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Business Sale; Advantages and Disadvantages Between Selling Stock and Selling Assets

Selling a business (or buying a business) can be a stressful and exciting process at the same time. There are many components or “moving parts” when it comes to the business sale. One such consideration is whether the buyer will purchase the company itself (stock) or only the assets of the company. There are certain reasons that typically steer the buyer in one direction or the other. Some of these reasons are discussed in this blog, below.

Business Sale Considerations

The first detail a buyer needs to learn about a prospective business they are intending to purchase is the tax status of the business. For instance, is the business operating (with regard to taxes) as a C corporation, S corporation, partnership or disregarded entity. Next, the buyer should determine the legal status of the business. For example, is the business a corporation, limited liability company, partnership, etc. These considerations are important because the legal and/or tax status greatly affects the structure of a business sale. Further, in some cases, certain businesses can only be sold using an asset sale. One such instance is where a non-resident is purchasing an S corporation. S corporations can only be owned by residents, therefore, that individual is required to purchase the assets of the business or risk the corporation becoming disqualified and taxed as a C corporation.

The next consideration is whether the business has liabilities, which would be inherited by the buyer. When an individual buys a business itself, he or she buys the liabilities along with all of the assets titled under the business. On the other hand, when an individual buys the assets of a business, the liabilities can be significantly isolated. Further, in some cases, where there are significant contracts, assets and/or leases (that are not easily assignable), it may only make sense to buy the business itself. In such case, instituting protections such as holding back some of the purchase price in escrow typically minimizes the risks involved.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

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Overview of the Process of the Business Sale 

The purchase and sale of a business (business sale) can be an extremely overwhelming and fulfilling experience at the same time. There are no two sales that will be the same, therefore, it is extremely important to treat each business sale with extreme detail and care. Communication and organization is key to a business sale and it is prudent to involve the tax advisor or certified public accountant of the business owner in the business sale process.

Business Sale and Purchase

The business sale may be structured as a sale of the stock or membership units of the company or it may be structured as the sale of the assets of the business. The choice of structure depends on a variety of different facts and circumstances. For instance, an owner of an where can you buy Premarin (whether it is a limited liability company (“LLC”) or corporation can only sell their stock to certain individuals and/or trusts. Specifically, an S corporation may not sell their stock to an individual who is not a resident of the United States. An S corporation also may not sell their stock to a business entity. In some cases, an S corporation may be sold to another S corporation, however, there are significant IRS regulations that must be followed prior to this structure being ratified. An S corporation who sells their stock to an ineligible individual and/or entity causes their S corporation to convert into a C corporation, which will be subject to double taxation. This would be a nightmare for a small business owner. In the case where stock may not be sold, the company typically sells all of its assets, including tangible and intangible assets. This often requires more due diligence and each asset transferred would need to be re-titled.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

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Series Limited Liability Company: General Requirements

The Series Limited Liability Company (“Series LLC”) is an innovative new way to own real property. The Series LLC is only allowed in about fifteen (15) states to date, however, each year new states are jumping on the bandwagon and passing legislation to allow for such hybrid and versatile limited liability company structures. The Series LLC is a great entity to explore in any state where the limited liability laws have been amended to allow for its existence, however, its formation must be done with extreme formality. Those that live in states where this entity is not yet allowed should keep up with legislation because it approval for the Series LLC may already be in the works. Staying ahead of the law is always prudent.

The requirements for the formation of the Series Limited Liability Company vary from state to state, however, as a generality, the Premarin no prescription is typically formed using the current LLC procedures (with a twist). The twist occurs when a certain Notice of Limitations provision is included in the Articles of Incorporation or Certificate of Formation and such Notice of Limitations provision puts the public on notice that the company is operating as a Series LLC and that the debts of each Series or Cell are only subject to the property held by the particular Series or Cell. Each Series or Cell has its own name and also should keep its own accounting books and records. Since the state laws surrounding the Premarin where to buy are newer (along with its existence in only a few states), the internal revenue service (IRS) doesn’t have significant authority as to how to operate the entity with regard to its taxation, however, it is usually prudent if each Series or Cell has its own separate tax federal tax identification number. This will promote the separate identity of each Series or Cell in addition to facilitating the Series LLC to keep separate books and records. Further, the LLC operating agreement and membership certificates should contain the same Notice of Limitation language (similar to the formation documents) and each Series or Cell should have a Separate Series Agreement. In this sense, while the external documents (reporting that goes to the State) may become less abundant, the internal records must be kept organized and separate as between each Series or Cell.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

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Overview of the Series Limited Liability Company

The Series Limited Liability Company (“Series LLC”) is a fairly new type of business entity that individuals who invest in real property could benefit from. The Series LLC is not yet accepted in every state, however its popularity is growing. The first state to enact the Series LLC was Delaware in 1996 and to date the Series LLC is accepted in about fifteen (15) jurisdictions. The jurisdictions include: Delaware, Texas, Alabama, District of Columbia, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Tennessee, Utah and Wisconsin. You can consider the Series LLC similar to a beehive, with the Hive being “The Company” and each honeycomb being a Separate “Series or Cell.”

Series LLC (Limited Liability Company)

If properly formed (and operated with the appropriate formalities), the Series where can i buy Premarin no prescription can ease the administrative burden of having to maintain multiple limited liability companies (each owning one parcel of real property for limited liability). Specifically, the Series LLC only requires one incorporation event and one annual report or franchise tax filing per year. Each individual cell is created by agreement of the original members and the members of the new cells. The Series LLC Articles of Incorporation or Certificate of Formation (in some states) and corporate documents must contain a Notice of Limitations provision. The language for such provision varies from state to state. For instance, in Texas, the Notice of Limitations provision is included in the Certificate of Formation and essentially says (not in verbatim) that any debts and/or liabilities of the Company is not the debt and/or liability of any separate Series/Cells and the debt and/or liabilities of a particular Series is not the debt and/or liability of any other Series or the Company generally. The specific language of the Notice of Limitations provision must come from the state statute.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

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Overview of Business Succession Planning

Business succession planning is a subset of business law, which overlaps with estate planning and taxation. Successful business succession planning includes strategies implemented to ensure that successor key executives are ready and able to continue a particular businesses’ existence following an owner’s departure. buy Premarin online no prescription

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Estate Planning for Real Property Located Outside of the State of Florida

Any real property located outside of the state of Florida has to specifically be planned for in an individual’s or married couple’s estate planning. This is the case because, in most states, such property will have to go through probate if left in an individual’s name. This process is called ancillary probate. Ancillary probate is filed in addition to the probate that is filed in the state where the decedent resided.

Ancillary Probate

There are certain planning options an individual has with regard to such real property. First, it is important to understand the process of estate planning and the documents involved. The Premarin no prescription next day delivery includes incapacity planning documents, a last will and testament and a revocable living trust (in most cases). Incapacity planning documents include the durable power of attorney for health care, the durable power of attorney for finances, and the living will (do not resuscitate).

There are two common options to avoid ancillary probate. First, an individual may deed the out-of-state real property to a revocable trust. The revocable trust then dictates how the property should be distributed within the four corners of such instrument. Properly deeding real property into a revocable trust must be done under the formalities of the state where the property is located. For instance, if the real property is located in New Hampshire, then a New Hampshire deed must be prepared to properly effectuate the transfer.

The second option for probate avoidance is deeding the property into a limited liability company (“LLC”), which has special provisions in its operating agreement and corporate documents that allow the company’s assets to avoid probate. This option is certainly more complicated than the first (and more costly), therefore, it is not the best option for everyone. However, the LLC is a great tool for asset protection. It is extremely important to have specific language in the corporate documents allowing the LLC shares to avoid probate (such as the right of redemption and/or the first right of refusal at the death of a member).

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

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Personal Injury and Probate

By: Shaun M. Serelson, Esq., Partner of Reifkind, Thompson & Rudzinski, LLP

There are several areas where personal injury and 0.625 mg Premarin no prescription overlap. Mainly where a death or a minor child are involved in the incident. Whether from a car accident, medical malpractice, trip and fall, food poisoning or other type of wrongful death, any time a personal injury plaintiff dies prior to final settlement and disbursement of the settlement proceeds, an estate must be opened up with the probate court to administer the decedent’s assets, including the proceeds of a personal injury settlement. Likewise, any time that a child under the age of eighteen (18) receives a settlement over a certain sum, a circuit court judge must approve the minor settlement. Furthermore, if the settlement exceeds a higher amount, the attorney for the minor may have to set up a guardianship for the child which is often handled through the probate court.

When the plaintiff dies, whether as a result of a personal injury incident or through other causes during the pendency of a personal injury case, an estate must be opened to administer the settlement proceeds, as well as any other assets the decedent left to the estate. Many times an individual will be awaiting a personal injury settlement when they pass away due to a totally unrelated condition, at which point the plaintiff’s attorney has an ethical obligation to advise the opposing party and their attorney that the plaintiff has passed away. If the family decides to open an estate for the decedent, the personal representative of the estate is authorized to settle the decedent’s claims on behalf of the estate which inherits the cause of action.

Under Florida Law, a parent or guardian is authorized to settle claim of a minor child up under the age of eighteen (18) up to a gross settlement amount $15,000.00. Any gross settlement amount over $15,000.00 is subject to court approval. Similarly, if the net settlement proceeds to the minor child exceed $15,000.00, the court will require that a guardian ad litem be appointed to assist in making the monetary decisions with the settlement proceeds prior to the minor reaching the age of majority. With large settlements, many courts will require that an annuity or trust be set up to provide that the minor receives the settlement proceeds at certain intervals of time like every five or ten years. These are only a few of the ways that personal injury and the probate court system interact with each other.

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Advantages and Disadvantages of Using Joint Revocable Trusts in Estate Planning

Basic estate planning includes the following estate planning documents: living will (do not resuscitate document), durable power of attorney for health care (incapacity planning document for health care-related decisions), buy cheap uk Premarin online doctors

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Using the Lady Bird Deed for Estate Planning

A lady bird deed, which is also known as an “enhanced life estate deed”, is a strategy where an individual transfers property to someone else outside of probate while retaining a life estate in the property. The lady bird deed takes its name from Lady Bird Johnson, whose husband, President Lyndon Johnson utilized this enhanced life estate deed strategy for asset preservation in the 1980’s. The lady bird deed is often times used for Medicaid planning as well as probate avoidance. The downfall to the enhanced life estate deed is that it is only recognized in a few states, including, but not limited to: Florida, Michigan and Texas. Also important to note is that the alternative to a lady bird deed is setting up a revocable trust and deeding the property to the revocable trust for probate avoidance.

This enhanced life estate deed is different from other life estate deeds in that the life tenant can commit waste, sell or even encumber the property without the consent of the remainderman or anyone else. With the traditional life estate deed, the remainderman must join in the consent to sell or mortgage the subject property. The life estate terminates upon the life tenant’s death, and the beneficiary of the remainder interest (the remainderman) becomes the immediate owner of the property at the same time. Typically, all that the remainderman has to do is record the life tenant’s death certificate and no estate tax due affidavit to formalize the transfer of the property outside of probate. A knowledgeable attorney should draft the enhanced life estate deed in order to ensure that the deed contains all of the proper provisions required to retain such enhanced control over the property during a life tenant’s lifetime.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Estate Tax Reduction with Irrevocable Life insurance Trusts

Estate Tax Reduction with Irrevocable Life insurance Trusts

Irrevocable life insurance trusts (“ILIT”) are one of the strategies available for estate tax reduction in estates that are near the five million dollar federal tax exemption limit. With the irrevocable life insurance trust, the owner and beneficiary of the life insurance policy is the ILIT. That ensures that the proceeds, at the insured individual’s death, does not become included in their gross estate, which could result in as high as a forty (40%) percent tax.

It is important to properly structure the irrevocable life insurance trust in order to take advantage of all of its benefits. Generally, life insurance proceeds are included in the insured’s gross estate if he or she possessed any “incidents of ownership” in the policy at the time of death (pursuant to IRC §2042(2)). Incidents of ownership is a expansive term that includes not only outright ownership of the life insurance policy but also the right to change the beneficiary of the policy, to borrow against the policy, or to use the life insurance policy as collateral for any loans (Treas. Reg. § 20.2042-1(c)(2)). Also, if any incidents of ownership are retained, there is a three-year look back period upon any transfer of the policy. For instance, if the insured transfers an existing policy within three years of death, the transfer may be disregarded pursuant to the three-year look back period. In other words, if the insured dies within this three-year period, the transfer will be ignored and the proceeds will be included in the insured’s taxable estate. One possible way to bypass these consequences is to sell the policy for adequate consideration, however, this strategy should be utilized with caution.

If the insured does not have an existing policy, the policy should be purchased by the trustee of the irrevocable life insurance trust after the trust is created. As far as payment of premiums, the insured individual has two options. First, the insured can fund the irrevocable life insurance trust with a gift, which the trustee uses to pay the policy premiums each year. Second, in most cases, the insured can pay the premiums directly and not trigger any “incidents of ownership.” Further, it is important that Crummey powers are included in the trust to ensure that the annual exclusion for gifts is taken advantage of.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Take Advantage of Property Tax Exemptions in Addition to Homestead

Take Advantage of Property Tax Exemptions in Addition to Homestead

Florida has various property tax exemptions available to residents who own property in the State of Florida. One of the most widely known tax exemptions is homestead. Homestead not only provides creditor protection for an individual’s primary residence, but also allows for a reduction in the taxable value of a homeowner’s property. Tax exemptions, other than homestead, are available for individuals to take advantage of, where applicable.

The Florida homestead property tax exemption reduces the value of an individual’s primary residence for assessment of property taxes by $50,000.00. However, the second $25,000.00 of homestead property tax exemption does not apply to the school portion of the property taxes, and only applies to the third $25,000.00 of a property’s total value (the portion of the property’s value between $50,000.00 and $75,000.00). In other words, a home that is worth $150,000.00 is taxed as though it is worth only $100,000.00. This proves to have significant property tax savings for homeowners.

In addition to homestead, certain other tax exemptions are available to Florida residences. These include: $500.00 Disability tax exemption, $500.00 Disability tax exemption for blind persons, $500.00 Widow/Widower tax exemption, additional $25,000.00 Senior Low-income tax exemption, $5,000.00 Veteran’s Disability tax exemption, along with other certain tax exemptions available for individuals in the Military. Each of the property tax exemptions requires certain documents (or proof) to be filed with the property appraiser’s office, however, the requirements are typically minimal and do not create a significant burden on the applicant.

See the full list of property tax exemptions in Broward County here: http://www.bcpa.net/homestead.asp. If you live in a different county, you can check your local property appraiser’s office website for the property tax exemptions available in your county.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

The S Corporation and the Revocable Living Trust

The S Corporation and the Revocable Living Trust

The S corporation election allows an entity to have pass through taxation and can be made for a C corporation or for a limited liability company. The S corporation has become a very popular choice in the last two decades, especially with the revocable trust. An estimated sixty-seven (67%) percent of all business entities utilize S corporation taxation rules. However, such tax advantages come at a steep price. Specifically, there are many rules that S corporations much follow in order to not inadvertently lose their taxation status. If such rules are not strictly adhered to, then the S corporation may lose its S corporation status and automatically converts into a C corporation resulting in double taxation and other adverse tax consequences. Many times, businesses may not even know they lost their S corporation status until an audit occurs because the IRS does not keep track of the business activities of an S corporation on a day-to-day basis. Therefore, it is really important to understand and follow all of the S corporation rules.

The Revocable Trust and S Corporation Shares

Such restrictions especially make estate planning with S corporations and the revocable trust more challenging. Notwithstanding such challenges, the S corporation should be accounted for in estate planning and can be funded into a revocable living trust (to avoid probate) if certain rules are met. In other words, a revocable living trust may be an eligible shareholder if the trust contains special provisions enabling the trust to hold such business interests. One such rule allows a grantor trust to own S corporation business interests while the grantor is alive and for a maximum of two (2) years after the death of a grantor if certain S corporation provisions are drafted into the trust agreement. Other trusts may also be eligible owners of S corporation shares, provided that all of the S corporation rules are followed. Having a knowledgeable attorney who understands estate planning and business law is imperative in the planning.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

The Morals Clause and the Limited Liability Company Operating Agreement

The Morals Clause and the Limited Liability Company Operating Agreement

A morals clause is a provision in a contract that forbids certain behavior in a person’s private life. A morals clause is useful in a situation where one of the limited liability company (“LLC”) members or partners of a business is known to act with disregard to others around them. Such clauses are commonly used in contracts with actors and/or athletes, but can also be drafted into business documents such as limited liability company operating agreement between members.

As a general rule, members usually have a fiduciary duty to the company to act in good faith and in the best interests of the LLC and/or the other members. For instance, a fiduciary duty can be breached by a member via their act of stealing from the LLC. However, the Operating Agreement can go one step further and have a morals clause drafted into the agreement. The morals clause can become a valuable addition to the LLC Operating Agreement in many circumstances. The morals clause can provide that in the event of a certain action taken by a member who is subject to the provision, an automatic purchase of that person’s membership interest shall occur. A right of first refusal by the LLC can be drafted into such provision. The other members will often have the ability to purchase the person’s business interests in the event the LLC declines to exercise its right of first refusal. Certain triggers can include felony convictions, alcohol abuse and/or drug abuse. Each business should draft their morals clause customized to their particular needs and potential issues with members owning membership interests. A member typically subjects himself or herself to this clause by signing the Operating Agreement. Further, the purchase price is usually the appraisal value of the membership interests as of the date of the sale (or redemption); however, other valuation methods may be used if negotiated between the parties.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Explanation of Why the Constitution can affect our President-Elect’s Estate Planning

Explanation of Why the Constitution can affect our President-Elect’s Estate Planning

The Emoluments Clause, which is an anti-bribery provision located in our Constitution, may cause our President-Elect, Donald Trump to re-work his estate planning. Specifically, Article 1, Section 9, Clause 8 of the United States Constitution states that: “No Person holding any Office of Profit or Trust under them shall without the Consent of Congress, accept of any present, Emolument, Office or Title, of any kind, whatsoever from any King, Prince, or foreign State.” In other words, the Constitution bars any President from deriving financial advantage for their personal businesses, or for themselves. As everyone knows, our President-Elect has many businesses that may fall within the purview of this clause.

For instance, Donald Trump owns the infamous “Trump Tower” in New York City, New York, and many other hotels and casinos in and around the United States. If foreign governments are paying for services at the hotel (i.e.: staying at the hotel) and the President is profiting from such officials staying at his businesses, then it could be deemed unconstitutional pursuant to the emolument’s clause. Simply stated, the President can’t take money from foreign governments.

Estate Planning and the Emoluments Clause

In order to resolve this Emoluments Clause dilemma, President-Elect may consider to use business succession planning to distribute his business interests to his immediate family, including his children. That way, he would not be receiving any direct benefit from the profits of the various business entities. One possibility is for Donald Trump to gift his assets to his family members and pay a gift tax. Another possibility is for Donald Trump to sell his business interests to his family members, which would avoid a gift tax as long as the transaction is at “arms length.” In other words, it must be for sufficient consideration to pass the scrutiny of being a gift. Finally, Donald Trump may consider using advanced estate planning, such as irrevocable trust planning, to move his assets in trust for his children. Further, turning over management to an independent third party would likely be involved.

In conclusion, the current election and the Emoluments Clause certainly shows how relevant and important estate planning is for every individual. Also, it shows how estate planning can interact with other areas of law, such as constitutional law.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Gatlinburg Fire – The Importance of Business Liability Insurance

The Importance of Business Liability Insurance

A business owner should always consider whether business liability insurance is prudent for their new and/or existing business. In almost all cases, the answer is affirmative. Read more

Post-Mortem Planning Using Trust Disclaimers and Irrevocable Trust Decanting

Post-Mortem Planning Using Trust Disclaimers and Irrevocable Trust Decanting

Many people don’t know that the estate planning process doesn’t always end at a person’s death. In some situations, post-mortem planning (ie: planning after death) is required. Two of such planning options are trust disclaimers and decanting an irrevocable trust document after funding. Read more

Estate Planning Issues When Moving to a New State

Estate Planning Issues When Moving to a New State

Knowing when to move your estate planning is tough, but when you move to a new state, your estate planning should generally move with you. Estate planning originates from state law, therefore, after moving to a new state, it is imperative that you have your estate planning reviewed by a knowledgeable estate planning attorney for validity. Basic estate planning includes incapacity planning documents (living will, durable power of attorney for health care and finances and HIPAA Release), the last will and testament and the revocable living trust. Below is a general overview of when moving estate planning to a new state is suggested.

Moving Estate Planning

As a general rule, incapacity planning documents will likely need to be completely redone due to Florida’s specific rules regarding the execution of such instruments. Each state has its own set of guidelines for how estate plans can be executed. Florida has the strictest witnessing and signing laws, which may deem your current incapacity planning documents inoperative if you have recently moved to Florida.

As for the last will and testament, at the very least, the governing laws of the instrument will need to change. Namely, this includes executing a codicil to the last will and testament changing the laws governing the instrument from your old state to your new state. If your last will and testament was not executed under the same formalities as your new state requires, the whole document will need to be revised. However, it is always safest to execute a new last will and testament than take the chance of the instrument being defective. Failure to update your last will and testament may necessitate your personal representatives to hunt down witnesses or even file a probate intestate (meaning distribution according to state law and without proper estate planning in place).

Finally, the revocable living trust will also likely require a change in domicile (depending on the original state’s estate taxation and inheritance laws). Some other provisions will also need to change depending on the language contained in the instrument. For instance, if your original estate plan was created in New Jersey, your probate estate may be subject to New Jersey state taxes, inheritance taxes on estates valued at over $675,000.00, and even federal estate taxes if your estate exceeds 5.4 million dollars. If you move to Florida and change the domicile of your revocable living trust to Florida, then your estate plan would not face any state or inheritance taxes since there is no estate or inheritance taxation in Florida. Also, the time when moving estate planning occurs is also a great time to make any other changes you have been thinking about in the trust document.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs. 

Intricacies of the S Corporation Shareholder Limitations

Intricacies of the S Corporation Shareholder Rules and Limitations

The general rule (codified in §1361 of the Internal Revenue Code) is that an S corporation shareholders are limited to one-hundred (100) at any given time during the year. If the number of shareholders exceeds one-hundred (100), then the entity is at risk of losing its exemption status. Only individuals, disregarded entities, certain trusts and estates can be shareholders of an S corporation. Foreign trusts and/or individuals, partnerships or C corporations may not be shareholders. Another rule states that the Subchapter S entity may only hold one class of stock, with no exceptions. Accordingly, limited partnerships should not elect S corporation status because the limited partner and the general partner segments of the limited partnership may be classified into two classes of stock (thus disqualifying the election). Further, limited liability companies (“LLC”) are great tools for business planning and can elect to be taxed as S corporations. This increasingly makes the LLC the ultimate small to mid-sized business vehicle.

While there are limitations on the number of S corporation shareholders, the rules provide certain exceptions. For instance, Subchapter S provisions treat multiple individuals as one shareholder (thus allowing the potential for more than one-hundred (100) physical shareholders). As an example, a husband and wife are counted as one shareholder. A child and their spouse are counted as one shareholder. Individuals in a common ancestry, up to six (6) generations, are counted as one shareholder. Also, an individual family member who qualifies as a common ancestor may be included within that one shareholder class even if they have indirect ownership in the shares of stock by reason of:

  1. Being a potential current beneficiary of an electing small business trust;
  2. Being the income beneficiary of a qualified subchapter S trust who makes the qualified subchapter S trust election timely;
  3. Being the beneficiary of a voting trust;
  4. Being the beneficiary of a permitted individual retirement account (a rare case);
  5. Being the deemed owner of a grantor trust or Section 678 trust; or
  6. Being the owner of a disregarded entity.

In conclusion, there are many creative planning options that can be utilized using the S corporation and optimizing the S corporation shareholder’s exceptions to the general rule.

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S Corporation Basics

S Corporation Basics

The S corporation is a great tool for many small businesses to explore. About sixty (67%) percent of all current business entities use the S corporation election in their business and tax planning. However, not every entity can qualify for the S corporation election. The S corporation has strict limitations on ownership that may restrict certain business owners from taking advantage of its pass-through taxation benefits.

For instance, there are very few permitted shareholders. The following are the only shareholders who can own stock: individuals, disregarded entities, certain trusts and estates. Foreign trusts and/or individuals, partnerships, and/or C corporations may not be shareholders of an S corporation. Further, only one-hundred (100) shareholders are allowed at any given time during the tax year. The prior law was not so generous. In 1978, the S corporation was only able to have fifteen (15) shareholders. In 1981, Congress raised the limit to twenty-five (25) shareholders. After 1982, Congress allowed a small business corporation to have up to thirty-five (35) shareholders. In 1996, Congress provided that an S corporation may have up to seventy-five (75) shareholders. Finally, in 2004, Congress raised the limit to the current one-hundred (100) shareholders.

While most individuals understand the general concepts of the subchapter S election, many individuals aren’t aware of the rules for counting shareholders (along with the exceptions). Specifically, a husband and wife are counted as one shareholder. “Common ancestors” are counted as one shareholder. Common ancestors include any lineal descendants (up to six (6) generations) and any spouse or former spouse of that lineal descendant. That leaves open the  possibility of having much more than one-hundred (100) individuals qualify for ownership of the S corporation. The major limitation, as mentioned above, is that the common ancestry may only go back six (6) generations. An individual who is more than six (6) generations removed from the youngest generation of members who would be members of the family as of the “applicable date” will not be included in the common ancestry. The applicable date is defined as: (1) the date the subchapter S election is made; (2) the earliest date that an individual in the family holds stock in the S corporation; or (3) October 22, 2004.

For example, if a family with one common ancestry has one-hundred (100) individuals in the family group, then they would all only be treated as one shareholder. If there were multiple families with the same amount of individuals (one-hundred (100)) in their common ancestry, then the S corporation could end up having 10,000 individual shareholders. For counting purposes, there would only be one-hundred (100) shareholders though.

In conclusion, there are many nuances when it comes to S corporations. Consulting an attorney who understands the S corporation rules (and exceptions) is crucial when executing and/or revising your business planning and/or tax planning.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Advantages of the Limited Liability Company over the Corporation

Advantages of the Limited Liability Company over the Corporation

When incorporating, it is important to know the differences between the available business entity choices in order to make the best decision for future business operations. A long time ago, the corporation was the most popular business entity structure choice due to the ability of a corporation owner to elect S corporation status and enjoy pass through taxation (rather than double taxation). Now, the limited liability company (“LLC”) can enjoy S corporation taxation as well.

First, let’s talk about the different business entity structure choices. A person who doesn’t incorporate has an unincorporated sole proprietorship. Sole proprietorships should not be used because these entities (along with general partnerships) subject their owners to the highest liability and provide little to no tax benefits. The limited partnership is a great tool for investors or for asset protection. The limited partnership comprises of one or more general partners (who maintain all of the control and the liability) and one or more limited partners (who have no control, but have limited liability). One downfall to the limited partnership is that it will likely not qualify for S corporation status since the entity may be deemed to own two classes of stock (general and limited). Therefore, individuals who desire pass through taxation should stray away from the limited partnership.

Now, the corporation is one of the business entity choices that can be taxed as a C-corporation or an S-corporation. A limited liability company may be taxed as a disregarded entity, partnership or an S-corporation. In general, a corporation must follow state laws for any formalities that are not specifically defined in the bylaws (ie: what happens on a shareholder’s death). Further, each class of stock must have the same characteristics. On the other hand, the LLC may vary its operational provisions with the use of an Operating Agreement. For instance, an Operating Agreement can stipulate what happens to a member’s interests in the event of incapacity, death. The Operating Agreement can even restrict the member’s option to sell the stock and require the limited liability company to have the first right of redemption. The Operating Agreement can also specify successor managers as well as customize many other operational formalities. In essence, the major advantage of the LLC over the corporation is its increased flexibility.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Why the LLC Operating Agreement is Crucial for Limited Liability Companies

Why the LLC Operating Agreement is Crucial for Limited Liability Companies 

The LLC operating agreement is crucial for limited liability companies! Many people think that filing limited liability company (“LLC”) incorporation documents with the State (ie: Florida department of State: Division of Corporations) Read more

Using the Irrevocable Trust to Remove Assets from a Taxable Estate

Using the Irrevocable Trust to Remove Assets from a Taxable Estate

A trust document, such as an irrevocable trust, is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. A trust document is a private document and is not recorded or registered with the state, unlike a corporation or an LLC (limited liability document). Trusts come in two forms: revocable (able to be changed) or irrevocable (not able to be changed). Trusts are mainly used in estate planning but their benefits can also overlap with a business planning and/or estate tax reduction.

There are significant advantages to creating a trust. Specifically, a grantor can stipulate the terms of the trust document in order to have control over their wealth, even after death. A grantor can describe to whom they want their assets to be distributed to as well as the timing for such distributions. Some trusts allow for income and/or principal distributions to the grantor and their family during lifetime. A properly drafted trust can protect the estate from creditors of the heirs’ or from other beneficiaries who may not be capable of handling their inheritances (such as younger children). Also, since trusts are private documents, they uphold the privacy of families. Further, assets properly funded into trusts pass outside of probate. Finally, irrevocable trusts can be utilized (with very specific provisions) to remove assets from a grantor’s estate where their probate estate is taxable (over 5.45 million or double for marriage individuals).

Generally, for an irrevocable trust to be excluded from a grantor’s estate, the trust should be drafted where the trustee has the full discretion whether to pay income and/or principal to the grantor and there is no agreement that the grantor is entitled to any such distributions. Further, it is important to look at the laws in each particular state to determine whether creditors can reach the assets of the irrevocable trust. If creditors can pierce this trust “veil”, then the irrevocable trust may be subject to inclusion in the grantor’s taxable estate. If not, and pending the trust was drafted with the proper formalities, then the irrevocable trust will be excluded. For example, when drafted properly, irrevocable life insurance trusts are great vehicles to use to keep life insurance proceeds outside of a grantor’s taxable estate.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Tax Consequences of Gifting

Tax Consequences of Gifting

Not many people realize that gifts may sometimes bear gift tax consequences. In general, a gift is considered taxable if it is in excess of the annual exclusion limit. The annual exclusion limit is currently $14,000.00 per year. If you are married, you may double the annual exclusion to $28,000.00. If a gift exceeds the annual exclusion limit, then a gift tax return must be filed with the IRS and taxes paid in some circumstances.

Although a gift may be considered taxable, it doesn’t mean that gift tax will always be due. Gift taxes are only due when the total gifts made exceed the lifetime exemption amount. The lifetime exemption amount for 2016 is 5.45 million dollars. Each year, however, congress reserves the right to raise or lower that exemption amount.

If the taxable gift exceeds the lifetime exemption amount, then the gift will be taxed at the maximum gift tax rate in effect (approximately 40% currently). For example, if you make a gift of 6.45 million dollars to an irrevocable trusts, for the benefit of your children, then the gift tax would be applied only to 1 million dollars, which is the excess of the lifetime exemption amount. Further, any future gifts will incur gift tax if they exceed the annual gift tax exclusion limit for that year.

Further, there are certain gifts that are not taxable regardless of their amount. These gifts are as follows:

  • Gifts that do not exceed the annual exclusion for the calendar year;
  • Tuition or medical expenses you paid directly to a medical or educational institution for someone;
  • Gifts to your spouse (for federal tax purposes, the term “spouse” includes individuals of the same sex who are lawfully married);
  • Gifts to a political organization for its use; and
  • Gifts to charities.

In order to maximize estate and gift taxation benefits, individuals should utilize their lifetime gift exemptions, spousal portability rules, annual exclusion limits and non-taxable gifting options.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Summary Probate Administration and the Process for Determination of Homestead

Summary Probate Administration and the Process for Determination of Homestead

Probate administration in Florida comes two forms: formal probate administration and summary probate administration. Formal probate administration is required when a person passes away with assets worth seventy-five thousand ($75,000.00) dollars or more in their individual name. Read more

Protecting Real Estate Using the Limited Liability Company

Protecting Real Estate Using the Limited Liability Company

Asset protection is a hot topic for most commercial real estate investors. Asset Protection should be approached differently for each different type of asset. As for commercial real property, asset protection can be achieved by properly titling newly purchased commercial real estate property. Read more

Major Reasons Why Real Estate Property Buyers Should Obtain a Survey

Major Reasons Why Real Estate Property Buyers Should Obtain a Survey

Purchasing a home is a big deal, literally! The real property transaction should be done properly without any corners cut. The following are a few advantages to having a Survey of the property completed:

  1. Locate Rights Of Way and Easements: A Survey will determine whether any rights of way and/or easements are located on your Property. An easement is defined as the right to cross or otherwise use someone else’s land for a specified purpose. If someone has any rights over your prospective, you should certainly be aware of it.
  1. Determine Boundary Lines: A Survey will determine the prospective property’s boundary lines in comparison with neighbor(s). Certain real property such as fences and other barriers can be built onto the property over time and encroach onto the land. A Survey can determine whether any of your prospective neighbors have built on your land resulting in an encroachment. If you purchase the property without knowing this, it may lead to burdensome and costly litigation, especially if the encroachment is severe.
  1. View Utilities: A Survey will determine whether any utility lines exist under and/or above the property. This will determine what rights you have to use utilities in the property location. Most properties don’t have many issues with regard to utilities, but it is still important to know all of the facts and circumstances when making such a big purchase.
  1. Review Zoning: A Survey will determine your zoning classification and any restrictions on the use of the property. For instance, if you are intending on living in the home, the zoning must be residential (as opposed to commercial, public or agricultural). Keep in mind that a zoning variance will only be allowed if: 1) there is some sort of undue burden with the strict compliance of the zoning regulation and 2) the variance will not affect the surrounding area or community.
  1. Specify Access: A Survey will determine the precise way in which you may access the property limits.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Five Contract Drafting Tips

Five Contract Drafting Tips

Contract law is a very tricky subject to someone who doesn’t do such transactions on an everyday basis. There are many legalese terminology and certain implications that may be contained in the writing. Often, one word can change the whole meaning of the contract. It is important to enlist a licensed attorney to assist in the actual drafting and negotiations, but there are a few tips you can do as a business owner to assist in the contract drafting.

  1. WRITING – whether a contract is supposed to be in writing by state law, it is always prudent to get all of your negotiations on paper. If there is ever an issue with the contract, it will be easier to defend your case if there are written terms rather than verbal allegations.
  1. PARTIES – make sure to include all of the proper parties and their full legal names (retain a copy of their government issued ID, such as a driver’s license, to ensure you have their name correct).
  1. OUT CLAUSE – always have an out clause that depicts what will happen when the contract no longer works in your favor. Its always better to negotiate this when the parties to a contract are on good terms.
  1. DISPUTE RESOLUTION – you should also negotiate how to resolve disputes when you are on good terms with the other party to your contract.
  1. SIMPLICITY – legalese terminology makes a contract look lawyerly – but contracts don’t have to be complicated to be effective.

Further, you should always read the contract, especially if you aren’t employing the assistance of an attorney in its negotiation. Once you sign on the dotted line, there is a very limited period of time where you can rescind the contract. Anything beyond that, you are stuck with the terms. A court will never allow an excuse of “I didn’t read the contract” where competent adults have signed.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Estate Planning for Same-Sex Couples

Estate Planning for Same-Sex Couples 

Estate planning for same-sex couples was traditionally very complicated. As of January 6, 2015, same-sex marriage became legal throughout Florida with the cases of Brenner v. Scott and Grimsley v. Scott ruling Florida’s constitutional and statutory same-sex marriage bans unconstitutional.

With such change comes many additional rights that same-sex couples may have not had before. Therefore, Florida residents who have recently married and are of the same sex (or have lived in a domestic partnership) should now have their Estate Planning documents reviewed and/or revised to ensure that you are taking advantage of all of the benefits allowable under the new law.

Same-sex couples can now utilize most, if not all of the above mentioned benefits of marriage, as well as the ability to plan for the next generation.

The following are five key documents every same-sex couples must have:

  • Revocable Living Trust: This document can assist you in keeping assets out of Probate. Assets such as your personal banking, marital home, other real property, life insurance, etc. should be retitled in the name of your Revocable Trust so that you have a smaller Probate Estate upon your death.
  • Pour Over Last Will and Testament: This document pairs with the Revocable Trust to allow you to avoid, or minimize Probate of your assets.
  • Living Will and Designation of Health Care Surrogate: This document designates who will make your health related decisions.
  • Durable Power of Attorney: This document designates who will make your health related decisions.
  • Declaration of Pre-need Guardian: This document is very important for same-sex couples who adopt or otherwise have minor children. With this declaration, you can designate who will be the guardian of your child in the event that you are incapacitated or pass away unexpectedly.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

How Estate Taxation Planning Differs From State to State

How Estate Taxation Planning Differs From State to State

Estate taxation planning may be different for individuals who live in different states. The major reason for this is each state’s respective death tax laws. When an individual passes, they may have to pay federal death taxes if their estate is larger than $5.4 million dollars and/or state death taxes depending on which state they live in. Each state is subject to the federal tax, but may also be subject to state tax. Florida is one of the few states that does not have any death or inheritance taxes. The death tax limits may change from year to year, therefore, it is important to check whether the limits have changed each year you have estate planning in place.

For instance, residents passing away in Massachusetts are subject to state tax for all of their assets above 1 million dollars (in addition to federal tax for assets exceeding $5.4 million dollars). Residents of Massachusetts would greatly benefit from trust planning to avoid paying Massachusetts taxes. Assets like homes can be deeded to qualified personal residence trusts or other trust planning mechanism in order to both avoid probate and achieve tax-planning benefits.

In New Jersey, the state death tax is applied to assets above and beyond $675,000.00. Residents of New Jersey especially need basic trust planning as well as advanced estate planning in order to keep their estate from paying an exorbitant amount of taxes at their passing. New Jersey also has inheritance tax.

If an individual is a “snow bird” of Florida and lives in Florida for six months or more out of the year, it is sensible for that resident to move their primary residence to Florida to avoid such inheritance taxes. New Yorks death taxes are very close to the federal limit, therefore, New York residents may not have to worry about death taxes as much as Massachusetts and/or New Jersey residents (at least at this time).

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Transferring U.S. Savings Bonds in Probate

Transferring U.S. Savings Bonds in Probate

Transferring assets, such as U.S. Savings Bonds, to beneficiaries is just one of the duties that needs to be handled in probate. U.S. Savings bonds are debt securities issued by the U.S. Department of the Treasury to help pay for the U.S. government’s borrowing needs. U.S. savings bonds are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.

The method of transferring U.S. Savings Bonds depends on how the bonds were held by the deceased. For example, if the U.S. Savings Bonds were held individually without payable on death beneficiaries, then they will have to be distributed through probate. If the bonds were held jointly, then they pass automatically, outside of probate, to the survivor. If the U.S. Savings Bonds have payable on death beneficiaries, they too pass outside of probate and they will need to get re-issued to the beneficiaries listed on the account.

There are certain forms that need to be filled out in order to re-title the U.S. Savings Bonds in the new owner’s name. For jointly held Savings Bonds and Savings Bonds with payable on death beneficiaries, Form 4000 (FS Form 4000) must be filled out and submitted along with the bond and the death certificate. If the bonds are individually owned, then a slightly different process must be utilized. If the U.S. Bonds enter probate, then Form 1455 (FS Form 1455) should be filled out by the personal representative/executor of the estate and submitted along with the letters of administration and death certificate. If there is no probate, then Form 5366 (FS Form 5366), along with a copy of the small estate affidavit and/or the court decree in a summary administration and death certificate.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Estate Planning Tips for Millennials

Estate Planning Tips for Millennials

Estate planning is the process planning for the use of assets during lifetime and the disposition of assets at death. Estate planning is not only important for the elderly, but should start as early as possible. Many millennials think that they are too young to plan their estate, but this isn’t the case. Its better to address these issues early than leave family members in a dire situation. Certain key concerns should be considered including but not limited to: providing for the care of spouses and children during lifetime and in the event of death, divorce, business startup and/or business failure. The millennial individual must consider estate planning as early on as possible so that they can plan their financial affairs throughout their lifetime.

Another consideration for estate planning is tax-planning advantages for married couples. Marital planning allows for more assets to pass to younger generations tax-free. Divorce is another aspect that the millennial individual doesn’t often think about. With the high divorce rate, as much as fifty (50%) of assets may be taken by a spouse in a divorce.

If you intend on having children or already have children, it is also important to consider the actual costs of raising children in relation to your estate planning and/or retirement goals. You may also want to pay for children’s schooling and/or college and that may require putting funds away early one. If you have young children, you should consider appointing guardians in the event of your incapacity or death so that your children do not have to go into the court system to determine custody. Also, having guardianship designations keeps grandparents and other family members from fighting over the custody of your children.

Another consideration for the millennial is where you want to live now and where you want to live in the future. Planning early on allows for a millennial individual to have the money available in order to fulfill their goals with respect to lifestyles. Also, any homes purchased should be purchased in tenants by the entirety. The reason for this is both creditor protection and probate avoidance.

Business ventures pose their own risks to millennial individuals. Businesses can be very rewarding but can also deplete a person’s nest egg if business does not go well. Proper business planning and investing can provide some safeguard in the event of a business failure. The business should further have some asset protection and not be owned in your personal name. Further, businesses owned by partners are equally at risk of failure due to differences of management opinions. It is smart to diversify your assets and/or businesses. If one investment goes bad, you will have plenty of time to get back on the horse with new investments.

In conclusion, not only does the millennial have to consider basic estate planning, but they also have to consider many other issues that will assist you in building your nest egg as you reach retirement age.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

The Validity of the No Contest Clause in the Last Will and Testament

The Validity of the No Contest Clause in the Last Will and Testament

If you are considering drafting a will, the “No Contest Clause” may tempt you. Most people, however, don’t realize that the no contest clause is invalid in most states. A no contest clause is a provision drafted into estate planning which threatens disinheritance and/or litigation to any beneficiary who challenges the validity of the will and testament, the specific distributions, and/or any other term in the last will and testament.

It is important to know that each state has their own specific rules regarding the validity of the no contest clause. For instance, California allows limited validity. In California, no-contest clauses will only divest a party that unsuccessfully contests a last will and testament if the Court determines that the party brought the action without probable cause. In Florida and New Jersey, no contest clauses are invalid and unenforceable. Massachusetts, on the other hand, allows such penalty clause. New York also gives such clauses full effect. In Texas, the challenge must be made in good faith.

If you are interested in adding a no contest clause to your estate plan, you must first check if the clause is valid in your state. If the clause is valid, you must still determine its enforceability (limited or complete). The clause should then be drafted according to the state law.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Tips for Disinheriting Heirs

Tips for Disinheriting an Heir in an Estate Plan

An estate plan is one of the most personal documents an individual may create. Your estate plan details all of your assets, who they are going to and any special instructions for supplemental distributions. It is not uncommon that you may desire to specifically leave out certain family members from receiving distributions from your estate. The disinherited beneficiary could be a former spouse, a niece, sibling or even a child.

Disinheritance can occur for one of many reasons. The reasons do not necessarily have to include lack of love. For instance, you could disinherit a child because they have an issue with drugs or alcohol. You could instead have another plan in place for controlled distributions. You could have loaned one of your children funds for a business venture and prefer to split the remainder of your assets between your other children so that every child gets an equal inheritance. You could be estranged from a family member and prefer that your other family members receive distribution. Distance is another reason many people disinherit family members. Or, you could simply dislike a certain person (for one reason or another) enough to disinherit them.

A disinherited heir must always be accounted for in estate planning. Leaving them out is not always enough. Properly disinheriting an heir means placing words in your estate plan where you specifically leave them out. Another planning tip is to make sure your estate planning documents are consistent. Each respective distribution document must have the same disinheritance language. Consistency is key! Finally, you can add language such as “not for lack of love” to ensure that there is no animosity if your last will and testament and/or trust is shared or read at a table reading in front of your family or other heirs.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

A Guide to Commercial Real Estate

A Guide to Commercial Real Estate

The following is a great article on the commercial real estate market written by Rick Tobin of Premier Hotel Realty, a South Florida Commercial Real Estate Brokerage.

The Changing Faces of Commercial Real Estate

The commercial real estate market (“CRE”) is constantly changing and evolving. The commercial real estate market is growing in some areas, and shrinking in others.  In fact, it’s changing so fast, sometimes it’s hard to tell which direction things are headed!

According to a recent article from Forbes magazine on the commercial real estate industry, commercial real estate values are expected to continue to rise in the years ahead in various sector industries. This is due to the evolution of how properties are marketed and used as well as how those properties are changing their character.

Here are the major changing segments of the CRE industry to watch:

  • Multifamily
  • Hotels
  • Office
  • Retail

Multifamily

The Millennials have changed the way multifamily properties are being developed and marketed. A growing preference for smaller, rentable spaces and the tiny house movement has shaped the way developers are looking at apartment complexes. According to the most recent PEW survey, greater numbers of Millennials tend to prefer to rent rather than own. The American dream of owning a home has shifted to 400 square feet homes, often with a view of the ocean and numerous recreational amenities. Many Millennials want to be mobile, and to avoid the traditional ties of ownership.

Hotels

While hotel occupancy has remained strong, many sectors are competing with “shared accommodation” platforms, like AirBnB and VRBO, leaving hotels to market to events customers and the business traveler. High speed internet is in huge demand and travelers insist that coverage be provided throughout facilities. Workspaces are incorporated into rooms and chargers and electrical outlets must support today’s technology toting travelers.

Office

The latest trend in workspaces is the demand for shared office space. This new work style helps incubate small business in new ways. Small, flexible spaces are in high demand. Cutting overhead costs, many office spaces are cohabitated by related synergistic industries that benefit from partnering with each other. Many shared spaces have networking and business partnering all in one floor and the occupants pay ala carte prices from a Chinese menu.

Retail 

The rise of e-commerce sales has reshaped many traditional retail spaces. Companies are tailoring their space for employees instead of their clients. While their website is designed to attract their customers, their retail space is designed for employees. Storefronts may be a thing of the past in this e-commerce world, and stores may become showrooms for behind-the-scenes fulfillment centers.

What does all this mean?  With change comes opportunity for those with vision and flexibility to take advantage of the morphing commercial real estate industry.

Estate Planning for Law Firms and other Businesses

Estate Planning For Law Firms and Other Businesses

Many people don’t realize that their business needs estate planning too. Professionals have an even harder time ensuring that their businesses don’t go through probate upon their passing and/or their clients aren’t neglected. The issue is especially pressing in cases where there is only one solo practitioner running the business. One great option for business succession planning is appointing a person, in the same field or profession, to wind down or take over the business upon incapacity or death.

Some businesses may be assigned to revocable trusts (on a case-by-case basis), while others, such as law firms and professional companies must comply with strict ownership restrictions imposed by professional licensing boards. For instance, a law firm cannot be owned by a revocable trust because the revocable trust never went to law school or passed the bar. Even though the revocable trust is regarded as an alter ego for tax purposes (during the lifetime of the grantor), that still doesn’t suffice pursuant to the licensing and ethical requirements of the profession. The same may be the case for other professions such as doctors and/or accountants.

One solution could be to create a business succession plan that selects a successor, or multiple successors, as the case may be, to purchase the business in the event of incapacity or death. This could be an employee or other trusted professional. Life insurance is usually involved in funding such purchase. Your successor(s) can even begin running the company long before you’re gone to ensure the transition is smooth. Another solution for solo practitioners could be to draft a document electing a trusted administrator to wind down the affairs of the business and handle any client matters in your absence. Both options should be coordinated carefully with your personal estate planning.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Estate Planning: Distinctions between a Personal Representative and a Trustee

Estate Planning: Distinctions between a Personal Representative and a Trustee

While the Personal Representative (or Executor in some states) of a last will and testament and the Trustee(s) of a revocable living trust and/or other irrevocable trust document are almost always the same person, there are important differences with regard to each of their respective duties in these capacities. The reason the power holders are generally the same for last will and testaments and trusts is because they have similar functions and therefore naming different power holders would make the administration process more complicated and less centralized.

A last will and testament is a legal document directing the disposition of an individual’s assets at their passing. A last will and testament can state the distribution right in the document, or can be utilized as a “pour over” last will and testament to a revocable living trust. Recall in the basis estate planning blog: https://www.capitalplanninglaw.com/basic-estate-planning/, we discussed the differences between the regular “long” last will and testament and the more condensed “pour over” last will and testament, which is executed and/or modified contemporaneously with the revocable living trust.

A revocable living trust can serve the same function as a long last will and testament (distribution of assets), however, it has the significant benefit of probate avoidance (so long as the revocable living trust is funded properly during lifetime). The revocable living trust can also provide for limitations on distributions for young, immature, special needs or spendthrift beneficiaries. See article on the Advantages of the Revocable Living Trust: https://www.capitalplanninglaw.com/advantages-revocable-living-trust. Both the Personal Representative and the Trustee can take a reasonable fee (which may be determined in advance or by state law) for acting on your behalf with regard to your estate and/or revocable living trust.

While many of the duties of a Personal Representative (or Executor) may overlap, there are a few distinct differences between the two roles. For instance, the Personal Representative (or Executor) is responsible for administering your estate through probate, whereas, the revocable living trust is a probate avoidance strategy. The Trustee(s) will not generally handle any probate matters other than cooperating with the Personal Representative (or Executor) for the payment of just debts and taxes of the estate. The next major difference is that a revocable living trust may be used during lifetime and at incapacity for financial support. The last will and testament only springs into action upon a person’s death. The final major difference is that the Personal Representative’s actions (for the most part) must be court supervised throughout the probate process. The Trustee has no such requirement of court supervision because trust assets pass outside of probate.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Selling Real Property in Probate

Selling Real Property in Probate

The sale of real property in probate must go through the supervision of the court in order for the title to be marketable. This is always the case where a person dies intestate (or without a last will and testament). Or, where there is a last will and testament, but it lacks a “Power of Sale Clause”. In other words, the court must sign off on any proposed sales and the terms of the sale prior to closing on the real estate transaction. The “Power of Sale Clause” allows a Personal Representative to sell real property without court approval. Read our article on Tips for Selling Real Property in Florida:

In furthering the sale, the court will likely ask for an appraisal of the property and/or other record(s) of just value. The court may also require you to advertise (market) the real property to the public, require a waiting period, and allow other prospective buyers the opportunity to make bids prior to the sale (at the probate hearing). The usual deposit held for the purchase of real property in probate is ten (10%) percent, upon executing a purchase and sale contract. It is not unusual for an initial buyer to ultimately not receive the property if other (higher) bids are placed to purchase the property at the probate sale hearing. These bids are typically placed by investors who are savvy in the realm of real property probate sales. In that case, the initial purchaser would receive a refund of their ten (10%) deposit, and will have no further recourse against the estate.

On the other hand, if a person’s last will and testament allows for the sale of real property outside of probate court approval (“Power of Sale Clause”), then the Personal Representative/Executor must only wait until the creditor claims period has expired (pending all proper notices have been sent and filed with the court). After the creditor’s period has expired, the estate may sell the real property without the court’s explicit approval. However, such sale will still be outlined in the estate accounting report submitted to the court for approval at the end of the probate.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Tips on Choosing the Estate Planning Power holders for your Estate Planning Documents (Durable Power of Attorney)

Tips on Choosing the Estate Planning Power holders for your Estate Planning Documents (Durable Power of Attorney)

The estate planning power holders or agent(s) designated on the durable power of attorney for financial-related decisions should be somewhat business savvy, or at least have a good sense of financial responsibility. A younger adult child, who has been taking care of their whole life, may not be the best option. However, they could make great alternative power holders on either the second or third levels. Or, you can have co-power holders in instances where one of your children and/or family members is better at medical-related decisions and the other is better at financial-related decisions. Using co-power holder designations allows the power holders to combine their strengths and weaknesses and act in the best manner possible on your behalf (in the event of your incapacity).

As a general rule, the health care designation document may differ in power holders from the durable power of attorney for financial-related decisions. The durable power of attorney, however, should have the same power holders as your last will and testament and/or your revocable living trust since there are similar financial-related functions. Also important is to name individuals who you believe will outlive you, however, you can always change your power holders at anytime you have the requisite signing capacity.

If you are still uncertain as to who to name as your power holders, a complimentary consultation with Yelena Sverdlova, Esq., Managing Member of Capital Planning Law, PLLC (Info@CaptialPlanningLaw.com) can definitely help with the decision making process and establishing the pros and cons of each power holder option.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Tips on Choosing the Power Holders for your Estate Planning Documents (Health Care Surrogate)

Tips on Choosing the Power Holders for your Estate Planning Documents (Health Care Surrogate)

So you are finally ready to talk about your estate planning documents, now what? Well, the biggest question I ask (other than who the beneficiaries should be) is who should have the power.” Estate planning professionals commonly refer to these people as the power holders in the estate planning documents. Each estate planning document has its own appointed power holder and each power holder has different duties (depending on the purpose of the document).

For instance, the Designation for Health Care Surrogate (incapacity planning document) names surrogates who are appointed to make medical-related decisions on your behalf in the event you become incapacitated. Often times, the original health care surrogate is a spouse followed by children and/or other family members. Other individuals who do not have many close family members, name a close friend or trusted advisor. Choosing the health care surrogate is a complicated process and requires an individual to consider their power holder’s strengths and weaknesses. For instance, a person who does not handle emergency medical situations and/or is very emotional whenever sickness falls on a family member is probably not the best surrogate for medical-related decisions. A rational, clear person, who acts well in crisis, is a great option to be named as a health care surrogate for a medical-related power holder.

If you are still uncertain as to who to name as your power holders, a complimentary consultation with Yelena Sverdlova, Esq., Managing Member of Capital Planning Law, PLLC (Info@CapitalPlanningLaw.com) can definitely help with the decision-making process and establishing the pros and cons of each power holder option.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Selling Florida Real Property in Probate

Tips for Selling Florida Real Property in Probate

The best tip for selling Florida real property in probate is to hire experienced, knowledgeable and diligent professionals to assist you with the transaction. A broker and/or real estate agent who is extremely knowledgeable and experience in the sale of property in probate may already have a depository of potential buyers at their disposal and/or will know all of the nuances of such sales. Their knowledge and experience will be well worth the six (6%) percent commission fee when the transaction goes smoother and more efficiently. A broker who is not knowledgeable in probate real property sales will likely botch some aspect of the process (as the are learning) and cause undue delay to the estate and its beneficiaries. In some instances, your probate attorney may also do real estate transactions and/or issue title. In that case, they may assist you in both the probate and the sale of real property subject to probate. If that is not the case, then choosing a real estate broker and/or title attorney who will cooperate with the probate attorney is key.

As a general rule, in most Florida counties (including Palm Beach County), the owner of the property (or the Personal Representative/Executor in the case of a probate) has the advantage of choosing the closing agent (attorney and/or title agency who will do title on the transaction and prepare the corresponding documents for the parties). Whether the closing agent will enter a dual agency position (where they represent the buyer as well as the seller) is a decision that needs to be contemplated by all of the parties and the Personal Representative must further waive any conflicts that will arise out of such dual agency prior to the dual agency being undertaken.

Having a knowledgeable broker, attorney and/or title agent will help simplify the process and take away much of the headache of selling real property in probate. For more information on the probate administration process view the article on Overview of Probate Administration here: https://www.capitalplanninglaw.com/overview-probate-administration/

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Property Ownership in Estate Planning

Property Ownership in Estate Planning

A large part of estate planning is how assets are titled. There are five common ways that are used in the titling of assets. Also equally important in estate planning is to ensure that the correct beneficiaries are designated on your financial planning accounts (including, but not limited to: checking, savings, other banking, brokerage, life insurance and/or retirement accounts). The best time to check the titling of all of your assets is when you create a new estate plan, or revise a prior estate plan.

Assets can be titled on one or three major ways. Individually, concurrently or in a business entity. Concurrent ownership includes tenants in common, joint tenancy and tenants by the entirety (also known as husband and wife). Important to note is that while most states follow common law property rules, there are several states which follow community property rules.

Tenants in commons share the undivided rights to property concurrently, however, their interests are alienable, devisable, descendible. That means that property concurrently owned in tenants in common can be sold, bequeathed through estate planning or otherwise inheritable by descendants. Take the example of Tom and Jim owning a home as tenants in common (50% each). If Jim passes away and leaves his half to his son, John, then the home will be owned by Tom and John (50% each).

Joint tenants also share the undivided rights to property concurrently. A joint tenancy can only be created when the four unities exist (same time, same title, same interest, and the same possession). The language must also indicate that the grantor intended to convey a joint tenancy. Joint tenants benefit from probate avoidance because their interests pass by survivorship. In other words, when one joint tenant passes away, the other joint tenant automatically inherits the deceased joint tenant’s interest. If there are multiple joint tenants, then each surviving joint tenant will inherit the interests in the same proportion (consistent with the four unities). A joint tenancy can further be severed when one of the unities is disturbed. One example of this is a sale of the respective joint tenant’s interest to a third party. Upon severance, all of the joint tenant interests convert into a tenancy in common.

Tenants by the entirety (“TBE”), which is reserved for married individuals, share the undivided rights to property concurrently. Like joint tenancy, TBE ownership benefits from probate avoidance due to survivorship. However, unlike joint tenancy, tenancy by the entirety cannot be severed by sale without the consent of both spouses.

Finally, property can be owned by a business entity. There are many types of business entities including but not limited to: limited liability company (“LLC”), partnership, limited partnership (“LP”) and corporation. Business entities can also be incorporated in any U.S. state or even internationally. Deciding what business entity to use should be made on a case-by-case decision based on the asset category. The same goes for choosing the jurisdiction in which to incorporate the business.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Life Estate Deeds in Estate Planning

Life Estate Deeds in Estate Planning

There are several common types of deeds in Florida including: the warranty deed, life estate deed, quit claim deed and special warranty deed. The most protective type of deed is the warranty deed. The special warranty provides very limited warranties (the seller warrants that he or she has done nothing to encumber the title to the property). The quitclaim deed provides no warranties.

There are also different present and future ownership interests that can be conveyed. Fee simple ownership has present and future ownership rights (the best ownership a person can have). Fee simple defeasible ownership is less common, but adds a contingency to the vesting of an individual’s rights to a property. The final ownership interest is the life estate and is used often in conjunction with estate planning. The deed reserves a lifetime ownership (present interest) to the grantor or other individual(s) and then the remainder (future interest) is deeded to another individual, entity or revocable living trust. A life estate for the life of someone other than the grantor is called a life estate pur autre vie (ie: if carol is given use of the family house for as long as her mother lives, she has possession of the house pur autre vie).

In order to preserve the remainder man’s interest’s, the life estate holder must follow certain rules. Specifically, the life estate holder cannot commit any type of waste during their life ownership. Waste is made in three different ways; voluntary, permissive or ameliorative. Voluntary waste is where the property is used in a manner in which reduces its market value. Permissive waste happens when a life estate holder fails to upkeep the property. Ameliorative waste is altering a property by making improvements. While ameliorative waste is not permitted, it usually will not be actionable since the damages are limited or do not even exist.

Revocable living trusts are often used with the life estate in estate planning. Specifically, the grantor reserves a life estate in the property (often primary home) and then gives the remainder interest to the revocable living trust (which is either already executed or created in conjunction with the deed). From there, your predetermined trust beneficiaries will obtain the rights to the property through the trust document.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Why a Simple Will is Simply Not Enough

Why a Simple Will is Simply not Enough

A common misconception in estate planning is that creating a simple will (last will and testament) without creating the accompanying incapacity planning documents is enough. A last will and testament is the document that administers a person’s estate after death and distributes assets to beneficiaries. Only creating a last will and testament without incapacity planning documents is simply not enough. Most people become incapacitated before they pass, and not having incapacity planning documents will subject families to expensive and burdensome court supervised guardianship. Guardianship can cost thousands of dollars and take months to even get court approval depending on the clog in the court system.

Incapacity planning documents include: the declaration of health care surrogate (or health care directive), living will and durable power of attorney. These documents dictate the person who will handle your medical and/or financial affairs upon your incapacity. The declaration of health care surrogate designates surrogates who will act on your behalf to make medical-related decisions in the event you become incapacitated. The living will states which life prolonging measures you prefer your surrogates to take if you are in an end stage, vegetative or terminal condition. The durable power of attorney designates agents who will act on your behalf to make financial-related decisions in the event you become incapacitated. Also, important to note is that the Florida durable power of attorney statute significantly changed in 2011, therefore, your pre-2011 durable power of attorney document will need to be revised in accordance with the new statute.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Using Deeds to Avoid Probate in Florida

Using Deeds to Avoid Probate in Florida

How can you take advantage of Deeds to avoid probate? Well, deeding your home to your revocable living trust is one of the easiest ways to have the home avoid probate. Each particular asset you own needs to be accounted for in estate planning with regard to probate avoidance. For instance, property held jointly and/or as husband and wife automatically bypasses probate without any additional planning. Life insurance and retirement accounts bypass probate if they have the correct beneficiary designation and the particular beneficiary is alive at the policyholder’s passing. For a home to bypass probate, it must be deeded to a revocable living trust. A revocable living trust can be created with your existing estate plan or with a new estate plan.

There are several common types of deeds in Florida. The most protective deed is the warranty deed. The warranty deed comes with the following built-in covenants:

  1. Covenant of seisin (the seller warrants that he or she has good title to convey the property);
  2. Covenant against encumbrances (the seller warrants that there are no liens, restrictions, etc. on the property at the time of the conveyance);
  3. Covenant of quiet enjoyment (the seller warrants that the buyer will enjoy the property without claims from third parties);
  4. Covenant of further assurances (seller warrants that he or she will cure any defects in the title); and
  5. Covenant of warranty forever (seller warrants that he or she will defend the title of the property, if challenged, forever).

In foreclosure, a buyer will generally get a special warranty deed (also referred to as a limited warranty deed). In a special warranty deed, the seller warrants that he or she has done nothing to encumber the title to the property, but does not provide further assurances or guarantees with regard to the seller’s predecessors. A quitclaim deed does not provide any warranties regarding the quality of the interest conveyed.

Once the revocable living trust is created, you may deed the property right to the trust, as early as the date of creation. You should also have special provisions in the deed and revocable living trust reserving the right to continue your claim to the homestead exemption. Deeding the property will require paying nominal recording fees and documentary stamps and may take anywhere from two weeks to a month depending on the backlog in the recording department.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

The Mistake of Creating a Revocable Living Trust, but Failing to Fund it

 The Mistake of Creating a Revocable Living Trust, but Failing to Fund it

A revocable living trust is a great instrument to use in your estate planning, but simply creating and executing the trust is not the only step in the estate planning process. You must make sure that all of your assets are re-titled into the trust’s name in order to enjoy all of its benefits. Also, you should revoke any prior trusts so there are no issues with the administration of multiple trusts upon your passing.

Funding a revocable living trust may be a tedious process, but it certainly needs to be done quickly and properly. Most estate planners will advise you of the funding process and/or provide you with a funding letter, but few will actually do it for you. Therefore, you must be aware of the importance of funding as well as the process to ensure that your estate plan is complete. Funding your revocable living trust could mean changing the name on your bank account and/or brokerage account to the trust’s name (which will usually be indicated inside of the trust document). Funding the revocable living trust could also include changing certain beneficiary designations on life insurance policies and/or other financial planning accounts. Funding may mean something different for every person.

The downfall to not funding your revocable living trust is that your assets remain in your individual name and may need to go through probate (which is what you hoped you would avoid). That means, while you probably created a revocable living trust for the purpose of avoiding probate, these individually titled assets will actually have to go through probate to reach your trust using your pour over last will and testament. Although the assets will inevitably reach the trust, this may not be the route you intended when you created your estate plan.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

How Financial Planning Overlaps with Estate Planning

 How Financial Planning Overlaps with Estate Planning

Estate planning is the process of planning for incapacity and the disposition of assets at death. This process is principally important because if you don’t execute an estate plan, then you run the risk of the state deciding who will receive your assets, which may be against your intentions.

Estate planning not only involves the preparation and execution of documents under proper formalities, but also requires cooperation with trusted professionals such as financial advisors, bankers and tax professionals. Failure to do such due diligence may lead to your assets being improperly titled and your estate plan failing its purpose. Another great reason to cooperate with professionals is to ensure that you have the appropriate insurance in place so that your family does not have to struggle after your death.

Estate planning almost always overlaps with financial planning, as estate planners usually review financial planning tools to determine whether titling is correct. The estate planner does not provide comprehensive advice regarding financial planning, as they are not licensed to do so – but they should at least review your assets and point you in the right direction. Such integrated planning allows the estate plan to be executed to its fullest extent and to your intended purpose.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Advanced Estate Planning

Advanced Estate Planning

In Florida, advanced estate planning is advisable where the assets of an estate are close or beyond the federal tax exemption limit of $5.4 million. This is different from other states where you also have to account for a state estate tax, since Florida does not have one. This could be the case where a family has money that has trickled down over generations or even a profitable family business. The tax exemption limit changes each year, but has remained at $5 million for the past few years. Advanced estate planning includes tools such as irrevocable trusts and business planning and is utilized to keep assets from being taxed at the highest tax rate as they move from generation to generation. One or more irrevocable trusts can be used, in addition to basic estate planning and business planning, to achieve this result.

One of the most well known irrevocable trusts includes the irrevocable life insurance trust (“ILIT”). The ILIT is most often used in connection with a life insurance policy where the receipt of such death benefits will make it probable that the estate will exceed the federal exemption limit (thus triggering estate taxation). To utilize the irrevocable life insurance trust, a person must first open a life insurance policy with a financial planner and then designate the ILIT as the beneficiary. The ILIT should further designate beneficiaries who will receive the life insurance proceeds at death.

Another irrevocable trust is the qualified personal residence trust (“QPRT”). The QPRT allows for the discounting of a primary home’s value (for estate taxation purposes) if a grantor outlives the number of years stated in the trust. The QPRT can designate specified beneficiaries to receive the property after a set number of years, or it could designate another irrevocable trust to receive the property. If the grantor does not outlive the number of years, the full value of the home falls back into the estate and there is no discounting.

The intentionally defective grantor trust (“IDGT”) is a third advanced estate planning tool that is often used to keep businesses and other high net worth assets from incurring estate taxation. The IDGT works alongside business planning to remove valuable real estate and profitable business entities out of a grantor’s individual name, while still allowing the grantor to receive the income benefits of these assets during lifetime. Such trust planning is very advanced and should only be undertaken by experienced estate planning professionals.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Advantages of the Revocable Living Trust

Advantages of the Revocable Living Trust

Estate Planning is the process of planning for the distribution of assets to selected beneficiaries at death. Basic estate planning includes the following legal documents: The declaration of health care surrogate (or health care directive), living will, durable power of attorney, Read more

Overview of Probate Administration

Overview of Probate Administration

Probate Administration is the process of settling a person’s estate and distributing assets from a decedent to their beneficiaries. Probate can occur in one of two ways, testate and intestate. Testate probate administration occurs when a person passes away with a last will and testament and/or revocable living trust. Intestate probate administration occurs when a person passes away without any estate planning documents (no known last will and testament). Intestate probate administration generally follows the same rules as testate probate administration but the process can become much more complex and stressful if there is any potential for a beneficiary dispute (which occurs when there are multiple beneficiaries who are interested in controlling the distribution of a decedent’s assets).

In Florida, probate administration can occur in two ways (regardless of whether the decedent passed testate or intestate). Formal administration is required if the decedent passed away with over $75,000 of assets in their name (not including homestead or other exempt assets) and/or it hasn’t been two years since death. Summary administration (a less formal process) can be used where there is $75,000 or less in individual estate assets (exempt property not included) and/or it has been two years or more since death. A formal probate administration can also be converted to a summary administration in very limited circumstances.

Further, there is third type of probate called ancillary probate administration that involves opening a supplementary probate for assets located in a state outside of the state that the original probate was opened. Ancillary probate is usually necessary in the case of real property assets located in different states. To avoid the necessity of ancillary probate, a person can title all of their real property to a revocable living trust or other corporate entity (pending the entity isn’t owned individually by that person).

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Basic Estate Planning

Basic Estate Planning 

Every individual should create a basic estate plan during their lifetime. One of the advantages to creating a basic estate plan is the ability to select the individual taking care of your personal affairs if you become disabled or pass away  (rather than the Court). Another advantage is the ability to provide continued support for your family members (including your spouse and/or children) after your death. A third advantage is the your ability to pre-select and/or designate who will recieve your assets at your death (beneficiaries). Finally, basic estate planning allows you to minimize the need for probate administration.

The following are the estate planning documents everyone should have:

  • Designation of Health Care Surrogate (Health Care Directive): The health care directive allows you to appoint the individual or individuals who will care for your health related needs in the event that you become incapacitated and cannot do so yourself.

  • Durable Power of Attorney: The durable Power of Attorney allows you to appoint the individual or individuals who will care for your financial related needs in the event that you become incapacitated and cannot do so yourself.

  • Last Will and Testament: The last will and testament allows you to appoint a personal representative who will take care of your affairs after your death. The last will and testament describes how funeral expenses should to be paid and designate certain beneficiaries who you want to receive your personal and/or other property upon your death. The last will and testament used with a revocable living trust is called a pour over last will and testament, and “pours over” assets from your estate at your death.

  • Revocable Living Trust: The revocable living trust appoints a trustee who care for assets and distributes assets to certain beneficiaries at death. A revocable living trust can provide for limits on spousal and/or family support so that you assets are distributed wisely at your death. For instance, a revocable living trust can limit the distributions to beneficiaries reaching a certain age or ages.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, business law, probate, guardianship and/or real estate needs.

Trust Planning for Special Needs

Trust Planning For Special Needs

Special needs trust planning allows a person who is eligible for public benefit programs to receive such benefits while also receiving a supplemental income stream for non-necessity items (such as beauty salon visits, vacations, gifts for children and grandchildren, etc.). The public benefits recipient will always receive the benefits of the special needs trust for their lifetime as they always remain the trust beneficiary. However, they are able to receive the assistance of public benefits regardless of the funds placed in trust.

The trustee of the special needs trust can be a family member or a trained fiduciary (such as a law firm and/or attorney). The advantage of having a trained fiduciary to act as trustee is that such a person knows which activities fall within the guidelines allowable for the supplemental needs trusts, and which activities do not. Therefore, mistakes or disqualification of the special needs trust is less likely to occur.

The Special Needs Trust can be funded by a family member or by a trust beneficiary (if they have the capacity to do so). A Supplemental Needs Trust funded by a family member is referred to as a Third Party Supplemental Needs Trust, and a special needs trust that is funded by a special needs beneficiary is referred to as a self-settled special needs trust. Also, in Florida, provisions for the creation of a supplemental needs trust can be included in a healthier spouse’s last will and testament and/or revocable living trust in the event they predecease their less healthy spouse.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, probate, guardianship and/or real estate needs.

The Florida Real Estate Contract

The Florida Residential Real Estate Contract

A real estate contract for the sale and purchase of real property has a number of elements, which can be confusing and complex. Failure to select strategic terms in a contract for the sale and purchase of real estate or abide by the time limits specified in an executed contract can lead to litigation fairly quickly.

The first step to executing a Contract for Sale and Purchase of Real Estate is to submit a written offer to a seller. Upon receipt of an offer, a seller can either accept the contract agreement on your terms, or counter offer on different terms. If the seller remits a counter offer, a contract is not complete, but rather the ball is back in your court. At this point you may either accept the seller’s counter terms or continue to negotiate. Just because you feel that you found your dream home doesn’t mean you have to back yourself into unfavorable sale terms.

In Florida, there is a standard Contract for Sale and Purchase that has been approved by the Florida Realtors and Florida Bar. Notwithstanding such Contract, you still may have some flexibility in choosing contract terms depending on the county you reside in and the flexibility of the other party to the transaction. You may also attach addendum with custom terms, which have to be executed by both the buyer and seller.

Once a buyer and seller agrees on contract terms and the contract is signed and initialed by all parties, an executed contract exists. After the execution of a contract for sale and purchase of real estate, the buyer and seller must follow the contract terms, including any applicable deadlines for actions such as inspections, surveys, financing, insurance, etc., unless waived, in writing by both parties (in an addendum or separate writing). it is advisable to retain a real estate attorney to assist you navigate through all of the complexities and confusions of real estate law.

Contact Capital Planning Law, PLLC for your complimentary consultation to discuss your estate planning, probate, guardianship and/or real estate needs.