Thursday, February 26, 2015

Estate Planning Essentials

You have likely spent many years accumulating wealth, establishing relationships and caring for your family.  Don’t let that all go to waste by neglecting to plan ahead. By carefully designing and establishing an integrated estate plan, your wealth, relationships and family will be protected.
 
Approximately 55% of American adults do not have a Will or other estate plan in place according to a 2013 survey conducted by LEXISNEXIS, a legal research provider.  Although thinking about and planning for potential incapacity and inevitable death may be uncomfortable, it is essential to assure that your wishes are carried out, your hard-earned money goes where you want it to, and your loved ones have direction and guidance as to your wishes.  These important documents warrant careful thought and planning as they will speak for you when you can no longer speak for yourself. 

If a person passes away without an estate plan, their loved ones and family are left in what could be a sticky situation.  They may not know where to find bank account information to pay that last phone bill, where the keys to a safety deposit box are located, or who was supposed to get the family silver.  While these questions are seemingly insignificant, they have the potential to develop into large family disputes when the person who has the answers to these questions is no longer there.  While under emotional stress of losing a loved one, a family is forced to guess the deceased person’s intent.  The situation is further complicated when the family has to go to court for probate of the estate where Nevada (or the state of the decedent’s death) may have a say in guessing the intent of the decedent.  This process of attempting to discern a deceased person’s intent may last for months and cause unnecessary disputes and tension between loved ones and family members.
 
If you are part of the 55% of American adults who have a Will or other documents in place to speak for you when you pass away, you are already way ahead of the curve.  However, oftentimes when people have executed solely a Will, they neglect to plan for what may happen in the event of incapacity.  Without a document like a living Will which states who you would like to act for you when you can no longer make decisions for yourself, family members may fight over who will take care of you and Nevada (or the state of your residence) may step in and choose someone who you would never want to be in that position of trust.  If you have a living Will, you can name a person (or persons) who will step into your shoes and assure that you are taken care of.  This person will enable you to maintain your standard of living, help provide for any dependents you have, and prevent your family from having to guess at what you would have wanted while under emotional stress and time constraints. 
 
These potential messes can generally be avoided with a comprehensive estate plan, wherein your wishes and intent are explicit.  Please contact our office for a FREE 30 minute Trust or Will consultation so you can plan and be prepared.
 
-Attorney Rebecca J. Haines

Wednesday, February 18, 2015

Planning for Aging Parents and Family Pets

When putting together our estate planning, it is natural for us to plan for our descendants and other persons whom we wish to be benefitted by our legacy.  We may also want to include provisions for certain charitable organizations that are meaningful to us.  Our population is changing such that estate planning considerations are also expanding to less traditional classes of beneficiaries, such as aging parents and family pets.  The older generations are living longer, and people are finding themselves caring for an aging parent, relative or friend.  Persons in care-giving roles may want to think about including their aging parents in their estate plans to ensure there is no disruption in their parents' ongoing care and/or diminution in their parents’ quality of life.  In addition, some pet owners go to great lengths to provide a high level of care for their pets.  To them, it is important to make arrangements for the continued care of their pets should their pets outlive them.  For the owner’s peace of mind and the security of the pet, an estate plan may include a reasonable monetary bequest to a caregiver who could in turn use the funds to care for the pet.
 

Tuesday, February 10, 2015

LLCs v. Corporations

Both LLCs and Corporations can be utilized as part of an integrated estate plan to provide additional protection, flexibility and perpetuity.  It is important to know the primary differences between an LLC and Corporation so that you can choose which type of entity will best help you achieve your business and estate planning goals.  Three of the primary differences between LLCs and Corporations are the following: differences in flexibility, differences in management structure, and different treatment for tax purposes.

1.      Flexibility.  Corporations are defined by statute, LLCs are defined by contract.  Corporations are rigidly defined and must meet numerous formalities to satisfy statutory requirements to protect assets, while LLCs are more flexible in nature as the members of the LLC write the contract by which the LLC is governed.

2.      Management Structure.  Corporation management is vested in its Board of Directors.  Each Director has one vote and the Board sets policies to be executed by the Officers on day to day basis and have the responsibility to govern the company.  An LLC’s governing structure is based upon its Operating Agreement.  The default organizational structure of an LLC is that all members of the LLC have an equal right to participate in management, but the members can agree to have a member-managed or manager-managed LLC.  In a member-managed LLC all the members of the LLC share responsibility for the day-to-day running of the business.  This structure usually works best for small businesses.  In a manager-managed LLC, a manager is chosen by the members to oversee the running of the business and the members almost act as a corporate Board of Directors in that the members delegate management responsibilities to a manager.  A manager-managed structure typically works best in a larger business where a separate management level is desirable or some members of the LLC want to be passive investors.

3.      Tax Treatment.  Corporations are subject to ‘double taxation.’  When a person sets up a corporation, he or she is taxed on both the corporate and the individual level.  However, a corporation can avoid double taxation of corporate profits and dividends by electing Subchapter S status.  An LLC typically allows for ‘pass-through’ taxation, wherein profits and losses typically pass through the LLC and get reported on the personal income tax returns of the owners.  Additionally, an LLC can elect to be taxed as a C or S corporation depending on the tax objectives of its owners. 

There are various reasons to choose forming a corporation versus an LLC and vise versa, not the least of which are flexibility, management and tax treatment.  To determine whether a corporation or LLC should be a part of your integrated estate plan and which type of entity will best help you achieve your business and estate planning goals, come in and speak with one of the knowledgeable attorneys at JEFFREY BURR.

-Attorney Rebecca J. Haines