All posts by Dennis Astill

Saving for College Through a 529 Plan

January 2, 2015 Dennis Astill Leave a comment

The cost of paying for higher education is steadily increasing. Most parents (and grandparents) are concerned with how their children will be able to pay for college. One option to consider is establishing a 529 education savings plan. The term “529 plan” comes from the section of the Internal Revenue Service code that creates and defines them. One of the primary benefits of a 529 plan is it provides a tax efficient means for contributing money that is earmarked for educational costs that a beneficiary can access in the future.

The contributions you make to a 529 plan are treated as a gift for tax purposes. Currently, you can make gifts up to $14,000 in value per person each year without being required to file a gift tax return. There is also a five-year election that can be made that allows you to contribute up to $70,000 in one year (or it can be up to $140,000 with your spouse) to a 529 plan. This election treats the gift as $14,000 payments over a period of five years. However, you cannot contribute any other funds to that beneficiary within that five year term without filing a gift tax, and if applicable, paying a gift tax. It should be noted that if you use the five-year election and you pass away before the fifth calenar year, any contributions made in the years after your death will be included as part of your taxable estate.

If you are looking for a wise investment and you are interested in contributing to your family’s future education, consider the 529 plan. It is an effective estate planning tool that allows you to provide for your children or grandchildren, and it permits you to decrease your taxable estate. This is especially true if your estate exceeds the exclusion amount.

Because the 529 plans require that funds be permanently ear-marked for education (and there is no guarantee that your family will seek higher education), some clients prefer to use an irrevocable trust for education of their children or grandchildren, which has more flexibility, and maintains control over the assets in your hands as a trustee. Understanding the benefits and limitations of 529 plan, and the benefits and limitations of an irrevocable trust is essential before making the decision to permanently set aside funds.

To learn more about using a 529 plan as part of your estate planning, contact us to schedule an initial consultation. 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.

Asset Protection

Asset Protection Through Family Limited Liability Companies

January 1, 2015 Dennis Astill Leave a comment

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

Can your Loved Ones Inherit your Frequent Flyer Miles?

December 31, 2014 Dennis Astill Leave a comment

If you are somebody who travels a lot and you have accumulated a large number of frequent flyer miles or reward points, you know they are a valuable asset. Many people don’t think about including them in their estate planning efforts, which is a big mistake. With some aforethought and planning, you may be able to transfer your valuable loyalty program points to your loved ones.

Every rewards program is different, so each has its own rules that apply to transferring points or miles. The best approach for transferring the program benefits is to start giving them away while you are alive. If you are no longer traveling or you have more points accumulated than you will ever use, start gifting them to family and friends now. Many companies allow you to purchase airline tickets with your miles to be used by anyone. Additionally, you can use your points to buy gift cards, hotel stays or other benefits.

If you are still using your points or miles and you are not ready to gift them to others, you should create a list of your accounts, user names and passwords. This will allow your loved ones to access your accounts if you should die. Many companies that do not allow you to transfer points allow somebody who logs into your account to redeem points or miles.

You should also check into adding family members to your account. Some credit card companies that provide points or miles for every dollar you spend may allow you to add your spouse or other secondary user to your account. If you don’t want this other person to be able to make charges on your credit card, stick it in a safe deposit box with your estate planning documents. Once you pass, the secondary user may have access to your accumulated benefits.

Lastly, you should consider setting forth who you want to leave your program benefits to in your estate plan. Many companies will honor the transfer of points or miles if they are specifically transferred in a will or other estate planning document.

Asset Protection

Guidelines for Asset Protection Planning

December 30, 2014 Dennis Astill Leave a comment

If you are wondering if you should be taking steps to protect your assets, you probably should. Whether you have a high-risk job or you are an average person who wants to make sure you are protected if a difficult situation arises, you should contact us to discuss your options.

Asset protection planning can take a variety forms, but all of them focus on strategies for safeguarding your most valuable assets from potential creditors. Just as important, however, is to take steps to ensure that nobody ends up in legal trouble, including going to jail for contempt or fraud for engaging in the process.

Below are a few guidelines to keep in mind when you are developing asset protection strategies:

Start planning as soon as possible. It is imperative that you create asset protection tools before a claim or liability arises. The longer your protections have been in place, the less likely a creditor can claim they are a “fraudulent transfer.”
Be wary of late planning. Any asset protection planning that occurs after a claim arises will likely make matters worse. In fact, a debtor and whoever assists him in fraudulent transfers can be held liable for the creditor’s attorney fees. You also lose any chance of obtaining a bankruptcy discharge.
You still need insurance. Even if you have established an effective asset protection plan, you still need liability and professional insurance. Your insurance will help pay any legal fees, pay to settle claims, and even help you survive a fraudulent transfer claim.
Business entities protect business assets. If you form a corporation, partnership or limited liability company, it should be used to protect business assets. Placing your personal property in a business entity does not ensure they are protected because an entity can be pierced by a creditor under a theory of “alter ego.” If successful, the creditor will have access to your personal assets. It is much smarter to create a trust to protect your personal property. However, many people misperceive that their estate planning trust protects their assets. This is not the case. Only certain types of irrevocable trusts work for asset protection.
Don’t keep too much control. An effective asset protection plan strives to provide you with sufficient control so that the assets don’t disappear, but not so much control that other parties can argue that you and the asset protection tools are one and the same.

If you are interested in exploring your asset protection options, call us today. 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

Does your College Student need an Estate Plan?

December 29, 2014 Dennis Astill Leave a comment

Under the law, your child is considered a legal adult when he or she reaches the age of 18 years. Most parents do not want to think about their young adult needing an estate plan, but in some situations, it is important to do so. If a young person is moving far away from you for college or a job opportunity, you should consider establishing a health care proxy, power of attorney or even a will or trust for him or her.

Why would your 18 year old need these types of legal documents? As soon as he or she becomes a legal adult, HIPPA prohibits healthcare professionals from sharing private medical information to anyone without consent. If your child is seriously injured or otherwise incapacitated and cannot communicate his or her consent for you to be involved in medical decisions, it can get complicated quickly. To prevent any confusion, you should have a loved one appointed as a healthcare agent, especially for a young adult living away from home.

Another important topic to discuss with your young adult is whether he or she desires to be kept alive by heroic measures if he or she would not have a meaningful quality of life. While this can be extremely difficult to discuss, it is essential for family members to talk about in case the worst case scenario occurs. You should also talk about organ donation and whether your young adult prefers to be buried or cremated.

Although most young adults have not accumulated significant wealth, ownership of any gifted funds or assets vest in your child at the age of 18. If your child should die before you, his or her assets may need to go through the probate process. Without an estate plan, your child’s estate will pass to the heirs-at-law, which usually will be you, as the parents. However, if you have been working to reduce your estate for tax purposes or asset protection purposes, the inheritance of such assets could disrupt your strategy. It may worth considering establishing a simple estate plan for your young adult directing assets to be left to siblings or other family members.

To learn more, please contact us for 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.

Estate Planning

Should your Estate Plan Include a Prenuptial Agreement?

December 26, 2014 Dennis Astill Leave a comment

Most people incorrectly believe that prenuptial or ante-nuptial, or premarital agreements are only advantageous for the wealthy or famous. However, having a prenuptial contract can be an important part of your estate planning process, especially if you have been married more than once and you have children from a prior marriage. In fact, it is possible for a new spouse to invalidate your estate plan if you don’t take action to protect it.

By way of example: You and your spouse have children from previous marriages, you and your spouse are living in the home your children were raised in, and you want your children to inherit the house. Without taking the appropriate estate planning steps, it is possible your new spouse could inherit the home and pass it on to his or her own children upon his or her death.

You can prevent this from happening by either having a prenuptial agreement or by setting forth your wishes in a comprehensive and updated estate plan. It is important to have your intentions set forth in writing. If you sign a prenuptial agreement, you must ensure that the contract is entered without undue influence and the parties made full financial disclosures. In an estate plan, you can dictate how your assets should be distributed under a will or trust. Estate planning provides you with flexibility in determining who should inherit and when the distribution should take place (such as when your children reach a certain age). A prenuptial agreement also has the benefit of protecting your assets from being decimated by a new spouse in the event of divorce.

If you are interested in learning more about protecting your loved ones with an estate plan, please 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.

Estate Planning

The Initial Meeting with your Estate Planning Lawyer

December 25, 2014 Dennis Astill Leave a comment

Your 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.

Estate Planning

When Should I Update my Estate Plan?

December 24, 2014 Dennis Astill Leave a comment

If you have created an estate plan, you have taken a very important step in protecting your family. However, it is important to understand that you cannot simply file your estate plan away and forget it. This can result in unintended and costly consequences. Not only does your life change, but so do the tax laws. You put a lot of time and effort into creating your estate plan, so it is essential to review it regularly and ensure that it still reflects your wishes and that you will obtain the maximum benefit from it.

When your estate plan was drafted, your attorney considered a variety of factors such as estate tax, gift tax, income tax and other rules governing the distribution of your estate. The tax laws are always changing and your finances have likely changed too. Having your estate plan reviewed can verify that your financial goals are still being accomplished in the most effective way.

So, when should you have your estate plan reviewed? In most situations, having an estate planning attorney look over your estate plan every few years is sufficient. However, if you have experienced a major life event or had a substantial change in your finances, you should update your plan. This includes events such as marriage, divorce, birth of a child, adoption, death of a spouse or other similar events that could impact the distribution of your estate.

Is it expensive to have my estate plan updated? Usually, a simple review of your estate plan is not expensive. However, the longer you wait in between reviews the more updates that are likely to be needed. In order to keep the cost low, many attorneys suggest having your estate plan reviewed each year. In all events you should review it annually to make sure that the guardians, trustees and personal representatives are kept updated.

Whether you need to draft the initial documents to create an estate plan or you have an existing plan that needs to be updated, let us help. 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.

Uncategorized

Starting a Business? Avoid these Pitfalls

December 23, 2014 Dennis Astill Leave a comment

Entrepreneurs make a wide variety decisions when starting a new business. It is important to make the right decisions and get your entity off to a successful start. If you are a first-time business owner, you must understand the legal risks involved in each of your decisions. Below are a few common pitfalls you should avoid:

Relying on verbal promises. When you first start your company, people will make you promises that you want to rely upon, but you shouldn’t. Even if you have a personal relationship with the other person, you should still get the agreement in writing. You should not rely on your ability to work out any disputes later. Having a written contract in place can not only protect both parties, but it can also help preserve your relationship.We like to think that a contract is like a good fence. Good fences make good neighbors and good contracts keep partners honest and clear on what is expected. A buy-sell agreement between partners is critical to success.
Patent infringement. If your business is going to be based upon a certain idea, it is imperative that you conduct a search to ensure the idea doesn’t already exist. Being sued for patent infringement can be very costly. You also don’t want to invest in your idea until you are certain it belongs to you. A patent or intellectual property attorney can conduct a search to determine if your idea has been patented already or if you should take action to obtain a patent to safeguard it.
Unfair competition. Recruiting your competitor’s employees can seem like a good strategic move, but it could also result in litigation. You do not want to hire an employee to convert business from the competitor in violation of unfair competition laws.
Form of Business Entity. The type of business entity and tax elections for that entity are crucial decisions for a new company. Many people think that they can make those decisions later. But the formation of the company is the best time to make these decisions.

The business world can be full of legal pitfalls, so one of the most important actions you can take is to retain an experienced business attorney to help protect your best interests. The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, business law 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.

Uncategorized

Who Can Serve as an Executor in Utah?

December 22, 2014 Dennis Astill Leave a comment

When you are creating an estate plan, it is important to choose an individual you trust to serve as the executor, personal representative, or trustee of your estate. This can be one of the most important decisions you make in your estate plan and in protecting your loved ones.

In order to serve as an executor of an estate in Utah, the individual must be 21 years of age or older and fit to serve. The court will decide if a person is fit to serve, but it typically must find that he or she is of sound mind. It must also be established that the individual does not have a conflict of interest with administrating the estate which would inhibit his or her ability to act fairly and impartially.

If nobody has been appointed to serve as the executor and more than one qualified person desires to serve, the court will appoint in the following order:

the deceased’s surviving spouse
children of the decedent, with equal priority
other heirs or named beneficiaries of the decedent
a creditor, if no other individual or interested party is appointed with 45 days after the death of the decedent

You should ask yourself if you want to leave it to chance and the discretion of the court and your children or spouse. If you have questions regarding creating a comprehensive estate plan or who to appoint as the executor of your estate, we can help. 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.

What is a FLLC?

How does a FLLC work?

What are the benefits of a FLLC?

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