If you have a child who was born with mental or physical disabilities or a child who became disabled later in life and needs someone to manage his or her affairs, you have special and unique estate planning needs. Planning for your child’s financial future is important, and parents want to make sure that their special needs child will be well taken care of when they are gone. A Special Needs Trust (SNT) is one option to consider for your special needs child to help guarantee that his or her health and welfare needs are taken care of after you die. However, there are both advantages and disadvantages to the creation of this type of trust. Listed below are some pros and cons of a Special Needs Trust.
SNTs are typically essential for any special needs person that is unable to independently handle and manage their finances. Some of the advantages of a SNT include the following:
- Your child will still be eligible for government programs like SSI and Medicaid, and the SNT will help fund services and care over what the government will provide.
- All funds are used for the care of the child with the disability. (Your child will not be influenced or taken advantage of by an unscrupulous person looking for financial gain.)
- The funds are tax-deductible.
- The funds are never available for any creditors to pay a judgment, they can only be used for the care of your child.
As with anything, there are also some disadvantages or challenges to creating a SNT for your child, which include the following:
- The cost is high. An SNT has an annual fee, as well as a fee to establish, which can make it financially unaffordable to create for some people. There are minimum amounts required to establish an SNT.
- Your child will lack independence. Your child will have to request funds from a trustee who has complete discretionary control over whether to release the funds or not based on the terms listed in the trust. Some children can feel frustrated due to the lack of independence.
- Some funds must be used to pay back Medicaid in the exact amount that Medicaid paid on the person’s behalf. This can completely wipe out the trust after the child’s death, or when the trust is terminated legally.
You will also need to make a decision regarding who the trustee will be of your SNT for your child. Oftentimes, a trustee is a professional, but the family will also choose a family member to serve as a co-trustee to ensure that their wishes are being followed. The trustee should have the best interest of your child in mind. You also have the option to pay for an audit and have a monitoring service on your trustee after you pass away.
Contact an Estate Planning Attorney
There are many different types of trusts and estate planning tools to choose from. An experienced attorney can ensure that you pick the right vehicle to take care of your special needs child when you are gone, ensure that the trust language is created accurately, and make sure that the trust is broad enough to meet the ever-changing needs of your child as they grow. Contact the Law Office of Kris Mukherji at (858) 442-5747. We can help you determine if a Special Needs Trust is the right kind of trust for your family.
If a deceased person created a last will and testament as part of an estate plan, the last will and testament will have to go through the probate process. The probate process a legal procedure done through a court that authenticates the last will and testament, locates and determines all assets, pays final taxes and bills, and then distributes the remaining portion of the estate to the correct beneficiaries. There are four basic steps to the probate process.
Step 1: File Petition and Give Notice
The first step in the probate process will be the official filing of the petition with the probate court to either admit the will to probate and appoint the executor or, if there is no will, appoint an estate administrator. All of the decedent’s heirs and beneficiaries will be notified that the last will and testament is now in the probate process through an official notice. Typically, a notice is also placed in a newspaper as a matter of public record to attempt to notify any other potential creditors of the decedent.
Step 2: Inventory of Property and Notice to Creditors
The executor will then give a written notice to all of the creditors of the estate. Any creditor that has a valid claim on any assets of the decedent is allowed to do so with the court. A complete inventory will be taken of all the decedent’s property, which can include real property, retirement funds, stocks, bonds, business assets, and more. If there are non-cash assets, the court can hire an independent appraiser to determine value.
Step 3: Payment of Debts
Any debts to creditors, taxes, and estate and funeral expenses must be paid from the estate. There may be a question regarding the validity of some creditor’s claims. If this occurs, a determination will need to be made. A personal representative of the estate is allowed to sell assets to satisfy any of the decedent’s obligations.
Step 4: Legal Title is Transferred
After the waiting period is given to creditors to file any claim, bills are paid, and all financial matters are settled, the court will be petitioned to grant the authority to transfer the remaining assets to the beneficiaries as directed in the last will and testament. If there is no last will and testament, the assets will be transferred according to the state’s intestate succession laws.
How to Avoid Probate
While you may give away all your property to avoid probate, there are some other ways to avoid the probate process. You could possibly use joint ownership with rights of survivorship or tenancy by the entirety for your accounts, which gives legal rights to your spouse when you die. Some accounts will let you use beneficiary designations, such as life insurance or retirement accounts. Finally, using a revocable living trust is an estate planning tool that has many benefits including avoiding probate, privacy, and the ability to make changes during your lifetime.
Contact an Estate Planning Attorney Today
If you are interested in creating an estate plan that will not need to go through probate or are interested in how the probate process will work with your last will and testament, contact the Law Office of Kris Mukherji at (858) 442-5747. We can help you build your estate plan to ensure that your estate is handled properly and according to your wishes.
Many small companies grow their business by selling shares of stock in the company. Oftentimes, as time goes on, the group of majority shareholders may attempt to remove the minority shareholders from the company. Perhaps there are different ideas about the direction of the company, personality differences have developed, or the majority shareholders simply want all of the stock to control. Whatever the reason, there are instances in which majority shareholders attempt to push out the minority shareholders. However, minority shareholders have rights regarding their shares in a company, and these rights can be enforced by law.
Under the law, the majority shareholders have a fiduciary duty toward the minority shareholders. They must deal with them honestly, in good faith, with candor, loyalty, and fairness. The majority shareholders must always act in compliance with the shareholders’ agreement. If a majority shareholder breaches his or her fiduciary duty, the minority shareholder may file a shareholder derivative action, which is a type of lawsuit. If a majority shareholder acts in a way that is not in the best interest of the company, pays him or herself a high salary, or sells stock that is a deal favorable only to the shareholder, a minority shareholder may have the right to sue.
Access to Financial Records
A minority shareholder should have the same rights as a majority shareholder to vote his or her shares, attend meetings, and have full access to the company’s financial records.
When a private company begins to value its company stock to sell or transfer ownership, a minority discount should be assigned. This means that the minority shares are not as valuable because they do not provide as much ownership in the company as other shares. The benefit to this is that a minority shareholder can purchase shares for less than majority shareholders.
Benefits of Shareholding
Minority shareholders should have the same rights to benefit from shareholding as majority shareholders. For example, if dividends are received by majority shareholders, minority shareholders should also receive dividends. If a minority shareholder believes that a majority shareholder is suppressing his or her rights in any way, the minority shareholder may have the basis for a strong lawsuit.
Communication With Other Shareholders
Minority shareholders have the right to communicate with other shareholders regarding their common business interests in the company. Any stockholder who is unsatisfied with some internal management of the company has the right to request the stock register that contains the name and addresses of the other stockholders to communicate with them regarding corporate management. Any shareholder lists, organizational documents, minutes, or other records should be made available so that shareholders can communicate with each other about the internal process of the company in which they own a part.
Contact an Experienced Business Attorney Today
If you are a minority shareholder and have concerns about your rights, you should take steps to ensure that those rights are protected. Protect your financial interests by visiting with an experienced business attorney at the Law Office of Kris Mukherji at (858) 442-5747 to learn how you can implement a successful strategy to ensure your shareholder rights are protected.
All relationships can have problems, and that includes business relationships, as well. The goal of creating a business partnership is to combine resources and maximize strengths in order to grow a successful and profitable business. However, before you enter that partnership, you should examine how to avoid any future partnership disputes before they start.
Discuss the Vision
Strategize the vision for the business down to the smallest detail. Strategic planning for a partnership can include everything such as finances, expenses, costs, branding, online website strategy, and everyone’s specific roles. Make sure to only ever partner with those people whom you have known for a while, like, respect, and trust.
Discuss the Details
Determine your six-month, one-year, three-year, and 10-year plan for growth. Make sure everyone is on the same page for all areas of a business. Determine why you truly want to partner with this specific person, and why it would be profitable and emotionally beneficial for you to do so. Determine the percentage of ownership, and the allocation of any profits or losses. Decide who can make fiduciary decisions or bind the partnership with or without consent from the other partners. Decide which partners will be able to make decisions, and the areas for which each partner will be responsible. Decide what will happen if one partner dies, or if there is a dispute. Decide on a business structure and how the business will operate day-to-day.
Write it All Down
Make sure to memorialize all conversations regarding your business. Oftentimes, people have short memories. After making all of the decisions above, contact an attorney to create the legal documents you need to ensure that your business is established legally and will operate effectively. An experienced business attorney will also be able to help provide additional information and resources you may not have considered.
Have an Exit Strategy
Unfortunately, relationships do not always work out, even with the best of intentions and planning. Business relationships are the same way. Just like having a prenuptial agreement, making sure that your partnership has an established plan for dissolution that is fair to all parties can help avoid any future lawsuits about intellectual property, real property, assets, and debts.
Unfortunately, if business disputes can not be resolved, the partnership will have to terminate. Making this difficult process easier by having an established plan in place will only help all parties involved.
Contact an Experienced Business Attorney
If you are considering establishing a partnership, it is imperative that you visit with an experienced business attorney. Executing legal documents that not only correctly set up your business, but also offer protection against future liabilities, are important to establish for all partners in the new business relationship. Contact the Law Office of Kris Mukherji at (858) 442-5747 to learn how you can create a wonderful partnership from the beginning and attempt to avoid or mitigate any future partnership disputes.
If you have rental properties or are considering purchasing rental properties, you may wonder whether or not to form a Limited Liability Company (LLC) to attempt to protect yourself and your assets. Unfortunately, the answer is not clear cut, and there are both pros and cons that must be weighed when making the decision to put rental property in an LLC.
Pros of an LLC
There are many advantages to establishing an LLC for your rental properties. Depending on your specific situation and unique circumstances, the following may be considered “pros” for making the decision to form an LLC.
- Asset Protection. One of the main reasons that rental property owners decide to create an LLC is to limit personal liability. In our litigious society, lawsuits are common, and no property owner wants to place his or her own personal assets at risk.
- Tax Advantages. An LLC has the option of being taxed as a “pass-through” entity, which means that any income and/or capital gains pass directly to you, the owner. Taxes are paid as an individual taxpayer, yet you still are afforded protections through the LLC.
- With an LLC, you will not have to put your own personal name on the deed, which will ultimately become public knowledge. If you create a holding company in a state that allows for anonymity then it will make it more challenging for anyone to determine who the actual owner of the property is.
Cons of an LLC
While there are several substantial advantages to the creation of an LLC regarding your rental properties, there are disadvantages, as well. Some of the most common disadvantages include the following:
- An LLC costs more money than not creating any kind of entity. LLC costs can vary depending on who creates your LLC and what kind of tax preparation you will need.
- Possible Lack of Asset Protection. While asset protection was listed as an advantage, the truth is that having an LLC does not necessarily completely insulate the owner from full liability. There are some situations where having an LLC will not offer much protection at all. Specifics listed in an operating agreement, as well as business practices, can change the level of asset protection afforded by the establishment of an LLC.
- Attempting to purchase a property such as a home, duplex, or townhome can be challenging as an LLC, instead of as an individual person. Many lenders will not allow a person to borrow money to finance the purchase of a property under the name of an LLC, but require an actual person’s name. Understandably, they want to hold someone personally liable if there is any issue in the future regarding payments. There are other options, such as paying in cash, or deeding the property to the LLC after you purchase it in your own personal name.
- Due-On-Sale. If you attempt the last move to deed the property to your LLC after you purchase it, then the lender may see that as a complete change of ownership and require full repayment of the loan. Whether this happens or not is a gamble, and entirely up to the lender.
Contact an Experienced Estate Attorney
If you are an owner of rental properties or are considering owning rental properties, you may be confused about whether or not you should establish an LLC. Contact the Law Office of Kris Mukherji at (858) 442-5747 to learn how best you can protect yourself and what structure will work best for your business.