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Naming Beneficiaries on Your Retirement Plans

We are often asked whether one should name individuals or their Trust as the designated beneficiary on their retirement plans.  There is no one answer to this question.  In other words, it depends!   Here are some considerations when naming beneficiaries on your retirement plans:

Do you and your spouse have different heirs? Naming your spouse, individually, as the beneficiary does not insure that your retirement plan will be passed to your beneficiaries upon your spouse’s death later on.

Do your retirement assets make up a significant part of your estate? If so, then leaving them individually to your beneficiaries may use up your estate tax exemption and reduce the amount available to fund your credit shelter or bypass trust.

How much control do you want to give to your beneficiaries? In naming a beneficiary individually, he will have full control over the assets (and can spend frivolously).

When will your spouse need to take distributions? In naming your spouse individually, you preserve the option for your spouse to “roll-over” the retirement account, and defer distributions (as well as its tax consequences) for a later day.  However, if you name your Trust, your spouse may be required to take distributions immediately after your death (and therefore pay taxes too).

Everyone should review their beneficiary designations frequently to make sure you have made the proper designation.  Work with your estate planning attorney to make sure you have made the proper designation which will accomplish your goals.

Are you ready to Franchise your Business?

Do you have two or three restaurants with a signature look and feel? Or a specialty clothing store with a brand name, concept and systems for doing business? Or perhaps a service you provide that can be duplicated by others? You may already have other stores where you have licensed the trade name to another individual or entity and entered into distribution agreements for the specialty merchandise; however you may now be ready to franchise your business. Licensing and franchising are two different legal tools and you want to ensure you are using the right one to avoid unpleasant consequences. Franchising can be a great vehicle for driving your business forward, but you must ensure compliance with federal and state laws. They mandate that if you are offering or selling a concept, you must register with the appropriate state authorities, depending on the jurisdiction. You will need an experienced franchise attorney to guide you through the details of this process, so you can focus upon building your business dreams.

 

You May Not Always Be Your Own Trustee

The focus for many people when they create a Trust is the distribution of their assets at the time of their death. We are seeing more clients who are living past their ability to direct and maintain their own finances. Make sure your Estate Planning documents are clear as to what you want for yourself in the event that a Conservator is appointed for you or in the event your Successor Trustee takes control of your finances during your lifetime.  What care and level of living do you want? Do you want to remain in your home for as long as possible despite the cost of home healthcare? Do you want annual gifts that you make to continue during your lifetime? Remember your Agent for Power of Attorney does not have authority or control over your Trust assets. If a Lease needs to be renewed or a Certificate of Deposit needs to be renewed and the assets are in the Trust name it will take the power of your successor Trustee to direct those assets.

 

Creating Related Businesses: How Robbing Peter to Pay Paul Could Wipe Out Peter!

Often time companies will have the need to create related businesses to their core business.  While in theory this is great, in practice it can be more than problematic.  For instance, you are the key shareholder in a product company.  You see great opportunities that relate to your product company by setting up a transportation company that can ship your products and possibly others’ products within the industry.  You also see the opportunity to establish an insurance company that insures your products and again, possibly those of others’ in the industry.

Excited about the potential revenue that you can capture, you have these two additional entities created.   You also take money from your product company and place it in two new bank accounts for these two new companies that you now own.  As time goes on, these new companies need additional capital in order to sustain themselves and reach your goals.  You have bills for each of the new companies paid out of the product company.  You also have employees working on all three companies, but only have their payroll taken from the product company. In addition, you mix and commingle money, assets, and human capital between all three of your business entities—because, after all—they are all your companies.

Is there a big deal?  Yes! Why? Because by failing to maintain and operate all three entities separately, you have now risked liability from each of these companies as to the other.  For example, if the transportation company gets sued and is subject to damages as a result, the lack of keeping all the “eggs” of each company in their own “basket” now permits the plaintiff to reach assets of the other companies.  If the product company has cash flow and/or sizable assets, your operating the three companies interchangeably has now put your product company at risk.

Therefore, it’s important to ensure that each company operates as if it has three different owners, notwithstanding that you are the only owner.  One example of operating under complete separateness is the following:  If one company needs cash, make it a loan, document it as between the two companies, and ensure that the company who needs the money pays its bills from its bank account with that loan money.

Operating completely separately may take some getting used to; however, it beats having to risk everything you worked for to build up that product company.  Making sure you have the right systems in place in the short run, will position you to try to reach your goals in the long run.

Balancing Act: How Attorneys Play a Key Role in an Entrepreneurs Vision

Entrepreneurs, you are indeed risk takers. You are "idea" people with creative minds constantly thinking outside of the box. Most of you do not know that there is a box. Attorneys, on the other hand, are trained to stay in the box and to spot the potential pitfalls that could cost a company time, money and possible lawsuits. While there is nothing wrong with thinking outside of the box, every business owner needs the right business attorney to balance your entrepreneurial spirit with the perimeters of the law. While this may sound confining to you, the visionary, a good business attorney allows a company to grow by keeping the impediments of a lawsuit or other disputes at bay. Entrepreneurs, we know you see attorneys as wardens, doling out warnings and restricting your ideas, but in actuality we share in your vision. We just help you minimize risk to get there and beyond.

How do we effectively combat international online piracy?
la_dailyjournal

la_dailyjournal

Article Published in the Los Angeles Daily Journal - Vol. 125, No. 021

Online piracy problem calls for global attack,

not US business-based approach

The power of the Internet continues to show its strength, whether it stems from intellectual property pirates or from mass online opposition to laws proposed to stop international online piracy. The online communities’ recent efforts in mobilizing millions to express opposition to the Stop Online Piracy Act are arguably unprecedented. Companies such as Google, Wikipedia and others rallied support to table Rep. Lamar Smith’s (R-Texas) online piracy bill. The bill’s goal is to curb international online piracy from foreign rogue sites. It’s alleged that these sites cheat U.S. companies out of millions of dollars in revenue and purportedly cost substantial U.S job loss, according to backers such as the Motion Picture Association of America and the U.S. Chamber of Commerce.

The two powerful groups involved in the controversy are the entertainment industry in Hollywood and technology companies. While Hollywood argues the legislation comports with the bill’s goals, the technology companies stress that, as written, the law places an undue burden on online businesses by forcing them to police the Internet, threatens Internet innovation and free speech, and blocks access to entire domain names if infringing material is placed on a blog or single webpage. Technology companies also contend that the bill’s ambiguous language creates the risk of unfettered online policing of companies without any real checks and balances. While this battle seems to have reduced to a simmer, another option has been introduced; one that is more palatable to the technology industry, but still not embraced by Hollywood and its supporters: the OPEN ACT (Online Protection and Enforcement of Digital Trade Act). This legislation aims to stop money transfers to foreign websites that “primarily” and “willfully” infringe upon the rights of U.S. intellectual property holders. Whereas the Stop Online Piracy Act (and also its cousin, PROTECT IP) sought to have an entire site taken down even if the infringement is contained in just one page or one blog.   ...<Continue Reading>

Estate Planning for Young Families: Protecting Your Assets and Passing on Your Values

Preparing your estate plan can feel like a daunting task, but once your estate plan is completed, it is a comfort to know that just in case something happens to you, your family is protected. Many young families preparing an estate plan are focused on the distribution of assets to their children and who will be handling it. What young families also need to consider is what important family values they would want passed on to their children. Appointing a guardian is the first step. Choosing someone who shares your core values and life priorities ensures that your values will be implemented. Many times the guardian of your children will not be the same person best suited to handle your children’s finances. This financially responsible person is known as a trustee. If your children’s guardian and trustee are not one in the same, you should make sure your plan appoints a trustee who will work well with your guardian and who is aware of your child’s needs. Your estate plan should document your core values and goals for your children so that both your guardian and your trustee are able to carry out your wishes. This plan is an evolving document and will change as your family grows and your values change. You should make sure to review your plan frequently (at least every 5 years) to reflect changes in your family, family relationships and growth of your children.

Plagiarizing The American President

*Photo courtesy of Australian Television Program "Sunrise"

Anthony Albanese, Australian transport minister, had this to say in an attack against the Liberal Party Opposition Leader Tony Abbot:

"In Australia we have serious challenges to solve and we need serious people to solve them. Unfortunately, Tony Abbott is not the least bit interested in fixing anything. He is only interested in two things: making Australians afraid of it and telling them who’s to blame for it."

Does this sound familiar? Michael Douglas gave a similar speech, written by The Social Network screen writer Aaron Sorkin, in the 1995 film The American President:

"We have serious problems to solve, and we need serious people to solve them. And whatever your particular problem is, I promise you, Bob Rumson is not the least bit interested in solving it. He is interested in two things and two things only: making you afraid of it and telling you who's to blame for it."

According to the The Hollywood Reporter, the films international distributor, Universal Pictures, has not taken any steps to bring action against the Aussie politician... yet. It could be argued by the studios legal team that Albanese was in violation of Australia's Copyright Act of 1968, which assures dramatic works from being reproduced in "substantial part."

"Of course, the speech was hardly a commercial endeavor and it's possible that the appropriation was merely de minimis under Australian law," wrote The Hollywood Reporter. "And it should be noted that the quoted excerpt in Sorkin's screen speech in The American President was preceded by these words: "You want free speech?" asks Douglas rhetorically. "Let's see you acknowledge a man whose words make your blood boil, standing center stage and advocating at the top of his lungs things you would spend your lifetime opposing at the top of yours."

After the news broke that Albanese's speech was not an original work, Albanese took to twitter: "D'oh! Stuff up (for the record, that comes from another great American, Homer Simpson)," he tweeted.

You can view the speeches side by side on YouTube, courtesy of the Australian morning television show Sunrise. Sorry Mr. Albanese, you're no Michael Douglas.

YouTube: Aussie politician caught using lines from The American President in speech

Source: The Hollywood Reporter