Thursday, January 25, 2007
Transportation Lawyers Blog Launch
I am excited to announce the launch of the Transportation Laywers Blog. The primary contributor will be Alex Miller, an attorney with over 30 years of experience, much of it dedicated to the needs of the transportation industry. From time to time I will also be happy to add my thoughts and comments. This is a fantastic new forum and source of information for anyone with an interest or questions related to transportation law. Visit often, subscribe and spread the word!
Let Me Help You Avoid Probate
You read the title right - this attorney is giving free suggestions on how to help keep you out of court. Interested? Read on.
One of the goals of estate planning for most people is to avoid probate. To understand “why”, you have to start with the “what”, meaning, what is probate? Probate is the process of a court transferring the title of a decedent’s assets to his or her beneficiaries or heirs.
Why do you want to avoid probate? Because it is costly and time consuming. It can cost thousands of dollars in costs and fees and it can take many months to complete.
Why else do you want to avoid probate? To protect your privacy. Probate proceedings are public record, and with more and more court records becoming available online, it will be easier than ever for those records to be accessed by the general public.
The good news is there are ways to avoid probate.
The first way is to use the process of naming beneficiaries or transfer on death or payable on death (“TOD” or “POD”) designations. Michigan has a statute that clarifies this right. This method of contractually transferring title upon the death of the owner of the asset is available for items such as bank accounts, life insurance policies, and retirement accounts. If beneficiaries are designated, upon the death of the owner of the assets the financial institutions will transfer the assets directly to your beneficiaries so long as your beneficiaries follow their processing requirements.
But not all assets can be transferred using beneficiary designations. This is where a trust can be used to avoid probate. If the trust is properly created and funded, it will avoid probate as the successor trustee is able to privately manage your assets in the event of your passing.
Did you catch the word “funding”? That could be the most important word in this posting. The process of changing title of assets so that they are under the control of the trust is called “funding” the trust. A trust provides a plan for management and distribution of assets and designates the person, the trustee, to carry out that plan. But if an asset is not properly conveyed to the trust, then the trust has no control over that asset, and it is likely that a probate estate will need to be opened.
Probate proceedings are less burdensome then they were in the past, but there are still plenty of reasons to talk to your attorney about how you can avoid probate. So talk to your attorney about designing an estate plan to avoid probate, or to make sure that your existing estate plan will keep your estate out of probate court.
One of the goals of estate planning for most people is to avoid probate. To understand “why”, you have to start with the “what”, meaning, what is probate? Probate is the process of a court transferring the title of a decedent’s assets to his or her beneficiaries or heirs.
Why do you want to avoid probate? Because it is costly and time consuming. It can cost thousands of dollars in costs and fees and it can take many months to complete.
Why else do you want to avoid probate? To protect your privacy. Probate proceedings are public record, and with more and more court records becoming available online, it will be easier than ever for those records to be accessed by the general public.
The good news is there are ways to avoid probate.
The first way is to use the process of naming beneficiaries or transfer on death or payable on death (“TOD” or “POD”) designations. Michigan has a statute that clarifies this right. This method of contractually transferring title upon the death of the owner of the asset is available for items such as bank accounts, life insurance policies, and retirement accounts. If beneficiaries are designated, upon the death of the owner of the assets the financial institutions will transfer the assets directly to your beneficiaries so long as your beneficiaries follow their processing requirements.
But not all assets can be transferred using beneficiary designations. This is where a trust can be used to avoid probate. If the trust is properly created and funded, it will avoid probate as the successor trustee is able to privately manage your assets in the event of your passing.
Did you catch the word “funding”? That could be the most important word in this posting. The process of changing title of assets so that they are under the control of the trust is called “funding” the trust. A trust provides a plan for management and distribution of assets and designates the person, the trustee, to carry out that plan. But if an asset is not properly conveyed to the trust, then the trust has no control over that asset, and it is likely that a probate estate will need to be opened.
Probate proceedings are less burdensome then they were in the past, but there are still plenty of reasons to talk to your attorney about how you can avoid probate. So talk to your attorney about designing an estate plan to avoid probate, or to make sure that your existing estate plan will keep your estate out of probate court.
Thursday, January 18, 2007
Do You Plan To Work Forever?
Nobody lives and works forever so succession is inevitable for every business. But owners can get so busy in the day-to-day workings of the business that they never set aside the time to plan for the future.
If you’ve worked hard to build a business, make sure you have also put together a plan for an orderly transfer of ownership. Poor or non-existent planning has resulted in the end of many businesses and, particularly in the case of family owned businesses, can lead to financial problems and even breaking families apart. Failing to plan can also result in excessive estate taxes and in some cases the need to sell the company or valuable assets in order to pay taxes, administration expenses and debts.
A key part of a succession plan is often a buy-sell agreement, sometimes referred to as a shareholders agreement. This agreement can be used to provide a market for each owner’s interest in the event of certain triggering events (such as death or disability), promote continuity and stability, potentially freeze the value of an owner’s interest for business or estate tax purposes, help to retain S-corporation status and serve as a way to resolve a dispute or deadlock among owners. If nothing else, the agreement can be used to lay the groundwork for long-term planning.
Planning is a process, and it’s never too early to start. To preserve your business for the future, do the practical thing and start working on you succession plan today. To further address this topic or to talk about the options that are available, please contact me to continue the discussion.
If you’ve worked hard to build a business, make sure you have also put together a plan for an orderly transfer of ownership. Poor or non-existent planning has resulted in the end of many businesses and, particularly in the case of family owned businesses, can lead to financial problems and even breaking families apart. Failing to plan can also result in excessive estate taxes and in some cases the need to sell the company or valuable assets in order to pay taxes, administration expenses and debts.
A key part of a succession plan is often a buy-sell agreement, sometimes referred to as a shareholders agreement. This agreement can be used to provide a market for each owner’s interest in the event of certain triggering events (such as death or disability), promote continuity and stability, potentially freeze the value of an owner’s interest for business or estate tax purposes, help to retain S-corporation status and serve as a way to resolve a dispute or deadlock among owners. If nothing else, the agreement can be used to lay the groundwork for long-term planning.
Planning is a process, and it’s never too early to start. To preserve your business for the future, do the practical thing and start working on you succession plan today. To further address this topic or to talk about the options that are available, please contact me to continue the discussion.
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