Michigan Estate Planning Blog

How to Protect Valuable Assets in Estate Planning

 

If you fail to take the necessary measures, you can lose your property, which might cause financial challenges when you will not be working in retirement.
Legal Reader’s recent article entitled “How to Legally Protect Your Assets” says there are different strategies you can use to protect your personal assets.
This will help you to prepare for any eventuality. Let’s look at some of them:
A Family Trust. This may be one of the best strategies to protect your personal assets. A trust will help protect your assets when you lose all your money. A family trust can also provide tax benefits to family members in lower tax brackets. However, talk to an experienced estate planning attorney before setting up the trust to make the right decisions.
Start a Company. This may be an alternative to setting up a family trust, since your property will be more secure than when operating a sole proprietorship or a partnership business. This gives you a more secure future, even when you face financial challenges. However, there are many legalities in starting a company, so talk to an attorney.
Register Your Most Valuable Assets in the Name of the Low-risk Spouse. This tactic will make it difficult for a trustee or liquidator to gain access to the property in case of bankruptcy. However, ask an attorney to help you to structure the purchase to make certain that the low-risk partner’s name appears on the legal documents. An experienced estate planning attorney can also help you access benefits, such as Social Security and Medicaid.
These laws keep changing. You might miss an opportunity of getting long-term care planning, if you keep postponing a review with an experienced estate planning attorney.
As you spend your hard-earned cash, take some time to learn how to protect what you buy. You should also use the legal strategies above to keep your property secure.
Reference: Legal Reader Jan. 26, 2022) “How to Legally Protect Your Assets”

Is Your Business Starting to Resemble a Partnership? Saginaw, Michigan

When it comes to structuring a business, you have many choices: LLCs, S Corps, C Corps, LPs, LLPs, etc. So how do you choose the best option? A golden rule for business is to do business the way your business is structured, and to structure your business entity in the way you need to be doing business! If you mix and match, it has an unfortunate tendency to create serious liabilities which often come with a fairly aggressive tax assessment. With liabilities and taxes in mind, consider reading a recent Forbes article titled “Beware Of Partnership Status Sneaking Up On Your Business Venture.” While this advice is nothing new, yet another tax court case has come down the pike to confirm this conventional wisdom. In the case a father and son operated a moderately large agricultural business. The father and son, however, each formed their own entities, worked together to do the work, split the income equally, but disproportionately split the expenses. The IRS determined that this juggling of the books didn’t compute, so the IRS slammed both father and son with the taxes that would have applied on a single “partnership.” You could say this was another case of “substance over form.” Teaching point: if there are two business entities, then they must act like two businesses in order to be separate businesses. Otherwise, there should be only one entity, if such is an accurate reflection of how the work is being done. So, if your business dynamic is changing from what you first structured it to be, you may need to restructure it in order to reflect the current business model it has become.

Reference: Forbes
(October 21, 2012) “Beware Of Partnership Status Sneaking Up On
Your Business Venture”

For more information, see www.jerryreiflawyer.com

 

Is Your Business Starting to Resemble a Partnership? Saginaw Michigan

When it comes to structuring a business, you have many choices: LLCs, S Corps, C Corps, LPs, LLPs, etc. So how do you choose the best option? A golden rule for business is to do business the way your business is structured, and to structure your business entity in the way you need to be doing business! If you mix and match, it has an unfortunate tendency to create serious liabilities which often come with a fairly aggressive tax assessment. With liabilities and taxes in mind, consider reading a recent Forbes article titled “Beware Of Partnership Status Sneaking Up On Your Business Venture.” While this advice is nothing new, yet another tax court case has come down the pike to confirm this conventional wisdom. In the case a father and son operated a moderately large agricultural business. The father and son, however, each formed their own entities, worked together to do the work, split the income equally, but disproportionately split the expenses. The IRS determined that this juggling of the books didn’t compute, so the IRS slammed both father and son with the taxes that would have applied on a single “partnership.” You could say this was another case of “substance over form.” Teaching point: if there are two business entities, then they must act like two businesses in order to be separate businesses. Otherwise, there should be only one entity, if such is an accurate reflection of how the work is being done. So, if your business dynamic is changing from what you first structured it to be, you may need to restructure it in order to reflect the current business model it has become.

Reference: Forbes (October 21, 2012) “Beware Of Partnership Status Sneaking Up On Your Business Venture”

For more information see www.jerryreiflawyer.com

 

Is Your Business Starting to Resemble a Partnership? Saginaw Michigan

When it comes to structuring a business, you have many choices: LLCs, S Corps, C Corps, LPs, LLPs, etc. So how do you choose the best option? A golden rule for business is to do business the way your business is structured, and to structure your business entity in the way you need to be doing business! If you mix and match, it has an unfortunate tendency to create serious liabilities which often come with a fairly aggressive tax assessment. With liabilities and taxes in mind, consider reading a recent Forbes article titled “Beware Of Partnership Status Sneaking Up On Your Business Venture.” While this advice is nothing new, yet another tax court case has come down the pike to confirm this conventional wisdom. In the case a father and son operated a moderately large agricultural business. The father and son, however, each formed their own entities, worked together to do the work, split the income equally, but disproportionately split the expenses. The IRS determined that this juggling of the books didn’t compute, so the IRS slammed both father and son with the taxes that would have applied on a single “partnership.” You could say this was another case of “substance over form.” Teaching point: if there are two business entities, then they must act like two businesses in order to be separate businesses. Otherwise, there should be only one entity, if such is an accurate reflection of how the work is being done. So, if your business dynamic is changing from what you first structured it to be, you may need to restructure it in order to reflect the current business model it has become.

Reference: Forbes (October 21, 2012) “Beware Of Partnership Status Sneaking Up On Your Business Venture”

For more information see www.jerryreiflawyer.com

 

Charging Order Challenge Successful

Most business owners seek to protect their personal assets from problems arising from their business activities. They do this by creating business entities like a partnership or LLC. Unfortunately, sometimes these personal and business worlds collide, and that can be an asset protection nightmare. Usually, when these two worlds collide, there is an attempt to attack personal assets by piercing the corporate veil. However, as a recent case illustrates, an attack can come through the personal world to attack the business assets … even when that business interest is in a partnership or LLC. Forbes recently reported on just such a case in an article titled “Webb & Carey: When Control Is Bad -- Receiver Uses Debtors' Controlling Interests In Partnerships To Get At Partnership Assets.” There’s a new trick in which a creditor can access assets within a partnership by pairing the often created “charging order” with the powers of a “receiver” who, in return, takes up the powers of a debtor with controlling interests in the partnership. Whew! Teaching point: if you have a controlling interest in a partnership or LLC, be aware. A creditor may seek to take control over your interest and thereby for distributions or even the sale of the business. As a result, if you are working to protect your assets and the assets of your company, it is worth handing off control and closing that back door before the creditors come.

Reference: Forbes (June 3, 2012) “Webb & Carey: When Control Is Bad -- Receiver Uses Debtors' Controlling Interests In Partnerships To Get At Partnership Assets”

Charging Order Challenge Successful

Wrong. Most business owners seek to protect their personal assets from problems arising from their business activities. They do this by creating business entities like a partnership or LLC. Unfortunately, sometimes these personal and business worlds collide, and that can be an asset protection nightmare. Usually, when these two worlds collide, there is an attempt to attack personal assets by piercing the corporate veil. However, as a recent case illustrates, an attack can come through the personal world to attack the business assets … even when that business interest is in a partnership or LLC. Forbes recently reported on just such a case in an article titled “Webb & Carey: When Control Is Bad -- Receiver Uses Debtors' Controlling Interests In Partnerships To Get At Partnership Assets.” There’s a new trick in which a creditor can access assets within a partnership by pairing the often created “charging order” with the powers of a “receiver” who, in return, takes up the powers of a debtor with controlling interests in the partnership. Whew! Teaching point: if you have a controlling interest in a partnership or LLC, be aware. A creditor may seek to take control over your interest and thereby for distributions or even the sale of the business. As a result, if you are working to protect your assets and the assets of your company, it is worth handing off control and closing that back door before the creditors come.

Reference: Forbes (June 3, 2012) “Webb & Carey: When Control Is Bad -- Receiver Uses Debtors' Controlling Interests In Partnerships To Get At Partnership Assets”