Monday

Estate Planning: Intervivos Trust a/k/a Living Trust

A friend of mine recently gave birth to her first (and likely only given her experience) child at the age of 35. Like most people, she executed a General Will years ago but otherwise did not spend any more significant time thinking about estate planning until her daughter was born. It seems she now spends a great deal of time changing diapers and a little more time worrying about her estate and its impact on her daughter's future. The other day the question arose as to whether she should set up an "Intervivos Trust" a/k/a "Living Trust."

What is a Living Trust?
A Living Trust is probably the most common instrument used by estate planners today for passing property upon death. A Living Trust allows an individual (the "Settlor") to put all of his or her property into a revocable living trust and name himself or herself as trustee. When the Settlor dies, the successor trustee conveys the property held in the Living Trust to the beneficiary designated by the Settlor in the Trust instrument.

A Living Trust allows the Settlor to pass his or her assets to a beneficiary quickly and inexpensively upon death of the Settlor and to revoke the Trust at any time during the life of the Settlor. A Trust may be funded by a life insurance policy even though the actual funds do not go into the trust until the Settlor passes away.

One Common Complaint About the Living Trust
One common complaint about the Living Trust is that it should be drafted by an attorney which can result in a lengthy and expensive document. You may be able to find online software to help you draft the document yourself, but doing may expose you to the risk of not crossing a "t" or dotting an "i" and having the trust declared invalid.

States that provide protections to family members such as the probate homestead found in Florida and California are unavailable to dependents of the Settlor. Also, creditors may be able to attach property of the Trust if the Settlor's estate is insufficient to cover the debts.

Trust Property Is Included in Decedent's Estate
Trust property is included in the decedent's taxable estate for estate tax purposes. The beneficiary takes the property at a "stepped up" basis.
SHARE:

Tuesday

Business: What is a Corporation?

Many of my clients come to me with questions related to what type of business they need to set up. I usually advise them that at least two primary concerns are involved in determining what type of business to go with: liability and taxes. There are obviously other factors to consider but these are usually the primary concerns.

The following are brief definitions of a Corporation. I intend to follow this post with information on other legal entities.

What Is A Corporation?
A corporation is a legal entity created by statute that has all the rights privileges and responsibilities of a natural person. In the eyes of the law a corporation is treated as if it were a natural person. It can open bank accounts, conduct business, and be sued just like you and me.

A corporation possesses attributes of limited liability (i.e. protects its owners from lawsuits), centralized management, continuity of life (i.e no set expiration period) and free transferability of interest (i.e. stocks, etc.).

There are different types of corporations. For small businesses, you may want to look into setting up an S-Corporation.

What Is A For-Profit Corporation?
A For-Profit Corporation is a corporation created for the purpose of conducting business in the broadest sense of the term. Its main purpose is to make money for those who own the business. The one restriction placed on a For-Profit Corporation is that the business it conducts must be legal. In other words, setting up a For-Profit Corporation to run a drug ring will not protect the corporations owners. Sorry Mob Bosses.

What Is A Non-Profit Corporation?
A Non-Profit Corporation is a corporation normally thought of as one created for religious, charitable or educational purposes. A Non-Profit Corporation is not precluded from engaging in a profit making situation. In fact, a Non-Profit Corporation is not necessarily a charitable corporation or one that is tax exempt. They are simply corporations that may not distribute their income to a member, director or officer.
SHARE:

Friday

Consumer Protection: I'm All Outta Love

You may have heard about the Los Angeles, CA court case where the sixty (60) year old woman hired an online matchmaking service to find her a wealthy husband. The woman made an initial payment of $100,000 to the service and the service guaranteed it would introduce her to rich men; presumably eligible marriage candidates. The service took her money and promptly introduced the woman to a man in bankruptcy and another wealthy (but married) man.

The Solution: More Money
Unhappy with the results, the woman paid the service an additional $25,000 for instructions on how to snare a wealthy husband. The service then introduced her to a retired, middle class firefighter and several other middle class men. Still no wealthy prospects.

When All Else Fails, File Suit
In the end, the service failed to provide what it had guaranteed. After numerous unsuccessful matches, the woman sued the service. The jury awarded the woman her initial $100,000 as well as a punitive award of $2 million. Now she can marry whoever she wants (rich or poor) and still be distinguished as a millionaire's wife.

SHARE:

Tuesday

Vote Today

Just a reminder (if you didn't already know it) today is the day to vote. I voted on the way into work this morning. My voting precinct is located at a small rural airport in the middle of nowhere. I was surprised when I arrived to see how many people showed up to vote for this mid-term election. There were about 10 proposed amendments to the Georgia Constitution and no real interesting races. Despite its location, our precinct has what I would call state of the art voting equipment. I enjoyed voting on the touch screen machine.

I am actually more interested in the issues being voted on just south of the border in Tallahassee, Florida. There is a new County Judge seat up for grabs and one of the guys I knew in high school is running for County Commissioner. They are also deciding on whether a new sales tax should be implemented. I personally oppose the tax because I would have to pay it but would not get the benefits; my being a resident of Georgia.
SHARE:
© CORPUS JURIS. All rights reserved.