We live in a litigious society. It would not be completely unheard of to suddenly find yourself at the center of a lawsuit. Car accidents, bad business dealings, extensive health bills that exceed the limits of your health insurance coverage, and even professional malpractice claims leave you open to the possibility of owing damages to another party. No one wants to think about his or her hard-earned assets being taken away. Estate planning gives individuals an opportunity to protect their assets in a variety of ways. One way to do this is through a domestic asset protection trust. A domestic asset protection trust is a trust that can protect personal assets.
Domestic asset protection trust are set up to personally protect various assets from creditors or lawsuits. Most states do not allow for a personal asset protection trust be set up. California law does not allow for a personal domestic asset protection trust, but that does not mean a trust can not be set up in one of the 14 states that allow them. The trustee of a domestic asset protection trust must be in the state that allows the trust formation.
Domestic asset protection trusts must be irrevocable and contain a spendthrift clause. Irrevocable means that once the grantor has transferred assets into the trust, they have effectively lost ownership of the trust. The beneficiaries of the trust would have to give the grantor permission to modify, amend, or terminate the trust or its terms. A spendthrift provision is a clause in an irrevocable trust that protects the assets of that trust from creditors. Since the grantor effectively lost the rights to ownership of the trust assets, creditors are not able to attach an interest to the assets in the trust.
Who Needs a Domestic Asset Protection Trust?
Those individuals who have a greater risk of being liable to others are usually good candidates for a domestic asset protection trust. Others who have a high net worth or a large amount of assets are also prone to lawsuits or creditors trying to obtain their assets.
While a domestic asset protection trust is way to protect your assets, the transfer of assets can not be done in a fraudulent way. Courts might find the transfer of assets to be fraudulent if they happened after the commencement of a lawsuit, or after a creditor has tried to obtain your assets. As such, it is important to speak with an estate planning attorney to make sure the set up of your trust is done in accordance with all laws.
The Law Office of Kris Mukherji is here to help you with your estate planning needs. From domestic asset protection trusts, to wills, and other types of trusts, our attorneys can help you determine what the best plan of action is for protecting your assets in a legal way. We know the thought of losing assets can be devastating, and no one wants to get caught up in a legal battle over assets. Contact us today for a consultation.Read More
More and more people are turning to naturopathic medicine as a solution to many health-related problems. Because of this increasing popularity, more and more naturopathic clinics are starting to appear and many individuals are considering opening their own businesses to take advantage of the trend. The business needs to be formed properly. An experienced business law attorney, like the the Law Office of Kris Mukherji, can help to make sure the formation of your business is done according to California law.
A naturopathic doctor corporation is a professional corporation. The Naturopathic Medicine Committee of California recognizes this type of corporation in California. The corporation’s main function revolves around providing the best services to individuals seeking care through a naturopathic doctor.
Steps to Forming a Corporation
There are many steps that must be done in order to legally form a naturopathic doctor or chiropractor corporation:
- Filing Articles of Incorporation with the California Secretary of State: The Articles of Incorporation are the “basics” of your business. The articles must include the name of the business, the purpose, shares the business is able to issue, street address, mailing address, and the registered agent of the corporation. There are many limitations and rules regarding the name of a business and who can be a registered agent. A business attorney can ensure you are complying with all laws.
- Prepare Bylaws: Most every corporation needs bylaws that are the rules of the corporation. These are not a filing requirement of the secretary of state, but almost every California corporation has bylaws.
- Appoint the Professional Corporation Directors: For professional corporations, the general rule is that the directors must be licensed so that they can conduct the professional activity the corporation exists for.
- Board of Directors Meeting: A board of directors meeting must be held.
- Stock Issue: Stock of the corporation must be issued to the stockholders.
- Statement of Information: This must be filed within 90 days of the Articles of Incorporation
- Taxes and Fees: all applicable California taxes and fees must be paid.
- Obtain a Business License: Corporations must obtain a local business license and make sure that they are complying with any local laws.
- Other Federal Obligations: If there are additional obligations remaining, these must be satisfied.
As you can see, there are many steps to forming a naturopathic doctor or chiropractor corporation. Each of the steps in formation must be done accurately and in accordance with the law. The Law Office of Kris Mukherji is here to help you with your business formation needs. We know that the key to a successful business is starting out strong. A business can not start strong without proper formation. Contact us today to get your naturopathic doctor or chiropractic corporation started.Read More
Both individuals and businesses make donations to charities. While donations are generally always welcomed, there are financial implications and considerations surrounding a donation that must be considered. A donation does not need to be an outright gift; there are other options available for donation purposes. It can be beneficial to set up a charitable remainder trust to donate to charity. A charitable remainder trust is an instrument that provides for donations to charity, while still allowing the donor to make income off of the property in the trust. A charitable remainder trust is an essential part of a financial plan that should be considered before making a large charitable donation or gift.
The Basics of Charitable Remainder Trusts
A charitable remainder trust is made by the settlor (the person setting up the trust) and transferring the property that is intended to be in the trust into the trust. The charity intended to receive proceeds from the trust is the trustee. The principal of the trust is invested and the settlor receives a portion of the trust in the form of an annuity. If the settlor dies, or the period of time specified for the trust elapses, the remainder of the trust is then distributed to the charity.
A charitable remainder trust is irrevocable, meaning that the trust cann ot be changed. When the property or assets are transferred into the trust, the trust is then the owner of the assets or property. Legal control of the property is transferred the trust. The charity must be an approved charity. Approved charities are usually those that are a tax-exempt organization under IRS definitions.
Types of Trusts
There are two main types of charitable remainder trusts:
- Charitable Remainder Unitrust: The annuity amount that is paid to the settlor is calculated annually as a percentage of the fair market value of the property donated in the trust.
- Charitable Remainder Annuity Trust: The annuity amount is a fixed percentage, meaning the settlor receives the same amount throughout the life of the trust
Benefits of a Charitable Remainder Trust
There are many reasons you might choose to set up a charitable remainder trust for donations.
- Tax Breaks: There are tax implications of a charitable remainder trust. The settlor is able to take a deduction over five years for the value of the gift being given through the trust. Additionally, there are no capital gains tax when the asset or property is sold.
- Receiving Income: The settlor is able to receive income over the life of the trust.
- Pursuing Philanthropic Goals: The settlor is encouraged to make charitable contributions, but is able to still generate income for themselves.
- Creditor Protection: Assets in the trust are generally protected from any creditors.
If you want to set up a charitable remainder trust, consult with an experienced attorney at the Law Office of Kris Mukherji. All of the benefits of the trust do not eliminate the complex process of setting up the trust. Contact us today to get your trust set up in the correct manner.Read More
When developing a new business, one of the questions that you must ask is what type of entity your business will be. There are many different types of corporations that can be formed, but not every type is right for every business. It is imperative that you choose right corporate structure for your business. Failure to do so can have a significant impact on the life of the business both financially and contractually. When setting up a corporation, it is imperative that you speak with an experienced business attorney to find out which corporation is best for you.
Two common types of corporations are general corporations and professional corporations. Each has its own requirements and qualifications to determine which is proper for your business. Both types have their advantages and disadvantages that need to be considered in forming a corporation. The following are the main differences between a general and professional corporations.
A general corporation is the most common type of corporate structure. A general corporation is one that is a completely separate legal entity owned by stockholders. There is no limit to the number of the stockholders that are protected from any creditors of the corporation. Instead, the personal liability of a stockholder is usually limited to the amount of investment that was made in the corporation.
There are many benefits to forming a general corporation. The main benefits include personal protection from debt and liabilities of the corporation, the corporation can outlive the life of its owners, and there are certain benefits that are tax-free. Additionally, transfer of ownership can be done through the sale of stock and ownership does not necessarily need to change the management of the corporation.
A professional corporation is one that only performs services in one, single profession. It is a specific type of corporation for professionals like doctors, lawyers, accountants, etc. The professional is able to form a corporation, but the professional remains liable for his or her own actions. However, the professional is shielded from malpractice claims that might be brought against other associates of the corporation. Shareholders are required to hold licenses in the relevant profession of the corporation.
There are many benefits to forming a professional corporation. First and foremost, the professionals are shielded from liability from nonprofessional acts. Second, a professional corporation offers many tax benefits. One of these benefits is the ability to deduct fringe benefit plans, like a group term insurance plan, from their tax documents. Finally, there is also free transferability of interests. These transfers are still subject to statutory or regulatory restrictions.
Knowing which type of corporation to form can be difficult to ascertain. Failure to form the right type of corporation can cost you financially and contractually. The experienced business attorney at the Law Office of Kris Mukherji can help eliminate this confusion and difficulty. You do not want your business to be formed incorrectly and result in trouble. Consult with an attorney early to eliminate mistakes and give your corporation the best chance at success. Contact us today for a consultationRead More
Buying a business is much more complicated than simply handing over a sum of money and receiving a business in return. On the flip-side, a seller of a business must do a lot more than just receive a sum of money in exchange for a business. Buying or selling a business involves complex laws and many moving parts. Additionally, there is more than one way to buy or sell a business. The best method to use will depend on the business being sold and the needs of the parties involved.
Selling a business is not like other consumer transactions, in which cash or credit is exchanged for a good or service. Instead, there are different methods used, with the two most common being asset sales and stock sales.
An asset sale is one in which the buyer purchases the seller’s assets. The buyer is only assuming responsibility for the liabilities that it chooses. If the buyer does not assume all of the seller’s liabilities, then the seller remains liable for them. If the business has shareholders, the seller will usually distribute the proceeds of the sale to the shareholders of the business through dividends or distributions. Shareholders are then liable for the taxes on the dividend they receive. The party selling the business remains liable for taxes on the asset sales, as well. There are some exceptions to these tax obligations in the event the business is a pass through entity, but generally, each party remains responsible for the tax implications on their income. Buyers often prefer this method of business sales.
Another method often used in the sale of a business is the selling of stock. In a stock sale exchange, the buyer is purchasing the outstanding stock of the business. Outstanding stock includes the shares of stock that are currently held by the shareholders, the shares that are held by instructional investors, and shares owned by the officers of the company. Like an asset sale, the proceeds of the stock sale are distributed through dividends or other distributions. Often times, a stock sale is preferred by seller. This is because it acts as a “clean break” for the seller’s shareholders.
Contact an Experienced Business Attorney Today
Whether you are considering buying or selling your business via asset sale, stock sale, or another method, an experienced attorney can be invaluable to the transaction. There are many legal challenges that can arise in the buying or selling of a business. Avoid adding extra stress to the situation and hire an attorney at the outset to handle unexpected issues as they arise. The experienced attorney at the Law Office of Kris Mukherji is here to help you from the first step in a transaction through its finalization. Contact us today for a consultation.Read More