Business Ownership Archives - Law Office of James F. Roberts & Associates, APC

The Importance of Incorporating Your LLC Interests Into Your Estate Plan

James F. Roberts — Fri, 07 Jul 2017 06:25:28 +0000

While creating an estate plan is important for any individual, it is especially significant for small business owners. In California, many small business owners have membership interests in a limited liability company, or LLC. Failing to properly consider these membership interests when creating your estate plan could have negative consequences when it comes time to administer your estate.

6 Possible Consequences If You Do Not Consider Your LLC When Creating an Estate Plan

What can happen if you do not incorporate your LLC Interests into an estate plan? The following are six examples:

Your loved ones may need to initiate probate proceedings in order to address your membership interest in the LLC, even if all of your other assets successfully avoid probate. This could mean there will be otherwise unnecessary court oversight of the administration of your estate.
Your estate, heirs, or beneficiaries would receive only an economic interest in your membership interest in the LLC—only the right to receive distributions and no management rights.
Neither your estate, nor your heirs or beneficiaries, would have any management or voting rights in the LLC.
Your estate would have only limited rights to inspect the books of the LLC for purposes of settling the estate. This would not be an ongoing right of inspection.
The remaining members of the LLC would have no fiduciary duty to your estate, your heirs, or your beneficiaries.
The remaining members of the LLC could amend the operating agreement without having to obtain the consent of the estate, the heirs, or the beneficiaries.

Fortunately, creating an estate plan that addresses your membership interests can avoid many of these potentially negative consequences. We can help. To learn more about how we have helped other clients create the estate plan that addresses their unique needs, we encourage you to check out our client testimonials page today.

Vacation Homes and LLCs: An Anaheim Estate-Plan Match Made in Heaven?

James F. Roberts — Fri, 07 Jul 2017 06:25:25 +0000

When creating an estate plan in Anaheim, it is important to walk through each of your assets step by step, carefully considering your options for each one. One such asset may include a family vacation home or a rental property. With vacation homes in particular, issues often do not arise until the property passes down to the second generation. At that point, there may be multiple owners of the same property. These owners have to try to find a way to agree about how the property should be managed, used, or held. One of the main ways to help avoid issues is to combine your family vacation homes and LLCs.

Vacation Homes and LLCs

Fortunately, tools that are more efficient exist for handling a vacation property when creating your Anaheim estate plan. One such tool is to place the property into a limited liability company, or LLC. LLCs have the unique benefit of combining the tax advantages of a partnership with the liability protection of a corporation. Holding a rental or vacation properly in an LLC may be a wise aspect of your overall estate plan.

Why are LLCs worth considering for holding title to your vacation home? Vacation Homes and LLCs give you some unique opportunities to protect your property in your estate planning.

The following are four examples:

An LLC may limit your personal exposure to lawsuits by people who rent the property, as well as your creditors. Ideally, the creditor who sues you will be limited to reaching only the property that is held in the LLC.
An LLC can have restrictions and rules built into the Operating Agreement that control how and when ownership of the property may change hands, as well as the general use and operation of the house. This is useful when multiple family owners have an interest in the home.
The Operating Agreement can also contain the rules for handling disputes among owners, deciding who can use the property at what times, and what should happen if one party wants to sell their interest but another one does not.
LLCs are generally easy to set up and maintain, requiring fewer formalities than a corporation.

Whether or not an LLC is the right choice for your estate plan depends on the unique circumstances surrounding the property and your family. To learn more about this and to keep up to date on other helpful tips for popular estate planning questions, follow us on Facebook!

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Should I consider holding title in an LLC for a rental property?

James F. Roberts — Fri, 07 Jul 2017 06:25:24 +0000

Many years ago, you had the good sense to save up and purchase a rental property in a good neighborhood. As a result, you now receive a steady stream of solid income from renting the units within the building. When it comes time to create your estate plan, it is important to take this valuable asset into consideration. One option that may be worth considering creating a limited liability company (LLC) to hold the title to the asset. Having an LLC for a rental property allows for many benefits for estate planning, taxation, and in protecting the owners.

Four Reasons for Considering an LLC for a Rental Property

Why is setting up a new LLC for a rental property worth considering?

The following is an overview:

If handled properly, the LLC can help avoid the need for probate administration in order to oversee the management and distribution of the asset.
An LLC can provide you with asset protection in some circumstances. Because the title is held in an LLC for a rental property, a third party trying to sue you personally for an injury or other harm may be blocked from doing so.
Placing the property in an LLC could provide you with certain tax advantages that other alternatives do not offer. It is very important to discuss this matter with a knowledgeable tax professional before doing so, however, as the tax benefits of an LLC for holding a rental property depend on the unique facts and circumstances surrounding your particular situation.
Using an LLC can allow you to pass small portions of ownership in the property over time, if you wish to begin doing so before you pass away.

Making estate planning decisions about important assets like rental properties requires the guidance of an attorney you can trust. We have helped countless clients make these important decisions. We encourage you to check out our client testimonials page today to hear what our former clients have to say about our services.

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Should I use a corporate trustee if I am creating a common pot trust?

James F. Roberts — Fri, 07 Jul 2017 06:24:51 +0000

If you are creating a living trust in California that uses a common pot trust, you may want to consider using a corporate trustee. Choosing your successor trustee is very important as you create your estate plan. A successor trustee could be a friend, family member, trusted advisor, or company that is in the business of administering trusts. An experienced Orange County trust lawyer can help guide you through the process of choosing the trustee that is right for your trust.

Why should you consider a corporate trustee if you are using a common pot trust? The following are several reasons:

The success of a common pot trust in California may depend on the ability of a trustee to be impartial. If the trustee favors one beneficiary over another, the result may be that one beneficiary receives the majority of the trust’s assets without regard to the other beneficiaries.
A common pot trust relies on the discretion of the trustee to make decisions based upon your stated goals and guidelines.
Corporate trustees are experienced with administering trusts and understanding the impact of discretionary asset distribution decisions.
Corporate trustees are familiar with the unique issues that arise with young beneficiaries.
Corporate trustees have tools at their disposal to properly invest trust assets over the long term.
Friends or family members serving as trustees may have difficulty with impartiality. Personal relationships can interfere with decision-making.

To learn more about corporate trustees and common pot trusts, contact the knowledgeable Orange County trust attorneys at the Law Office of James F. Roberts & Associates, APC. Call our office today at (714) 282-7488 for a consultation.

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Should I consider using a trust for my family business interests in my estate plan?

James F. Roberts — Fri, 07 Jul 2017 06:24:50 +0000

As you create your estate plan in Orange County, you have many options to consider. Living trusts are often used to hold assets when the creator of the trust wants to avoid probate, minimize taxes, and maintain a greater amount of control over how and when the estate assets are transferred to beneficiaries. For owners of family business interests, living trusts can be especially useful. An experienced Orange County trust attorney can review the facts and circumstances surrounding your business to determine whether a living trust is right for your estate.

The following are examples of some of the benefits of using a trust for family business interests who are creating an estate plan:

The living trust can give the owner of the family business the ability to retain control over the business.
The trust can dictate the circumstances under which the ownership of the business interest is transferred to the beneficiaries. For example, if a beneficiary is a minor, ownership would not be transferred until a later point.
A living trust can help to avoid delays caused by probate court oversight during the administration process.
The trust can be used to prevent ownership of the business from passing to an undesired third party, such as a spouse or former spouse of a beneficiary.
The trust can outline which assets should be used to pay the expenses of estate administration, including taxes. This could mean including provisions that call for other assets to be used rather than the business interests.
A trust can potentially be used to minimize taxes.
A living trust allows someone to step in and control ownership of the business interest in the event that you become incapacitated.

For more information about estate planning for business owners, contact the knowledgeable Orange County trust attorneys at the Law Office of James F. Roberts & Associates, APC. Call our office today at (714) 282-7488 for a consultation.

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Report Outlines 5 Reasons for Business Owners to Create an Estate Plan

James F. Roberts — Fri, 07 Jul 2017 06:24:45 +0000

A new report highlights the importance of estate planning for family business owners of family businesses. The report notes that the recession of 2008 resulted in many laid off workers creating their own businesses in order to provide for themselves financially. The availability of the Internet and low-cost websites helped many of these smaller businesses thrive. Today, family businesses account for 50% of the gross domestic product in the United States. Similarly, 35% of Fortune 500 companies are private companies or are public companies that families control.

For all of these family business owners, creating an estate plan is essential. The report identifies five key issues that can be addressed through estate planning:

Only a small portion of family businesses are able to successfully transition the business to the second generation.
The interests of current owners and future owners of the family business may not always align.
The question of how to value a business as ownership of the family business transitions to new owners can be controversial if it is not predetermined.
Interfamily disputes can arise following a divorce, death, or marriage of an owner of the business.
Estate and inheritance issues can result from probate court delays or estate taxes due upon the death of a family owner.

Clearly, business owners in California should strongly consider creating an estate plan. This plan may benefit from the use of a living trust, in addition to other estate documents. For more information, contact the experienced Anaheim trust attorneys at the Law Office of James F. Roberts and Associates, APC, for a consultation. Call our office today at (714) 282-7488.

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Should I consider incorporating insurance policies into my estate plan when I am young?

James F. Roberts — Fri, 07 Jul 2017 06:23:28 +0000

Should I consider incorporating insurance policies into my estate plan when I am young? As you will soon discover when meeting with an attorney to discuss estate planning, the process involves more than just creating a will or trust. A good estate plan will also factor in retirement assets, disability planning, and insurance products. Even if you are relatively young when creating your estate plan, insurance products in particular can be an important part of the estate planning process.

5 Reasons to Consider Insurance Policies as Part of Estate Planning While Young

Why should you consider incorporating insurance products into your estate plan even while you are young? The following is an overview:

While you are young and healthy, term life insurance is often very inexpensive. A relatively small sum can purchase a significantly large policy.
If you die unexpectedly, the proceeds of the policy can be used to pay off your bills. These bills may include a mortgage, student loans, credit card debt, or medical debt.
If you die leaving a spouse, the proceeds of an insurance policy are important in order to benefit your surviving spouse and replace your lost income. In addition, if you have small children, the proceeds can be used to pay for child care or college tuition.
The proceeds of your policy can also be used to leave a legacy to your loved ones if you otherwise do not have significant assets to pass on at this stage in life.
Depending on your age and overall needs, it may also be a good time to consider long-term care insurance. If you wait until you are significantly older to purchase this type of policy, you may no longer be eligible.

Should I consider incorporating insurance policies into my estate plan when I am young?Creating an estate plan can feel overwhelming with many considerations to factor into the process. We encourage you to learn more by checking out our free pamphlet, The Ten Things You Must Know Before Creating (or Amending) Your Will or Trust.

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