Law Offices of Lawrence H. Jacobson A Professional CorporationCalifornia Expert Witness | Expert Testimony | Consultant for Real Estate & Malpractice2024-03-25T18:37:04Zhttps://www.lawrencejacobson.com/feed/atom/WordPress/wp-content/uploads/sites/1103263/2021/05/cropped-LHJ-siteicon-512px-transparent-32x32.pngOn Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485852024-03-25T18:37:04Z2024-03-25T18:37:04Zflexible business structure, offering the legal protections of a corporation with the tax efficiencies and operational flexibility of a partnership. By default, the Internal Revenue Service (IRS) does not recognize an LLC as a separate tax entity, so the business itself is not taxed. Instead, taxes are generally paid through the individual members' tax returns. However, LLCs have the unique ability to elect how they are taxed, choosing between being treated as a sole proprietorship, partnership or corporation for taxation purposes.
Weighing your options
If your LLC has a single member, so by default, it is taxed as a sole proprietorship. Income will pass through to the member's personal tax return, simplifying the tax filing process but subjecting personal assets to potential liability. For multi-member LLCs, the default taxation is as a partnership, where income and losses pass through to members according to their ownership percentages.
Electing to be taxed as an S corporation can be beneficial for LLCs that meet IRS requirements. This option allows profits (and losses) to pass through to owners' personal tax returns, avoiding double taxation. It also enables members to be treated as employees, potentially saving on self-employment taxes.
Alternatively, opting for C corporation taxation means that a LLC is taxed separately from its owners, introducing a layer of complexity with potentially double taxation (first on the company's income and again on dividends to shareholders). This structure can be advantageous for businesses planning to reinvest profits into the company or seeking venture capital.
The choice of tax classification for your LLC involves several considerations. These should be contemplated carefully in order to better facilitate the success of your company down the line.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485832024-03-19T13:10:10Z2024-03-19T13:10:10Zliving trust, which allows the property to bypass the often lengthy and costly probate process. Another option, a direct deed transfer, such as through a grant deed or quitclaim deed, can be used for a more immediate change in ownership.
Setting up a living trust
A living trust offers a flexible and efficient way to transfer your home to your children. To establish a living trust, you must create a trust document, naming yourself as the trustee to maintain control over the property during your lifetime. Upon your death, the property is transferred to your designated successor trustee, typically one of your children, without needing court intervention.
This method simplifies the transfer process and provides a level of privacy not available through public probate proceedings. However, it's essential to properly fund the trust by transferring the title of your home into the trust's name, a process that requires drafting and recording a new deed.
Considering a direct deed transfer
A direct deed transfer can be accomplished using a grant deed or a quitclaim deed. A grant deed assures that the property hasn't been sold elsewhere and is free from undisclosed encumbrances. A quitclaim deed transfers ownership of the home without any guarantees regarding the property’s status.
It's crucial to consider the implications of each type of deed, especially regarding potential tax consequences. A direct transfer can trigger a reassessment of the property's value for property tax purposes. This will possibly change the tax burden on your children.
Making informed choices
Regardless of the chosen method, it's important to consult with a legal representative to understand fully the implications of transferring your California home to your children. The approach that will best suit your situation will depend on various factors, including your financial situation, your children's needs and the specific legal requirements involved.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485812024-03-11T22:23:18Z2024-03-11T22:23:18ZA Payable On Death account, or a POD account, gives you a new option to transfer assets to others. You name a beneficiary on a bank account or another eligible financial account. When you pass away, the beneficiary provides the death certificate or notice to the financial institution and then immediately takes over control as the owner of that account.
But why would you use this type of account, rather than passing the contents of the bank account along in your estate plan? Here are a few potential advantages.
Skipping probate
First of all, many of your assets may need to go through the probate process. But Payable On Death accounts are not included. If you’re looking to reduce the percentage of your estate that goes through probate, POD beneficiary designations are one of the fastest ways to do it.
Quick access
For your beneficiary, one of the benefits is that they can quickly access the account. You may pass away and probate could take months. But a POD account may transfer in just a few days.
Avoiding disputes
Finally, a POD account may lower the odds that your beneficiaries will get into a dispute. After all, your biological children and other beneficiaries may have the option to challenge the estate plan. But since a POD account isn’t part of your estate plan and skips probate, they cannot challenge the beneficiary designation.
Setting up your plan
POD accounts are just one option you may want to consider when creating an estate plan. Carefully look into all of the options you have to set up a plan that is going to work best for your family in the future.
]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485782024-02-23T00:39:30Z2024-02-23T00:39:30ZProvisions of a force majeure clause
The reliability of a force majeure clause is determined by the clarity of its language, the inclusivity of events or circumstances listed as triggering factors, and the specificity regarding the rights and obligations of both parties in the event of activation. Provisions may include the following.
Force majeure event
The clause should clearly outline what events qualify as force majeure events. These typically include natural disasters such as earthquakes, floods, hurricanes, or other extreme weather events, as well as acts of war, terrorism, riots, labor strikes, governmental actions and pandemics.
Mitigation efforts
While force majeure events occur for reasons beyond the control of the parties involved, the clause may specify that both parties are expected to make reasonable efforts to mitigate the effects of such events to the extent possible. This could include actions such as finding alternative means of fulfilling obligations, communicating effectively to minimize disruptions or seeking legal recourse if necessary.
Notice period
The affected party is typically required to provide prompt notice to the other party upon the occurrence of a force majeure event. This notice should include details about the event, its impact on the party's ability to fulfill their obligations under the agreement, and any steps being taken to mitigate the effects. The notice period allows both parties to assess the situation and collaborate on potential solutions or adjustments to the terms of the agreement as necessary.
Seeking legal guidance can help ensure that a force majeure clause is drafted effectively and in accordance with applicable laws and regulations, maximizing its enforceability and providing clarity on the rights and obligations of both parties in the event of a force majeure event.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485762024-02-12T17:30:01Z2024-02-12T17:30:01ZBusiness succession planning is closely related to estate planning. Many people consider it because they are passing a family business onto the next generation. They can certainly see the benefits for their immediate family members of having a clear, well-defined plan in place.
But it’s also important to think about the business side. A succession plan should be crafted to benefit the company, as well. Here are some examples of how it can do so.
Stable operations
To start with, when the succession happens, a plan provides stability for the business. You can limit disruptions and focus on continuous workflow moving forward. It also decreases the amount of time it takes to replace people at key positions, so the business can continue operating just as it was.
Higher retention rates
In some cases, an effective business succession plan will also result in higher employee retention rates. This can also lead to higher performance and assist with the stability noted above. The new owners can just focus on running the business, not having to replace numerous employees.
Defining roles
One clear focus of a succession plan should be to define which roles are being assigned to which individuals – if multiple people are involved. For instance, many family businesses are passed to multiple adult children. Are they all going to share ownership? Who makes financial decisions? Who is in charge? Having clearly defined roles helps the business operate smoothly and reduces the odds of a dispute.Are you doing business succession planning this year? Be sure you carefully take the time to look into the necessary legal steps.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485742024-01-30T13:42:11Z2024-01-30T13:42:11ZA non-disclosure agreement (NDA) can be an important tool in protecting your business trade secrets, confidential information and intellectual property from being disclosed to unauthorized parties. As legal documents, it helps to understand that mistakes can invalidate NDAs or make them difficult to enforce.
Your business could be significantly compromised when this happens. Picture a situation where highly sensitive information falls on your competitor’s hands, yet you cannot seek legal redress against the party responsible due to an enforceable or invalid NDA. It underscores the importance of avoiding these common pitfalls when crafting an NDA.
Using vague language
An NDA should be as specific as possible about what information is confidential and other aspects. Using ambiguous terms and unnecessary jargon is a recipe for disaster. You do not want an agreement with confusing clauses or room for interpretation, as it can be difficult to enforce.
Unreasonable scope of the agreement
Setting an unrealistic duration or harsh restrictive terms, like an NDA that lasts a lifetime, can invalidate the agreement. Similarly, having an overly broad agreement that covers information that is not confidential can result in legal complications. The terms of an NDA should be reasonable and fair enough for the court to enforce.
Incomplete or inadequate information
Omitting crucial details or poorly drafting the agreement can leave it toothless when facing legal scrutiny. Ensure that all relevant information, from the names of the parties involved to the scope of confidentiality and consequences of breach, is comprehensive and well-documented.These are just a few of the various mistakes that could weaken or entirely invalidate an NDA. Given it could be your first line of defense when safeguarding confidential business information, you cannot avoid taking unnecessary risks. Reaching out for legal guidance can help create a comprehensive and legally valid NDA that will stand legal scrutiny and protect your business interests.
]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485722024-01-16T20:17:42Z2024-01-16T20:17:42ZAn appraisal gap
California is home to some of the most expensive and competitive real estate markets in the country. Buyers often need to make their best offer immediately to have any chance of securing the property. However, if they are too aggressive with the amount they offer, they may not be able to finance the transaction. If an appraisal comes in low, that may lead to a cancellation of the closing.
Inspection or survey issues
An appraiser isn't the only professional who looks into a property to determine if a mortgage company should finance a transaction. An inspector should also look at the condition of a property. If there is a large plot or any questions about the boundaries of the parcel, then a survey may be necessary as well. Unexpected outcomes during the survey or inspection process could lead to renegotiations or a canceled closing. Title issues that show up during the title search for the property could also bring the transaction to a halt.
Practical complications
There are a host of challenging circumstances that could suddenly arise and diminish someone's ability to follow through on a real estate purchase agreement. The buyer might lose their job and suddenly be unable to obtain a mortgage. The seller could find it prohibitively difficult to locate a new home and may back out of the transaction at the last minute. Issues ranging from divorce to health challenges may suddenly complicate a situation and force one of the parties involved to cancel the closing.
Canceled closings can cause expenses and frustrations everyone involved. However, it is possible to protect against some of these issues with a robust contract. Acknowledging and preparing for possible complications that could alter plans for a real estate closing may benefit either party involved in a transaction.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485682024-01-15T22:39:20Z2024-01-15T22:39:20ZIt can be difficult for parents and children to have a conversation about estate planning. Some people feel uncomfortable talking about the end of their life. Others feel uncomfortable talking about money and financial assets.
But it’s still an important conversation to have because an estate plan can lower the odds of disputes and help the process go smoothly. Here are a few things to keep in mind when asking your parents about their plan.
Talk about the benefits
A good place to start the conversation is by explaining why certain things may be beneficial. Using a will to divide sentimental assets may prevent an estate dispute between siblings, for example, which may be a substantial goal for your parents.
Explain why you want to know
It can also help to talk about your intentions. Explain to your parents that you’re not just trying to figure out how much money you’re going to inherit or anything like that. You just want to ensure that there is a plan in place, you’re concerned about future disputes, you want to help your parents with legal or medical decisions and much more. People are sometimes more open to having a difficult conversation when they understand exactly why the other person has brought that topic up.
Listen and offer assistance
It’s very important to listen to your parents once this conversation is going, rather than just telling them what type of plan you think they need to make. But it can be helpful to offer assistance. If you’ve already done your own estate planning, for example, you may be able to explain some of the tools that you used and the benefits that you expect for your family.It’s crucial to make an estate plan well in advance. Those who do so need to be aware of the legal options at their disposal.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485662024-01-04T01:48:51Z2024-01-04T01:48:51ZEstate planning is crucial for securing your legacy and ensuring your wishes are honored.
However, several mistakes can undermine your intentions and create complications for your heirs. Avoiding these common mistakes can save your beneficiaries time, money and stress.
1. Not creating an estate plan in the first place
The most significant mistake is not having an estate plan at all. Many assume estate planning is only for the wealthy, but this is a misconception. Without a plan, California laws determine the distribution of your assets, which may not align with your wishes.
2. Failing to update your estate plan
You need to update your estate plan when your life experiences a significant change. Examples include having a child, getting a divorce or getting married. An outdated plan can lead to unintended beneficiaries receiving your assets or your wishes not being fully realized.
3. Overlooking digital assets
In today's digital age, it's essential to include digital assets like social media accounts, online banking and digital currencies in your estate plan. Failing to account for these can lead to complications and potential loss of assets.
4. Underestimating the need for assistance
Estate planning can be complex, and DIY approaches often lead to errors. Getting help ensures your plan complies with current laws and your wishes are clearly articulated.
5. Not clearly defining beneficiaries
Vague language in wills and trusts can lead to disputes among heirs. Clearly identifying beneficiaries and their shares prevents confusion and potential legal battles.
6. Ignoring tax implications
Estate plans should be structured considering potential tax implications. When you plan your estate early, you can reduce the tax burden. This helps to maximize the value your heirs receive. By avoiding these common mistakes, you can create an effective estate plan that safeguards your legacy and provides peace of mind.]]>On Behalf of Law Offices of Lawrence H. Jacobson A Professional Corporationhttps://www.lawrencejacobson.com/?p=485622023-12-19T14:29:23Z2023-12-19T14:29:23ZManaging an estate is a critical aspect of handling a person's affairs after they pass away. This is especially true in California where the laws and regulations can be intricate and demanding.
An essential person in this process is the estate executor. This individual is pivotal in ensuring that the decedent’s wishes are honored and the estate is managed effectively.
Qualities of an estate executor
When selecting an estate executor, it's essential to consider certain qualities that can significantly impact the efficiency and effectiveness of estate administration. You must have someone who understands your wishes and who you confidently believe will do what you want. Organizational skills are also important because the executor must handle various tasks such as inventorying assets, paying debts and managing paperwork. This requires a high level of organization to ensure everything is accounted for and addressed promptly.Reliability and honesty are critical. The executor is entrusted with managing the estate following the decedent’s wishes and in the best interest of the beneficiaries. This demands a trustworthy person who can be relied upon to act with integrity.The ability to communicate effectively is also crucial. The executor must keep beneficiaries informed and work with various professionals, such as accountants. Strong communication skills ensure that information is conveyed clearly and misunderstandings are minimized.Naming the estate executor is only one part of having a comprehensive estate plan. Getting everything set up so it’s clear and easy to follow is important and it will make the job of the executor easier. Working with someone who’s familiar with these matters can take some stress off the creator.]]>