An heir apparent is the heir who is assumed to receive the deceased's property before the will is read. Find out what an heir apparent is from an estate planning and probate lawyer in this free video on estate law.
Tuesday, June 30, 2015
Estate Planning : What Is an Heir Apparent?
An heir apparent is the heir who is assumed to receive the deceased's property before the will is read. Find out what an heir apparent is from an estate planning and probate lawyer in this free video on estate law.
Sunday, June 28, 2015
Estate Planning : How are Trusts Taxed?
In estate law, trusts are taxed differently depending on whether they are revocable or irrevocable trusts. Learn how a trust is taxed from an estate planning and probate lawyer in this free video on estate law.
Saturday, June 27, 2015
Estate Planning : What Is a Durable Power of Attorney?
Durable power of attorney allows the power of attorney to manage funds even in the event of incapacitation. Find out what durable power of attorney is from an estate planning and probate lawyer in this free video on estate law.
Thursday, June 25, 2015
Becoming Incorporated - The Pros and Cons Of Incorporation
So you currently have your own business and you're pondering over
whether or not you should incorporate it, or carry on as a sole trader?
Before you make the incorporation decision, you need to consider all of the advantages and disadvantages that incorporating brings.
This article will set out to explain the benefits and downsides to incorporation, starting with the benefits ...
Benefits of Incorporation:
Personal Liability Protection
An incorporated company is a separate legal entity responsible for its own debts. Shareholders only have responsibility for servicing debts and liabilities up to the value of their equity in the Company.
Creditors of a corporation can only seek payment from the assets of the incorporated business and not from the personal assets of shareholders, directors and officers.
As a small business owner of a non incorporated company, your personal assets are at risk if your business fails to service it's debts.
Personal liability protection is therefore a major benefit of business incorporation.
However, owners forming new corporations with small amounts of invested capital may well be asked to provide personal guarantees that credit will be honoured to reduce the risk of the lender.
Also, owners of incorporated businesses are required to personally ensure that the company makes its required tax repayments.
Protection From Legal Action
As with personal liability protection from debts above, the personal assets of the company's owners is protected by the separate legal entity status in cases where the incorporated company faces legal action.
Note, incorporation does not protect a company's officers from liability and prosecution in cases where the company is found guilty of criminal negligence.
Tax Advantages
Some incorporated businesses can enjoy lower taxation rates following business incorporation compared with partnerships and sole traders. One way of achieving lower taxation is to minimise the salary paid to the owners to reduce higher rates of personal taxation, and draw income from the business in the form of dividends which are taxed at a lower rate.
Obviously professional advice from a qualified taxation expert should be sought in all instances as all personal circumstances are different.
Other taxation benefits of incorporation are that once incorporated, many additional items of expenditure become tax deductible. For example medical expenses, entertainment expenses, vehicle and travel costs, recreational facilities and pension costs all become tax deductible. This can be a significant cash benefit. In particular money placed in an approved pension plan is tax free as is the funds growth.
Raising New Capital
Once you've incorporated your business, the ability to issues shares simplifies the process of raising capital investment. It's also easier to get loans and other finance approved from financial lending institutions if you are an incorporated company.
Transferring Ownership
The existence of shares also simplifies the sale of your business in the future. Also should an owner or director die, the business can continue to operate indefinitely.
Business Credibility
Having the words Inc or Corp in your business name gives a positive perception of long term financial stability.
Disadvantages of Incorporation
Double Taxation
Once incorporated, earnings are subject to double taxation, whereby, company profits are taxed, and then the dividends paid to shareholders from the "net" profits are also taxed.
With a non-incorporated business, the income the owner receives from the business is only taxed once. Double taxation can be avoided if the corporation is registered as an "S-Corporation"
Statutory Compliance Costs
Compliance with legal and accounting requirements places a significant burden on companies in terms of staffing, cost and time. There are also fees associated with the initial company incorporation, and ongoing operations.
Loss of flexibility The separate legal entity status of incorporation also means that the company finances are separate from the individual's, therefore the individual cannot "borrow" money from the accounts of the corporation, and statutory requirements in general reduce the flexibility of what can and can't be done with the business and its finances.
The above are some of the key advantages and disadvantages that you as a business owner need to consider before you begin the process of incorporation. You should always seek legal advice as all cases are different.
Before you make the incorporation decision, you need to consider all of the advantages and disadvantages that incorporating brings.
This article will set out to explain the benefits and downsides to incorporation, starting with the benefits ...
Benefits of Incorporation:
Personal Liability Protection
An incorporated company is a separate legal entity responsible for its own debts. Shareholders only have responsibility for servicing debts and liabilities up to the value of their equity in the Company.
Creditors of a corporation can only seek payment from the assets of the incorporated business and not from the personal assets of shareholders, directors and officers.
As a small business owner of a non incorporated company, your personal assets are at risk if your business fails to service it's debts.
Personal liability protection is therefore a major benefit of business incorporation.
However, owners forming new corporations with small amounts of invested capital may well be asked to provide personal guarantees that credit will be honoured to reduce the risk of the lender.
Also, owners of incorporated businesses are required to personally ensure that the company makes its required tax repayments.
Protection From Legal Action
As with personal liability protection from debts above, the personal assets of the company's owners is protected by the separate legal entity status in cases where the incorporated company faces legal action.
Note, incorporation does not protect a company's officers from liability and prosecution in cases where the company is found guilty of criminal negligence.
Tax Advantages
Some incorporated businesses can enjoy lower taxation rates following business incorporation compared with partnerships and sole traders. One way of achieving lower taxation is to minimise the salary paid to the owners to reduce higher rates of personal taxation, and draw income from the business in the form of dividends which are taxed at a lower rate.
Obviously professional advice from a qualified taxation expert should be sought in all instances as all personal circumstances are different.
Other taxation benefits of incorporation are that once incorporated, many additional items of expenditure become tax deductible. For example medical expenses, entertainment expenses, vehicle and travel costs, recreational facilities and pension costs all become tax deductible. This can be a significant cash benefit. In particular money placed in an approved pension plan is tax free as is the funds growth.
Raising New Capital
Once you've incorporated your business, the ability to issues shares simplifies the process of raising capital investment. It's also easier to get loans and other finance approved from financial lending institutions if you are an incorporated company.
Transferring Ownership
The existence of shares also simplifies the sale of your business in the future. Also should an owner or director die, the business can continue to operate indefinitely.
Business Credibility
Having the words Inc or Corp in your business name gives a positive perception of long term financial stability.
Disadvantages of Incorporation
Double Taxation
Once incorporated, earnings are subject to double taxation, whereby, company profits are taxed, and then the dividends paid to shareholders from the "net" profits are also taxed.
With a non-incorporated business, the income the owner receives from the business is only taxed once. Double taxation can be avoided if the corporation is registered as an "S-Corporation"
Statutory Compliance Costs
Compliance with legal and accounting requirements places a significant burden on companies in terms of staffing, cost and time. There are also fees associated with the initial company incorporation, and ongoing operations.
Loss of flexibility The separate legal entity status of incorporation also means that the company finances are separate from the individual's, therefore the individual cannot "borrow" money from the accounts of the corporation, and statutory requirements in general reduce the flexibility of what can and can't be done with the business and its finances.
The above are some of the key advantages and disadvantages that you as a business owner need to consider before you begin the process of incorporation. You should always seek legal advice as all cases are different.
Richard Taylor is an MBA and Company Director with a particular interest in small business start ups. Click on the following link to learn more about the benefits and disadvantages of business incorporation. http://www.incorporate-my-business.com
Monday, June 22, 2015
What is Power of Attorney?
Power of Attorney is a legal document where one person authorizes
another to act on his/her behalf. It allows that authorized person to
manage business and/or financial affairs when one person is no longer
able to do so. It may be required due to illness, overseas travel or
mental incapacity.
Why is it important to organise a Power of Attorney? Should you be considered incompetent to deal with your finances - you need somebody else to be authorised to deal with your affairs. A Power of Attorney document allows you to choose the person, with defined authority and limits if desired, the power to protect, or re-arrange, your assets.
The person named in a Power of Attorney to act on your behalf is referred to as your "agent" or "attorney-in-fact." With a valid Power of Attorney, your agent can take any action permitted in the document. Often your agent must present the actual document to invoke the power.
If you do not have a Power of Attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act on your behalf. Usually referred to as guardians, conservators, or committees. If a court proceeding is required then you may not have the ability to choose the person who will act for you.
By executing a Power of Attorney for Finances (also referred to as a Durable Power of Attorney for Finances) you can decide who you want to make decisions about your legal and financial matters. You can be very specific about what actions you are authorizing your partner (or agent) to make, including which accounts he/she has access to and the types of decisions he/she can make.
A Power of Attorney for Health Care allows decisions to be made specifically on what kind of treatment the person wants, based on their medical condition.
A Living Will in some ways duplicates the information in the Power of Attorney for Health Care. It is a separate document that lets your family members know what type of care you do or do not want to receive should you become terminally ill or comatosed. It can also cover situations in which a person may survive but is not capable of making their own medical decisions.
It can be a directive stating that there is to be no heroic measures to keep the person alive when there is no realistic prospect of any meaningful recovery.
An Enduring Power of Attorney is a legal document authorizing a named person or people to act on your behalf. Subject to certain conditions it continues in force until death.
Guardianship is a legal relationship whereby a probate court gives a person (the guardian) the power to make personal decisions for another (the ward). A family member or a friend can initiate the proceedings by filing a petition in the probate court where the person lives. A medical examination by a licensed doctor may be necessary to establish the person's condition. A court of law will then determine whether that person is unable to meet the essential requirements for his/her health and safety.
As long as you are alive you have the power to revoke the Power of Attorney. To do this you must contact your attorney-in-fact to advise that the Power of Attorney has been revoked.
You can also specify a date that the Power of Attorney will expire.
A Power of Attorney is also important for unmarried couples, who live together, when a partner becomes incapacitated and unable to make decisions. When this occurs the law usually assigns the incapacitated person's next of kin as the decision maker. With a Power of Attorney, unmarried couples can give their partners the power to make decisions.
Why is it important to organise a Power of Attorney? Should you be considered incompetent to deal with your finances - you need somebody else to be authorised to deal with your affairs. A Power of Attorney document allows you to choose the person, with defined authority and limits if desired, the power to protect, or re-arrange, your assets.
The person named in a Power of Attorney to act on your behalf is referred to as your "agent" or "attorney-in-fact." With a valid Power of Attorney, your agent can take any action permitted in the document. Often your agent must present the actual document to invoke the power.
If you do not have a Power of Attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act on your behalf. Usually referred to as guardians, conservators, or committees. If a court proceeding is required then you may not have the ability to choose the person who will act for you.
By executing a Power of Attorney for Finances (also referred to as a Durable Power of Attorney for Finances) you can decide who you want to make decisions about your legal and financial matters. You can be very specific about what actions you are authorizing your partner (or agent) to make, including which accounts he/she has access to and the types of decisions he/she can make.
A Power of Attorney for Health Care allows decisions to be made specifically on what kind of treatment the person wants, based on their medical condition.
A Living Will in some ways duplicates the information in the Power of Attorney for Health Care. It is a separate document that lets your family members know what type of care you do or do not want to receive should you become terminally ill or comatosed. It can also cover situations in which a person may survive but is not capable of making their own medical decisions.
It can be a directive stating that there is to be no heroic measures to keep the person alive when there is no realistic prospect of any meaningful recovery.
An Enduring Power of Attorney is a legal document authorizing a named person or people to act on your behalf. Subject to certain conditions it continues in force until death.
Guardianship is a legal relationship whereby a probate court gives a person (the guardian) the power to make personal decisions for another (the ward). A family member or a friend can initiate the proceedings by filing a petition in the probate court where the person lives. A medical examination by a licensed doctor may be necessary to establish the person's condition. A court of law will then determine whether that person is unable to meet the essential requirements for his/her health and safety.
As long as you are alive you have the power to revoke the Power of Attorney. To do this you must contact your attorney-in-fact to advise that the Power of Attorney has been revoked.
You can also specify a date that the Power of Attorney will expire.
A Power of Attorney is also important for unmarried couples, who live together, when a partner becomes incapacitated and unable to make decisions. When this occurs the law usually assigns the incapacitated person's next of kin as the decision maker. With a Power of Attorney, unmarried couples can give their partners the power to make decisions.
Gay Redmile is the webmaster of several finance and investment sites. Having recently been named as Power of Attorney for her father - she realised how important it was for people to be aware of the implications of not having one in place. For further information and the latest news and articles visit her site at [http://www.powerofattorneyhome.com]
Sunday, June 21, 2015
Saturday, June 20, 2015
Annulment Versus Divorce
There are various ground upon which an annulment or a divorce could be granted by a court. The legal consequences could be very important, since an annulment basically erases a marriage, whereas a divorce simply terminates it.
Friday, June 19, 2015
What Are the Tax Benefits for LLCs?
If you form a limited liability company (LLC) from your business,
this is an excellent way to protect your personal assets from the
liabilities of your company. Incorporation protects your own property,
if a judgment is rendered against your business. In addition, forming an
LLC gives you an advantage, since your business isn't responsible for
the taxation of its profits.
The owner of an LLC reports the profits and losses of the business on his personal tax return. This operates in a way that is similar to general partnerships or sole proprietorships. These are called "pass-through" taxes, and you will not have to file a corporate return if you own an LLC. Your share of the profits or losses is reported on your individual tax return.
No Residency Requirements
When you form an LLC, you do not have to live in the state in which it is formed. You don't even need to be a permanent US resident or a US citizen. For this reason and others, businesses owned by immigrants are usually formed as LLCs.
LLCs give your company more credibility with prospective customers, suppliers, partners and lenders. The LLC is often favorably looked upon by other businesses.
LLCs have flexible management structure. Your LLC can establish any type of organizational structure upon which the owners agree. It can be managed by the owners, known as members, or by managers. This differs from corporations, which must have a set board of directors who will oversee all major business decisions for the company. They will also manage all the affairs on a day-to-day basis.
LLCs encounter fewer ongoing formalities and annual requirements imposed by states than corporations do. In addition, there are fewer restrictions on who can own an LLC, unlike the rules found with S Corporations.
You may also be considering how to incorporate a business as an S-Corp or C-Corp, if you plan to incorporate rather than pursue registration as an LLC.
What is an S-Corporation?
An S Corp has similarities to LLCs, because its federal tax status also allows pass-through of taxable income or losses to the investors or owners. Your company will not be double-taxed as it is with a C corporation. S Corp status offers you pass through taxation, limited liability protection, investment opportunities and the elimination of double taxation on business income. An S Corp can also continue to function even if the original owner dies.
What about a C-Corporation?
If you prefer to incorporate, as opposed to becoming a Delaware LLC or an LLC in your home state, the C-Corp is the most common type found in the US. When you form a C-Corp, you will create a separate structure that shields personal assets from any judgments against your company. C-Corp structure includes officers, shareholders and directors.
The owner of an LLC reports the profits and losses of the business on his personal tax return. This operates in a way that is similar to general partnerships or sole proprietorships. These are called "pass-through" taxes, and you will not have to file a corporate return if you own an LLC. Your share of the profits or losses is reported on your individual tax return.
No Residency Requirements
When you form an LLC, you do not have to live in the state in which it is formed. You don't even need to be a permanent US resident or a US citizen. For this reason and others, businesses owned by immigrants are usually formed as LLCs.
LLCs give your company more credibility with prospective customers, suppliers, partners and lenders. The LLC is often favorably looked upon by other businesses.
LLCs have flexible management structure. Your LLC can establish any type of organizational structure upon which the owners agree. It can be managed by the owners, known as members, or by managers. This differs from corporations, which must have a set board of directors who will oversee all major business decisions for the company. They will also manage all the affairs on a day-to-day basis.
LLCs encounter fewer ongoing formalities and annual requirements imposed by states than corporations do. In addition, there are fewer restrictions on who can own an LLC, unlike the rules found with S Corporations.
You may also be considering how to incorporate a business as an S-Corp or C-Corp, if you plan to incorporate rather than pursue registration as an LLC.
What is an S-Corporation?
An S Corp has similarities to LLCs, because its federal tax status also allows pass-through of taxable income or losses to the investors or owners. Your company will not be double-taxed as it is with a C corporation. S Corp status offers you pass through taxation, limited liability protection, investment opportunities and the elimination of double taxation on business income. An S Corp can also continue to function even if the original owner dies.
What about a C-Corporation?
If you prefer to incorporate, as opposed to becoming a Delaware LLC or an LLC in your home state, the C-Corp is the most common type found in the US. When you form a C-Corp, you will create a separate structure that shields personal assets from any judgments against your company. C-Corp structure includes officers, shareholders and directors.
Christine writes for USA Corporate Services, a company that helps entrepreneurs incorporate a business or form a limited liability company.
Thursday, June 18, 2015
Grounds For Divorce
We've all heard about "fault" and "no-fault" divorce. While its true that many state laws provide for a variety of fault-based grounds for divorce, such as adultery, cruelty, or abandonment, almost all states also offer some sort of no-fault divorce.
Wednesday, June 17, 2015
Estate Planning Tips for People Going Through Divorce
Divorce is stressful period of transition and change for most
people. While there many things on which you will need expend your
attention during this challenging time, you should not forget that your
estate plan also requires addressing now that you've experienced this
life change.
One of the first things you will want to do is update your will. Generally, your will names your spouse by name, so if you die and your will leaves a sizable inheritance to "John Doe" or "Jane Doe," then your executor (or the trustee of your trust) and the courts will be obliged to follow this instruction, even if this person is your ex-spouse. For many people, such an outcome might be especially frustrating and painful, so you should deal with updating your will promptly.
You will also need to go through any asset or account that has a death beneficiary destination on it to remove your ex. Recent court cases have ruled that, even if you divorce your ex and update your will, your ex will still receive the money from your life insurance or retirement account if you do not update the paperwork on those accounts. The single determining factor regarding who gets your transfer-on-death or pay-on-death accounts is the name on that account's death beneficiary designation form, so it is vital that you make sure you update each of these accounts.
Additionally, you'll want to tend to your powers of attorney and living will. Chances are, you do not want your ex managing your financial affairs or making healthcare decisions (including end-of-life decisions) for you after you're divorced. Executing new powers of attorney and a new living will is often a relative quick and straightforward process.
If you have a living trust, you should investigate updating this part of your estate plan, as well. For many people, their spouses may not only be beneficiaries of their trusts, but trustees, as well. A capable estate planning attorney can assist you with making the changes your trust needs to address your divorce.
Finally, you do not have to wait until your divorce is finalized in order to begin updating your estate plan. Even if you anticipate that your divorce may take several months or years to complete, you can (and should) start working on updating your estate plan right away. Keep in mind, though, that the law in every state says that you cannot disinherit your spouse so, even if your preference is to leave your ex nothing, you will not be able to make that happen until the divorce is final.
One of the first things you will want to do is update your will. Generally, your will names your spouse by name, so if you die and your will leaves a sizable inheritance to "John Doe" or "Jane Doe," then your executor (or the trustee of your trust) and the courts will be obliged to follow this instruction, even if this person is your ex-spouse. For many people, such an outcome might be especially frustrating and painful, so you should deal with updating your will promptly.
You will also need to go through any asset or account that has a death beneficiary destination on it to remove your ex. Recent court cases have ruled that, even if you divorce your ex and update your will, your ex will still receive the money from your life insurance or retirement account if you do not update the paperwork on those accounts. The single determining factor regarding who gets your transfer-on-death or pay-on-death accounts is the name on that account's death beneficiary designation form, so it is vital that you make sure you update each of these accounts.
Additionally, you'll want to tend to your powers of attorney and living will. Chances are, you do not want your ex managing your financial affairs or making healthcare decisions (including end-of-life decisions) for you after you're divorced. Executing new powers of attorney and a new living will is often a relative quick and straightforward process.
If you have a living trust, you should investigate updating this part of your estate plan, as well. For many people, their spouses may not only be beneficiaries of their trusts, but trustees, as well. A capable estate planning attorney can assist you with making the changes your trust needs to address your divorce.
Finally, you do not have to wait until your divorce is finalized in order to begin updating your estate plan. Even if you anticipate that your divorce may take several months or years to complete, you can (and should) start working on updating your estate plan right away. Keep in mind, though, that the law in every state says that you cannot disinherit your spouse so, even if your preference is to leave your ex nothing, you will not be able to make that happen until the divorce is final.
This article was written by Rich Lynn, Author for UPG America and is intended for general information purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. For more information about this and other estate planning matters, including additional estate planning related articles, visit our website at http://www.upgamerica.com. You may also find out more about the Legacy Assurance Plan, an estate planning assistance service offered by UPG America, at http://www.legacyassuranceplan.com.
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