Helpful Tips When Preparing Your Estate Plan

Forbes recently published an article that provides helpful estate planning tips for both those with estate plans in place and those who are just beginning the planning process. The five estate planning tips listed in the article are below:

• Prepare a will that declares who inherits both financial and nonfinancial assets. Assets that have beneficiary designations may not be governed by a will, so it is important to consult with the appropriate financial institution to determine what rules apply. 

• A trust can help ensure that certain assets are allocated to cover specific expenses like college and special needs expenses.  

• Consider using tax-efficient strategies to lower or eliminate the estate and income tax your beneficiaries will owe on their inheritances. These strategies include gifting amounts to beneficiaries and leaving taxable assets to charities while giving tax-free assets to beneficiaries.

• Life insurance proceeds can be used to offset estate and income taxes. Life insurance proceeds are tax-free, and the entire amount can be used to pay taxes owed by beneficiaries. 

• One of the best way to create an effective estate plan is to work with an estate planning team. Involving an estate-planning attorney, a tax professional, and a financial advisor can help ensure that the estate plan is the best fit for the size of the estate and the outcome desired.  

Not Sure What it Takes to Form a Company?

The thought of forming a small business can be extremely exciting but also very overwhelming.  The truth of the matter is that the American dream of growing a business from the ground up doesn't have to remain a fantasy--it can become reality.  Of course, it's going to take a lot of hard work and, most importantly, research. If you handle it correctly from the onset, your foundation will be made for a very successful business.

Your very first decision should be figuring out exactly what type of business you want to form.  Many entrepreneurs decide to form corporations, which exist as a separate legal entity from their owners and provide a layer of protection for owners when it comes to their personal assets.  The following ten tips should help get you started as you consider the logistics of forming a corporation.

Choose a Business Name.  You'll need to research the specific regulations governing corporate names in your state, and check whether your desired name is available.  Make sure you choose one that is professional, but appealing to consumers.  It's a good idea to have a few alternatives in mind, just in case your top pick is taken.

Appoint Corporate Directors.  Directors play a crucial role in corporations.  They're responsible for making major policy and financial decisions for the business.  Examples of decisions directors typically make include authorizing stock issuance, appointing corporate officers (and setting out their salaries), and approving loans to and from the corporation.  Make sure to select trustworthy people to take on this role!

File Articles of Incorporation.  Once you choose a business name and decide on which directors to appoint, your next step will be to file Articles of Incorporation (or whatever your state calls them) with your state's corporate filing office.  For most states, this responsibility lies with the Secretary of State's office in the state's capital city.  Articles of Incorporation do not have to be complicated or overly involved.  They must, however, specify a few vital details such as your corporation's name, principal office address, the names of its directors, and the name and address of one person who will serve as the company's "registered agent."  Typically, that individual functions as the person who can be contacted in the event someone wishes to serve a lawsuit against the corporation.

Draft Corporate Bylaws.  Bylaws are the internal rules and regulations that will govern the daily operations of a corporation.  Examples include when and where the corporation will hold directors' and shareholders' meetings, and what the voting requirements for directors and shareholders will be.  The corporation's directors typically adopt the company's bylaws at their first board meeting.

Hold First Board Meeting.  Speaking of which, the next step for forming a corporation is holding the first meeting of the Board of Directors.  The purpose for this initial meeting is to handle a few items of official corporate business like setting the corporation's fiscal year, appointing corporate officers, adopting the corporate bylaws, authorizing the issuance of any shares of stock, and adopting an official stock certificate form and corporate seal.  Also, if the corporation is intended to be an S corporation, the Board will approve the election of S corporation status.

Issue Shares of Stock.  Corporations should not conduct any business until they issue shares of stock, which formally divides up the ownership interests in the company.  Simply put, if the corporation wants to be treated as its own legal entity, then it must behave that way, doing business as a corporate entity rather than just an extension of its owners.  The formal requirements must be met in order to qualify for the legal protections offered by forming a corporation.

Securities Registration.  It's crucial that the corporations follow all securities laws when issuing stock.  Fortunately, most small corporations are eligible for exemptions from securities registration.  Typically, those corporations who issue shares to a small number of people (generally ten or less) who will actively participate in running that business will qualify for exemptions to securities registration.  Be sure to research the specific requirements in your jurisdiction, however.

Obtain Necessary Licenses and Permits.  If you've filed your articles, approved the corporate bylaws, held the first Board of Directors' meeting, and issued stock, you're almost there!  Now you need to obtain all required licenses and permits that all new businesses must acquire (like a business license), along with any extras like obtaining an employer identification number from the IRS, a state seller's permit, or a zoning permit from your local planning board.

Sounds like a lot but it's really not as overwhelming as it seems. Once you've had your attorney (whether internal or external) give the corporation the legal thumbs up, it's official.  Your corporation can open for business and the only thing left to do is have fun growing your company.

Take These Questions into Consideration BEFORE Starting a Business

You are super excited about starting your business. That's fantastic. However, there are some things you should consider, kind of like "preventive medicine".

Have you set goals and a plan for reaching them?

Without a clear idea of where you want to go and how you plan to get there, you may find yourself stumbling through the stages of starting a business and facing unwanted stress and frustration.

One of the most important steps is setting goals that outline what you want to accomplish in the short term (1 month, 3 months, 6 months, etc.), as well as over the long term (2 years, 5 years, etc.).

Once you have created your goals, it's time to make sure you have a plan for your business that will guide you along the way. It's also helpful to understand your motivation for starting a business in the first place.

Will I be able to follow my plan without breaking any laws or regulations?

There are a number of legalities that you should consider and explore when starting a business.

• Deciding on the structure of your business (sole proprietorship, partnership, corporation, limited liability company)
• Registering a business name
• Obtaining necessary licenses and permits
• Planning for business taxes

Have you fully considered the financial implications of starting a business?

Money is a major concern when you start a business, especially if you will be leaving behind a steady paycheck and if your business has significant start-up expenses.

Some business financing options to consider to ease the financial transition include starting your business on the side while continuing to work full time, working a part-time job until your business becomes established, waiting to start your business until you have saved up a financial reserve, and borrowing the necessary funds to bridge the gap.

Is your support network in place?

We accomplish very little in life completely autonomously, and the same is true in business. Even if you plan to be a sole proprietor, you can benefit tremendously from creating an external support system to keep you on track.

Your support network may include family, friends, colleagues, a mentor, a coach, and anyone else who can help you navigate roadblocks. When you have an effective support system in place, you will find that you have a cheerleader, consultant, moral support and even a devil's advocate when necessary.

Do you have what it takes to make it as a business owner?

Being a successful business owner requires a unique mix of personality and small business character traits. While there isn't a standard formula that makes one type of person more successful than another, some entrepreneur-friendly personality traits that can ease the process of getting started as a business owner include passion, drive, dedication and self-discipline. And it doesn't hurt to be an effective communicator and someone who is willing to take measured risks.

These questions are likely to spur a few more specific to your situation. Now is the time to consider all of the possibilities ... then you can let your enthusiasm take your dream to the heights you expect.


What mistakes did you make because you simply "Didn't Know What You Didn't Know"? Help others to learn by sharing below.

EXTENDED - Florida Enhanced Short Sale Relocation Program

The Florida Enhanced Short Sale Relocation Assistance Program has been extended to December 12, 2011.

This program offers enhanced relocation assistance to help encourage homeowners to engage with Bank of America on a pre-offer short sale. Homeowners may be eligible for relocation assistance between $5,000 and $20,000.*

Eligibility:

• Homeowners with property in Florida
• Short sales initiated without an offer between Sept. 26 and Dec. 12, 2011
• The customer will have to be eligible for one of the without an offer programs, such as the Home
• Affordable Foreclosure Alternatives (HAFA) program or Bank of America's proprietary program (specific investor participation and eligibility criteria do apply to these programs)
• Successful closing of the eligible short sale by Aug. 31, 2012

Exclusions:

• Ginnie Mae, FHA, VA and USDA loans are ineligible for participation
• Lot loans are ineligible for participation
• Properties outside Florida are not eligible for participation
• Short sales initiated with an offer are not currently eligible for the enhanced relocation assistance

Frequently Asked Questions:

How can I find out if my client/homeowner qualifies for this relocation assistance?
Call a Bank of America short sale specialist at 1.877.459.2852,
Monday-Friday 8 a.m. - 10 p.m.; Saturday 9 a.m. - 5:30 p.m. Eastern

Do I have to do anything different to initiate or complete the short sale?
No. If the homeowner's short sale is initiated between Sept. 26 and Dec. 12, 2011, and the property closes by Aug. 31, 2012, the homeowner will be eligible.

Will the relocation assistance funds be reported on the HUD-1?
Yes, they will be documented on the HUD-1, and a 1099-MISC will be issued.

Can the relocation assistance funds be used to pay off existing liens?
Yes, if the investor approves it.

Will this enhanced relocation assistance waive the homeowner's deficiency?
An additional benefit for these pre-offer programs, such as HAFA and Bank of America's proprietary program, is that deficiency may be waived for homeowners who qualify.

Is the relocation assistance added to any other incentives, such as HAFA or Bank of America proprietary program incentives?
No. A homeowner will receive the $5,000 to $20,000 in place of the typical incentive paid out by these programs. The relocation assistance is essentially an enhancement to the standard payout offered on these programs.

Is the enhanced relocation assistance available for other programs?
The enhanced relocation assistance is currently available only to short sale programs initiated without an offer. However, as we gauge the success, we may extend this incentive to other programs.

Questions?
Homeowners and agents may call 1.877.459.2852 Monday-Friday 8 a.m. - 10 p.m.; Saturday 9 a.m. - 5:30 p.m. Eastern to speak to a Bank of America short sale specialist about this exciting relocation assistance offering.

* The relocation assistance payment is calculated based on the unpaid principal balance of the homeowner's loan and the type of short sale that the homeowner completes, but will not be less than $5,000 or more than $20,000. The payment amount will be calculated based on the homeowner's loan balance as of August 2011 and the short sale program in which the homeowner is eligible. The payment will be delivered at the time of closing if the homeowner complies with all terms and conditions of the Short Sale Agreement, including the satisfaction of all second liens and presentation of clear title for the property (the relocation assistance payment can be used to clear those liens). If the homeowner does not comply with all terms and conditions of the Short Sale Agreement, the homeowner will not receive the relocation assistance payment. Even if the homeowner receives relocation assistance, Bank of America, N.A., and their successors and assigns may reserve and retain the right to pursue collection of any deficiency following the completion of the short sale, unless otherwise prohibited by law. The amount of the deficiency and relocation assistance will be reported to the Internal Revenue Service (IRS) on the appropriate 1099 Form or Forms.  We suggest that homeowners contact the IRS or their tax preparer to determine if they have any tax liability. This offer is for Florida properties only. To receive the relocation assistance, the property must close by Aug. 31, 2012.

Are You Ready if the Unexpected Happens?

"I shall not waste my days in trying to prolong them."
- Ian L. Fleming (1908-1964)

A living will, or an advance health care directive, are written instructions to the public about what actions should be done concerning an individual’s health in the event that individual is no longer able to make a decision due to an illness or incapacity. These documents are usually required to be executed by hospitals and doctors prior to surgery or other invasive medical proceedings to ensure that the wishes of an individual are carried out in case something goes wrong. However, these documents are important beyond planned events, they are useful in case the unexpected happens and a decision has to be made after the unthinkable has occurred.

Many may remember the “Terri Schiavo” case where Teresa Marie Schiavo was diagnosed to be in a persistent vegetative state and her loved ones fought in the courts for seven years about whether further life-prolonging procedures should be given. A huge issue in the matter was the fact that Mrs. Schiavo had no written living will informing everyone of her beliefs and wants.

A living will is one important piece of a person’s individual estate planning package. Florida estate planning can be as simple as having a last will and testament, health care surrogate, durable power of attorney, and living will or be inclusive of other asset protection plans including trusts and business succession planning. It is recommended that regardless of what one possess, that one should prepare now to avoid burdening one’s family and friends with making decisions on their behalf when they could have told them in writing earlier.

Please consult with an estate planning attorney regarding your desires and wishes.

Think Positive Even When World News is Negative

There is a lot of anxiety over current events including the state of our economy and the direction of our political leaders. This concern has impacted many businesses, great and small. However, many business owners need to realize that the stock market ups and downs, whether a foreign embassy is fully manned, or countless other issues newscasters display daily.  

It is true that many business owners will feel some type of impact from these larger scale news items, however the impact will probably not be as much as whether their individual business is selling its products and services to its customers. Regardless of the times, people still eat, sleep, get haircuts, go shopping for necessities and little perks, seek entertainment where they can, and millions of other things as they have been doing for years.

There are countless stories of businesses that have survived and thrived from these current down times and the ones that have hit our nation and world in the past. So rather than not do anything for fear of what may come, people should charge forward and continue to try to grow their business and succeed. Business owners everywhere should take a quick look at what they have, think about what they wish to accomplish, confer with their accountants and lawyers about what can be accomplished, and do it.

Protecting Your Biggest Asset - Your Property

When dealing with asset protection, a huge concern is property ownership.  At times, a trade-off is necessary between the control of the property, the tax benefits desired and protection wanted.

In a common scenario, a future husband and wife may own a property as joint tenants in common but wish to maximize their creditor protection and own it as tenants in the entirety.  This transfer may be useful in that they may choose to change ownership to tenants by entirety when they get married.  This change will offer the following benefits:

• give them the ability to have an undivided interest in the property,
• creditors will have limited ability to force distribution,
• the property will automatically transfer to the survivor upon death of one,
• a filing of bankruptcy by one may keep the property secure from creditors by the other.

However, the conveyance may cause a spouse the loss to individually transfer ownership, the property would lose its separate property status, and the entire property would become subject to the surviving spouse's creditors and the whims of the surviving spouse.

While this is just one issue and there are many ways to convey ownership of property, whether real or personal or utilizing corporate ownership or beneficiary interests in trust, there are many issues that should be reviewed and possibly addressed prior to making the transfer.  This runs true even for future business partners as well as marriage and other new ventures.

It is always highly recommended that one should consult with professionals who are experienced and skilled to establish a plan that addresses one's needs, desires and goals.