circumstances, the executor will have quite a task on their hands, but a will can make things much easier for everyone involved. Don't take chances - make a will.


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