If you are in the process of determining how to structure your new business legally, you may feel overwhelmed. The following is a listing of your options if you are considering establishing a Limited Liability Company (LLC).
Single Member vs. Multiple Member LLC
The obvious distinction between a single member vs. multiple-member LLC is how many owners the LLC has, the company business structure has other characteristics, as well. A single-member LLC only has one owner with full control over the company, and the LLC is its own legal entity that is independent legally of its owner. A multi-member LLC that has two or more owners is also separate legally from its owners, however, with multiple owners, they will all have legal authority and control over the company.
There are two ways you can establish an LLC: member-managed, and manager-managed. If you create a single-member LLC, then the LLC will be managed by one person, who is also the only member of management, the owner. However, if you have a multiple-member LLC, you must decide if you want the business to be managed by the members (owners) of the company, or if those owners can agree upon the selection of a manager to whom authority will be granted to manage daily operations or business decisions. All of these legal decisions must be made clear in the Operating Agreement of the newly established LLC.
Personal Asset Protection
In most cases, making the decision to establish an LLC will protect the owners’ personal assets. However, if there is a multiple-member LLC, and one owner has committed fraud or done anything to pierce the corporate veil and commingle personal and business assets, it is possible that the owners may lose some personal asset protection.
For both single-member and multi-member LLCs, the profits and losses will pass through to the owners according to the Operating Agreement. However, a single-member LLC will be treated as a sole proprietor and a multi-member LLC will be treated legally as a partnership for tax reasons. It is important to understand that how you establish your LLC at the beginning will have far-reaching consequences regarding how you operate your business, your legal liabilities, and your responsibilities regarding taxes.
Both single-member and multi-member LLCs have requirements legally regarding their business entity. Typically, single-member LLCs have less complicated requirements regarding compliance than multi-member LLCs. However, the failure to comply with any legal requirement regarding paying taxes, submitting annual reports, holding annual meetings, renewing permits and licenses, and maintaining company records could be met with severe fines and penalties.
Contact an Experienced Business Attorney Today
As you begin to consider your options regarding how to legally establish your business, consider visiting with an experienced business attorney. The lawyers at the Law Office of Kris Mukherji at (858) 442-5747 can help you determine which type of LLC would be most advantageous for your new business, and ensure that your legal rights are protected.
You may be considering starting a business, and establishing it as a Limited Liability Company (LLC). If so, there are several key elements that you should include in your LLC operating agreement to ensure that your legal rights are protected.
The equity structure of a business includes contributions, capital accounts, and how profits and losses are allocated. You should make sure that the membership interests, classes of membership interests, and the contributions and capital accounts are all addressed within your operating agreement. Additionally, your operating agreement should clarify exactly how the profits, losses, and distributions will be allocated among all members.
You have the right to determine whether your LLC will be managed by members or managers. If your LLC is manager-managed, you should include a section in your operating agreement that directly discusses the appointment of management, voting processes, manager duties and responsibilities, and how managers may be removed if necessary.
The standard rule is that members of an LLC may vote in proportion to their percentage interests. However, this rule may be changed in an operating agreement. All voting rights can be determined by the owner and can include veto rights or supermajority votes.
Limitation of Liability
When you develop your LLC operating agreement, you should ensure that you address all fiduciary duties, responsibilities, and liabilities with respect to managers. Contacting an experienced business attorney can help ensure that you uphold your fiduciary obligations.
Books and Records
Always make sure to include a section in your operating agreement that discusses record-keeping and the rights of an LLC member to inspect any accounting records or corporate records.
In some cases, a company will grow and offer new membership interests to additional parties. Your operating agreement should include an anti-dilution provision that protects certain members with specific interest percentages with respect to their voting rights, capital calls, or any other pre-emptive rights regarding their ability to purchase other classes of membership being offered.
Restriction on Transfer
Your operating agreement should directly address how membership interests may be transferred, and if those transfers will include management rights, veto/approval rights, or other originally established rights.
Confidentiality and Non-Compete Clauses
In many cases, your business will have trade secrets or patents regarding the services or goods your business sells. You should always include non-compete clauses, non-solicitation clauses, as well as confidentiality agreements in your operating agreement.
Contact an Experienced Business Attorney
Establishing an LLC and creating an operating agreement can be legally challenging and complex. Any oversight or missed details can prove to become legal headaches at a later time. Make sure that all of your intentions are executed correctly in your operating agreement by visiting with an experienced business attorney at the Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and will help you determine how exactly to create an operating agreement for your new LLC that exactly meets all of your legal needs.
The California Probate Code 850 is commonly referred to as the Heggstad Petition and avoids the lengthy court probate process by asking a court to transfer a property to a beneficiary following a decedent’s death. This petition is typically used when a decedent created a valid trust but failed to property title one or more property in the name of the trust.
Filing an 850 Petition
If your loved one passed away, and you feel that certain property should have been added to a trust, you may consider filing an 850 petition to add those properties to the trust. All too often, people create trusts without truly understanding that these trusts only control those assets and properties transferred into it.
If you believe that some property of the decedent should have been in the trust, you may consider filing an 850 Petition with the court. There are specific circumstances under which you will be able to make this request, and not every request is granted by a court. Additionally, it is important to note that an 850 Petition is always handled and processed through the courts, meaning that you will need to provide documentation regarding your petition if you wish the court to grant your request. Visiting with an experienced probate attorney can help you potentially avoid probate notes and help you determine if a court will likely rule in your favor regarding an 850 Petition.
The basis for such a petition was established in a case called the Estate of Heggstad. However, this case has its limitations and not every property will be granted admission into a trust. For example, one requirement is that the property must be referenced in either the trust document or in a separate written document of the estate. If there is no declaration of this property, it will likely not meet the standards established by the Heggstad case. A petitioner can not simply allege without proof that the decedent intended to put certain property into a trust but never got around to doing it legally.
Additionally, a successful Heggstad petition will need a copy of the decedent’s Living Trust, the Living Trust’s Schedule of Assets, the property deed, and all information and documentation regarding the decedent, heirs, and beneficiaries.
Common Reasons for Filing a Heggstad Petition
There are several reasons a California resident may use the 850 Petition. Some of the most common reasons include:
- The decedent simply forgot to include the property in the trust (and this is provable through evidence)
- The paperwork to include the property in the trust was somehow flawed
- The decedent died prior to the official transfer of property into the trust
- The decedent failed to realize they needed to change the title of the property
Contact an Experienced Estate Attorney
If you would like to visit with an experienced attorney regarding your ability to file a Heggstad petition, contact our legal team at the Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and will help you determine if the 850 Petition would be right for you.
If you were in the process of estate planning, you may wonder how you will be able to finish your important legal documents during this time of global pandemic. Many areas are currently requiring shelter-in-place, and those that are not may be by the time this article is actually finished. The changes are occurring at a rapid pace, and you may wonder how your estate planning can be handled in this time of COVID-19 (Coronavirus). If you are considering your estate planning needs, or in the process of creating your estate plan, know that there are options for you in the state of California during this very uncertain time.
Typically, probate law in California requires that your Last Wills need to be signed by two witnesses. However, there are specific allowances if a Last Will and Testament (will) is not executed completely in compliance with the witness requirements.
Probate Code Section 6110(c)(1)-(2) states:
(c)(1) Except as provided in paragraph (2), the will shall be witnessed by being signed, during the testator’s lifetime, by at least two persons each of whom (A) being present at the same time, witnessed either the signing of the will or the testator’s acknowledgment of the signature or of the will and (B) understand that the instrument they sign is the testator’s will.
(2) If a will was not executed in compliance with paragraph (1), the will shall be treated as if it was executed in compliance with that paragraph if the proponent of the will establishes by clear and convincing evidence that, at the time the testator signed the will, the testator intended the will to constitute the testator’s will.
Estate Planning During Coronavirus
Many attorney offices have shut down, or in other cases, people are simply not encouraged to leave their homes for non-essential items or services. It is important to note that all estate planning documents have different requirements. For example, some documents need to be notarized, but living trusts do not need to be notarized. If you have estate planning documents in process, we can meet with you over the phone or over a video conference to discuss your estate planning needs. In fact, we can help you create your estate planning documents and then have you sign and fill out all necessary paperwork remotely.
If someone happens to pass away prior to either notarization or without correct witness signatures on an estate planning document, an experienced estate planning attorney will be able to still file an 850 Heggstad Petition, requesting that the court look at the documents and the current circumstances and hold all estate planning documents valid under the law.Read More
In an attempt to prevent older Americans from outliving their assets in retirement, the federal government passed The Setting Every Community Up for Retirement Enhancement Act of 2019 in December 2019. Known as the SECURE Act, this law was approved as an end-of-year appropriations act and tax measure that helps out many Americans. Learn more about the SECURE Act and how it may impact you.
Understanding the SECURE Act
There are several major components to the SECURE Act, but the overarching intent was to help American workers as they save for their retirement. According to the U.S. Bureau of Labor Statistics, only half of the workers in the United States even participate in their workplace retirement plan, and those who do participate fall far short of contributions necessary to retire with adequate investments. The SECURE Act is an attempt to encourage employers who previously have not established a retirement plan to begin offering this important employee benefit.
Major Provisions of the SECURE Act
The SECURE Act changes many of the established rules regarding retirement plans offered by employers in the United States.
- Small businesses will now find it easier to set up 401(k) retirement plans by increasing the cap where they can enroll workers in “safe harbor” retirement plans.
- A maximum tax credit of $500 per year will be allowed to employers who create a SIMPLE IRA plan or 401(k) Plan that includes automatic enrollment for employees.
- Small businesses will be able to sign up part-time employees who work 1,000 hours or have worked for three consecutive years with 500 hours of service.
- The SECURE Act encourages employers to include annuities as options in retirement plans.
- Participants will be able to wait until 72 years of age, instead of 70 ½ to take required minimum distributions from their retirement plans, allowing them to save longer for retirement
- Student 529 savings accounts can be used to repay qualified student loans, up to $10,000 annually.
- Penalty-free withdrawals of up to $5,000 will be allowed to defray the cost of having or adopting a child.
- The removal of a provision known as the stretch IRA (Individual Retirement Account) which allowed non-spouses that inherit retirement accounts to stretch out distributions over their lifetimes. Instead, a full payout will be required within 10 years of the death of the original IRA account holder.
How these new changes will impact the retirement savings and lives of Americans remains to be seen, however, what is certain is that most workers in the United States simply do not have enough put away to live comfortably in retirement. Time will tell whether these new federal regulations will help that number grow larger.
Contact an Experienced Business Attorney
If you are a small business owner, you may be wondering how the new SECURE Act can impact your ability to offer a retirement plan for your employees. Contact the Law Office of Kris Mukherji at (858) 442-5747. We can help ensure that you have all of your questions answered, and all of the correct forms filed on time.Read More