Wednesday, May 30, 2018

Don't Be Part of the "I-Dunno" 72% Business Owner Statistic

72% of small businesses don’t have a succession plan, reports Isaac O’Bannon, Managing editor of the CPA Practice Advisor. What’s more, O’Bannon found, 87% of small business owners were unaware that there are documents that can be created to specifically protect their businesses.

“Meanwhile, the new tax bill changes the rules for pass-through entities (Limited Liability Corporations, sole proprietorships, partnerships, and S-Corporations), which make up 90% of all businesses in the U.S.,” the law firm Petefish reminds us.

Even more startling is a statistic released by CNBC showing that some 10 million small business owners are planning to sell or close their businesses over the coming ten years, yet most of those have no succession or exit plan in place in order to cash out for retirement.

And, yes, the new tax law roughly doubles the federal estate tax exemption, Eleanor Laise writes in Kiplinger. But, far from meaning that you should “take your estate planner off speed dial”, she says, be aware that the law doesn’t address creditor protection and maximizing bequests.

At Geyer Law, we do know. That’s why, working in cooperation with our clients’ tax, insurance, and financial planning advisors, we counsel on business matters, including:
  • choice of business entity
  • internal corporate documents
  • liability issues   
  • succession planning
Don’t make the mistake of being part of that 72% statistic!

Wednesday, May 23, 2018

Yes, Bylaws and Operating Agreements ARE Part of Estate Planning

Bylaws? Operating agreements? Choice of business entity?  Those may not sound like estate planning topics, but they most definitely are. In fact, all too often, entrepreneurs are so busy developing and then running their businesses, they don’t take the time to address legal issues that can make the difference between failure and success.

What are some of those important legal issues?
  • choosing the proper organizational structure (C- corporation, S-Corp partnership, LLC)
  • buy-sell arrangements
  • corporate restructuring
  • tax reduction
  • succession planning (in the event of the death, disability, or retirement of a current owner)
“If you own a business or a professional practice, it is even more important that your estate planning begin today,” Entrepreneur Press cautions.  “As a business owner, it’s quite likely that a significant portion of your wealth – and your family’s source of income after your death – is tied up in the family business…The success of your estate plan is dependent upon the business being transitioned to the next generation or sold to someone outside the family for a fair price. Either result takes years of planning and preparation, sometimes as much as 10 years.”

The fact that a business will literally die when the owner retires or dies does not mean the business can be ignored for estate planning purposes. For one thing, as so rightly points out, liability does not die with the owner, and the family will need to consider procedures to reduce the applicable statute of limitations. Steps can be taken to avoid estate tax on a business that no longer exists.

While many entrepreneurs are focused on growing the business, they often neglect to consider what will happen if they are injured, writes Fred Cohen in “By failing to have a plan that enables the business to continue operating, partners, owners, and family members will be left scrambling to manage the business assets, and disputes are likely to arise.”

“Without a plan in place for how various scenarios should be dealt with, the continuity of that business can be compromised,” Tamara Schweitzer observes in Inc.

The attorneys of Rebecca W. Geyer & Associates, PC counsel clients on a range of business issues, including choice of business entity, preparing and filing the organizational documents, business record keeping, succession planning, and advising clients on critical planning issues which entrepreneurs face.

All these things are, we know, very much a part of estate planning!

Wednesday, May 16, 2018

You're Legally Married Until You Aren't - Divorce and Estate Planning

“It doesn’t matter how far along the divorce is or how long the action has been pending, the law considers you to be legally married until the judge signs the final decree ending the marriage,” writes  Patti Spencer in That means your spouse may still have legal control over you and your estate, and may be entitled to most, if not all of it.

What happens to all the spousal rights when a divorce is pending but one party dies before the final divorce decree is entered? In most situations, practitioner Kent A Jeffirs writes in ICLEF’s Law Tips, not much.  You’re still husband and wife. That means that even if one spouse changes the documents while the divorce is pending, the other spouse’s right to elect against the will remains until the divorce is finalSurviving spouses are also entitled to a $25,000 surviving spouse allowance, even if a divorce was pending.

There are five estate planning documents to be updated when you’re planning a divorce, Spencer points out:
  • your will
  • your trust
  • your power of attorney
  • your living will
  • your beneficiary designations
“If you’re going through the emotional and financial turmoil of a divorce, estate planning may be the last thing on your mind,” concedes attorney Mary Randolph in Don’t count on state law to automatically revoke the naming of your spouse as executor – in your new will, appoint a new executor and an alternate.

At Geyer Law, we’ve come to realize, many people don’t know that it is not only marital assets that are divided in a divorce; marital debt is also divided between the spouses.  Some serious things to think about include:
  • Can you afford to take on half of the debt you and your spouse have incurred over the course of the marriage?
  • If you do take on half or part of the marital debt, what impact will it have on your credit score?
Estate planning may indeed be the last thing on your mind during a divorce, but don’t neglect your planning if you want your wishes to be followed!

Wednesday, May 9, 2018

Now-and-Later Charitable Giving

“With markets up and a desire to make an impact strong, charitable giving is growing,” says Pamela Norley, President of Fidelity Charitable. There are four factors driving this generosity, she posits:
  • the strong stock market
  • increased awareness of issues (due to the 24/7 news cycle)
  • the desire to make an immediate difference by giving
  • the desire to minimize taxes
Carrie Schwab-Pomerantz, CFP®, President of Charles Schwab Foundation, lists four ways to incorporate charitable giving into your estate plan:

1. Include a contribution to a charity in your will
2. Designate a charity as beneficiary of an IRA
3. Create or participate in a split interest trust (you receive part of the benefit; the charity  receives  part of the benefit)
5. Use a donor-advised fund to give during your lifetime and beyond

Donor-advised funds are charitable investment accounts that individuals or families can use exclusively for the support of charities they care about. These funds can be opened with a minimum gift of $5,000 and have significantly lower administrative burden and costs than trusts.

Donor advised funds are ideal if you have not already committed a specific dollar amount to a charity in writing and you want to give substantially to more than one charity,” explains Deborah L. Meyer, CPA/PFS, CFP®. The way it works is that you donate assets or cash to the fund, but don’t decide how much is going to one or more charities until later on. Your charitable tax deduction applies now, but the distribution decisions can come later.

“You likely have a big heart and want to give to several different causes.  Yet there are so many valuable causes in the world.  Your contribution will go further if you select a few causes and give meaningfully to them,” Meyer suggests.

At Geyer Law, we generally recommend that our clients periodically review their estate plan, just to make sure nothing major has changed since their planning was originally drafted. One of the topics to discuss might be charitable planning. Are you in a different position when it comes to donating certain assets to charity than perhaps a year or two ago? Has your tax situation changed? Has “increased awareness of issues” made getting involved with the right charity seem more important? Have you learned of a charity that seems to be in better accord with your principles than the ones to which you’ve donated in the past?

Do you have a strong desire to make an impact? Let’s talk about now-and-later charitable giving!

Wednesday, May 2, 2018

Don't List User Names or Passwords in Your Will

“Talk to your clients about how they want their online life handled after their death, Philip Herzberg, CFP® and attorney Michael Dribin advise financial planning practitioners. Digital assets may include:
  • photo files
  • images
  • videos
  • email accounts
  • social media such as Facebook, LinkedIn and YouTube
  • purchasing accounts (eBay, store accounts, PayPal, etc.)
  • iTunes
Digitizing your personal and financial information online makes data easier to store and recall – for you!  Bu, after you’ve died, family members might not be able to access those accounts unless you’ve made arrangements in advance, Herzberg and Dribin caution.

Under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), owners of digital property in Indiana can name people in their estate planning documents who will have the ability to access their digital assets along with their financial assets.
Your “digital executor” can be named in your will, along with instructions on what you wish to have happen with your digital assets.  That person will have the responsibility of following your wishes regarding each online account. You might want the executor to:
  • simply close the account*
  • “memorialize” the account by posting your obituary on it
  • respond to new friend requests
  • archive photos
The purpose of closing digital accounts which are no longer being used is to protect family members from identity theft. Your digital executor will need a list of all your online accounts, including the login IDs and passwords to access them. However, the authors warn, do not put user names or passwords in your will, because that document becomes public upon your death!

“It’s important to understand what your clients really own,” Herzberg and Dribin tell planners.
Digital assets (in addition to those listed above), might include domain names and even blogs, the authors caution.

With our objective of bringing peace of mind to individuals and families and avoiding confusion following the death of a loved one, at Geyer Law we agree: For most people today, digital assets must be included in the estate planning discussion. But remember NOT to list user names and passwords in your will!