Tag Archives: Estate planning

Asset Protection

Asset Protection Through Family Limited Liability Companies

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11102865_s (2)A Family Limited Liability Company (FLLC) can be an effective tool for protecting your family’s assets from creditors. The FLLC can allow you to maximize your family’s net spendable income while also provide you with estate planning options.

What is a FLLC?

The FLLC is a form of business or investment entity ownership, which is generally created to provide its owners with significant protection from creditors and potentially substantial estate and gift tax savings. It usually involves several owners who are related to each other and it operates under a restrictive operating agreement that outlines the terms upon which the FLLC will do business.

How does a FLLC work?

The most common arrangement involves a senior member creating the FLLC and serving as the Managing Member. Children and grandchildren can be named as Members of the FLLC, but without any management authority. Typically, the senior member funds the FLLC with money, real property, stocks, bonds, artwork, or other assets. Percentages can be assigned to each Member (children or grandchildren) with discounts being allowed as to the valuation since they are receiving a minority interest (without any control authority over the FLLC). Each party’s contribution to the FLLC determines liability for debts. Additionally, the FLLC provides significant flexibility since ownership shares can be modified as your family or business changes.

What are the benefits of a FLLC?

A FLLC can allow you to shift or reduce income tax and estate tax liability among generations in the family. The FLLC is often treated as a partnership for income tax reporting, with flow-through taxation, which means the profits and losses of the entity are passed through pro rata to the members. Using a FLLC for estate planning purposes allows you to reduce the size of the senior member’s estate and contributions to the FLLC are not taxable events, while also providing asset protection from lawsuits against the individual members of the family.

By transferring ownership to multiple owners through the FLLC, creditors of any member are unable to force a dissolution of the business entity and their remedies are restricted to obtaining a “charging order” which provides only that the creditor receives distributions when the members receive distributions. Since nothing requires that a FLLC distribute profits, it is not very beneficial to the creditor. Thus, the FLLC provides a distinct benefit for asset protection purposes.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Estate Planning

The Initial Meeting with your Estate Planning Lawyer

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Business handshakeYour estate plan is a personal matter that should be discussed with and drafted by a lawyer you trust. While it can be helpful to obtain referrals from family members and friends, it is important to understand that the right attorney for them may not be the best fit for you. Many people also find lawyers by contacting their local bar association for a list of local, qualified estate planning lawyers. Don’t get pressured into using a professional that you are not comfortable with using. However you locate your attorney, it is essential to prepare for your initial consultation with him or her.

Before you first meeting with a lawyer, you should make a list of questions you want to ask so you don’t forget to get the answers you need. It is helpful if your documents and records are organized. You should also consider what your goals are for your estate plan. This will assist your attorney with making recommendations for the type of plan you should create.

A few pieces of information that will be helpful for your attorney to have include:

  • A list of your beneficiaries, including anyone you want to specifically exclude from your estate plan
  • Individuals who you want to appoint to serve as the trustee or personal representative of your estate
  • An accounting of your most significant assets, including bank accounts, real estate, investment accounts, IRA or 401(k), life insurance, or other valuable items. It is also helpful if you know how assets are titled, i.e., joint tenants, individual names, etc.
  • If you have minor children, you should consider who you want to appoint as their guardian
  • If there are any special circumstances about your family or your estate that may impact the way your estate planning is handled (such as a special needs family member), be sure to discuss this with your lawyer

Taking the time to prepare for your initial consultation with your estate planning attorney will help expedite the process, which in turn saves you money. It is important that you remain active in the estate planning procedure and don’t rely on the lawyer to simply “handle things” for you. This is not your attorney’s legacy, so you want to ensure it is done the way you want! Your attorney should be a good listener, so that he makes sure he understands your needs, and then tailors your documents to fit those needs.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

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Estate Planning Mistakes to Avoid

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OopsCreating a comprehensive estate plan can be a complex process. It requires forethought, strategic planning and an understanding of tax laws. Below are a few common estate planning mistakes that you want to avoid:

Create a Plan

Don’t assume your estate is too small to warrant having an estate plan. Although state law provides a plan for everyone, it likely is not the most beneficial plan for your loved ones.

Beneficiary Designations & Title to Assets

It is important to verify that your estate plan matches your beneficiary designations and how your assets are titled. If there is a conflict, the designations and the titling will control, but you want to avoid confusion in order to eliminate any disputes from arising.

Life Insurance

If you own life insurance at the time of your death, it can be included in your estate. If you choose to transfer ownership of the policy during your lifetime, you can avoid any potential estate tax inclusion. Deciding how to have your insurance policy owned or controlled is a highly individualized decision, but it is important to get professional advice.

Gifts

An effective way to minimize future estate taxes is by giving annual gifts to your loved ones. You can transfer significant amounts of money or assets out of your estate which reduces your tax liability. With strategic planning, you can use your annual gift tax exclusions so each yearly gift can be leveraged into greater sums being transferred out of your estate. To learn more, please read our blog “Estate Planning Tip: Gifting to Grandchildren.”

To learn more about mistakes commonly made in estate planning, please read our blog tomorrow titled “Estate Planning Mistakes to Avoid – Part 2.” The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

 

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Estate Planning Mistakes to Avoid – Part 2

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erase mistakeThis blog is a continuation from our last blog topic titled “Estate Planning Mistakes to Avoid – Part 2.” The following are three more errors in estate planning that you want to avoid:

Failing to Get Help

We live in a world where many things can be done with the help of “do it yourself”guides. The internet is full of websites claiming they will save you money by showing you how to prepare your will or trust. However, there are many problems that can arise from using DIY guides. Many of them are very generalized and were not created to comply with your applicable state law or your unique life circumstances. Additionally, computer programs are often not timely updated to comply with changes in the law, nor will it notify you when the law changes. As a result, a seasoned estate planning lawyer will save you time, money and stress, because you have the peace of mind knowing your plan is done correctly.

Estate Tax Exemption

An attorney can help you minimize your estate taxes by strategically making gifts during your lifetime. Estate tax exclusions routinely change, so it is important to be aware of them and take advantage of the exclusions when they are at their highest.

Outright Inheritances

Even if all of your beneficiaries are adults, you may not want to give outright inheritances. This is especially true of the adult who has poor financial management skills and you want to provide for them over a long period of time. Creating a trust, either revocable or irrevocable, can allow you to take advantage of the asset protection benefits for as long as possible, while also giving you the flexibility to set forth how you want your assets distributed once you are gone. For more information regarding trusts, please read our blog titled “Do You Need a Trust?”

Don’t put your estate or loved ones in jeopardy. Let a professional help you create your estate plan. It will save you money and time in the long run.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

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Why Estate Planning is Crucial for Unmarried Couples

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couple planningCouples who are living together but who are not legally married, whether same-sex or opposite-sex, may have unique estate planning needs. Unlike legally married couples, the law does not currently provide you with automatic protection if one of you dies. Thus, having an estate plan in place is important for you.

Unmarried couples can use their estate plan to ensure that assets are distributed as they want them to be. If either person has been previously married or has children from a prior relationship, having an estate plan is even more important. It is also essential to safeguard your estate plan in a safe place where your loved ones can locate and access it when needed.

Another reason unmarried couples need an estate plan is to grant their loved one the authority to make health care decisions on their behalf. When an unmarried individual is incapacitated or unable to make their own medical decisions, there is no guarantee that their physician will include their partner in any medical decisions because you are not legally a family member. To ensure your loved one can make medical decisions on your behalf, you should appoint him or her as your health care proxy or power of attorney. The power of attorney document can grant your loved one the ability to manage your finances if you are unable to do so for yourself.

If you are an unmarried couple and you would like to learn more about creating an estate plan, contact us to schedule an appointment.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

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DIY + Estate Planning = Trouble

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HammerOnNailCreating an estate plan is one of the most important gifts you can give your family. It helps provide them stability and comfort, as well as helping you save money. While you may be tempted to “do it yourself” (DIY), estate planning is not an area where DIY is typically successful.

There are many pitfalls in estate planning that can get you into trouble. For example, many DIY estate planners fail to file a gift tax return with the Internal Revenue Service (IRS). The IRS uses a gift tax compliance initiative allowing the agency to use land records from both state and local governments to locate individuals for gift tax audits. In other words, the IRS conducts searches for real estate transactions that involve little or no money exchanged, which commonly occurs in DIY estate planning.

A common mistake occurs when an individual attempts to save money by transferring real property to their family members by adding their name to the deed instead of creating an estate plan. While this strategy can effectively transfer ownership of the property, it creates serious tax consequences for the person transferring the property. Transferring real estate can constitute a gift and the IRS requires the transferor to file a gift tax return and possibly pay a gift tax.

It is important to note that even if you would not owe a gift tax, your failure to file a gift tax return could result in criminal penalties. In fact, a conviction for failing to file a gift tax return can result in a penalty of up to $25,000 and up to a year in prison.

The IRS has been increasing its enforcement of gift taxes. If you are considering creating an estate plan, let us help. Don’t get yourself into trouble or put your estate in jeopardy. Whatever amount you pay a lawyer to help you will be less expensive than a DIY disaster

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.