Tag Archives: Law

Your Business: Preserving Your Business Liability Protection

Law

By Kathleen Moore

Congratulations!  You have selected the best legal entity for your business and have executed the formal paperwork to set up your entity, whether it is a corporation or a limited liability company (LLC).  Your business is now considered a “person” separate and apart from you, the owner(s). The assets and liabilities of the business are owned by the business itself, not the shareholders of the corporation or members of the LLC. Therefore, you cannot be held personally liable for the debts of the business IF the business is properly formed and preserved.

Business owners often ask why they need to bother with the formalities: holding annual and special meetings; electing officers, directors or managers; and passing or adopting resolutions.  Typically, the same people are involved in the business from year to year and there is a clear understanding on operating the company.  So, in the pursuit of business objectives, the company’s housekeeping matters are often forgotten.

Courts in all states have regularly found that if the shareholders or members ignore the duties imposed on them by law or by written agreement, then the shareholders or members may lose the business liability protection.  Courts can “pierce the veil” and hold the individual shareholders or members directly liable for the liabilities of the business, if the individual shareholders or members ignore the required formalities.  Courts – and the IRS – are crystal clear on this subject: if you neglect to treat your company as a separate legal  entity, they will too.  They will set it aside and impute personal liability to you, plus disallow tax deductions.

Courts have framed several bases for piercing the veil:
• Ignoring corporate or LLC formalities;
• Substantial undercapitalization;
• Commingling of assets;
• Using the business as an “alter ego” where there is no distinction between the business and its owners; and
• Fraud.

Experienced legal counsel can provide the support necessary to keep your business safe from the tools that can pierce the veil.  If you expect to enjoy the limited liability provided by a corporation or LLC, then you must keep the business form in order.

This information is brought to you courtesy of The Law Offices of Kathleen M. Moore, LLC, at
351 S. Cypress Road, Suite 404B, Pompano Beach, Fl 33060.  You can reach Kathleen at (954) 366-3694, or visit her website at www.kmoorelaw.com.

Estate Planning – It’s Important for Everyone!

Law

By Kathleen Moore

Many people ask if they should have an estate plan. For most of us, the answer is yes.  People who do not have an estate plan should think about preparing one.  And those of us with an estate plan should review and update it from time to time.  Estate planning means deciding what will happen to your property when you die, how you can make it easier for heirs to receive your property and how you can reduce taxes so your heirs receive as much as possible.

Certain tools are part of most estate plans.  These tools include:

A Will.  Wills are used to list who you want to receive your property when you die; however, wills can do other things as well.  A will can let you choose your personal representative – the person in charge of managing your estate during probate, including paying the debts of your estate and ensuring that property is distributed in accordance with the will.  A will can also designate who you want to serve as guardian for your minor children, if you and your spouse both are gone.

A Living Trust.  Trusts are legal devices that let someone stop being the “owner” of their property, but still control it.  With a living trust, you can transfer the title of your home, car, stocks or other property to the trust.  You can serve as both the trustee and beneficiary during your lifetime, which lets you control the property in the trust and obtain the income stream and other benefits it provides.  When you die, a successor trustee that you have named will distribute the property in the trust to the successor beneficiaries.  This transfer occurs outside of the probate process, avoiding the delays and costs of probate.  A living trust can also help avoid guardianship proceedings if you become incapacitated.  Since you have already given someone the power to manage the assets in the trust, a court will not have to appoint anyone else.

Life Insurance.  When you die, the insurance policy pays money to the person(s) you designate and usually does not go through probate.  One purpose of life insurance is to provide enough money for your spouse or children to replace the earnings lost due to your death.  Another common purpose is to ensure there is enough money available to pay any estate or inheritance taxes that may be due on your estate.

Health & Disability Insurance.  Medical care for a serious injury or illness can wipe out a lifetime of savings.  Worse, a disabling injury could end your ongoing income by preventing you from working.  Insurance can help you maintain an income stream and protect your savings if you can’t work or if you need costly medical care.

Retirement Plan Statements.  If you have now, or had previously, a retirement or pension plan, make sure you have the statement of terms and benefits of each plan.  If you don’t have these statements, you should contact your current and prior employers to obtain them.

Records of Your Property.  Make sure you have copies of the deed(s) to the real estate that you own, your stock certificates or brokerage account statements, your insurance policies, bank statements for all of your bank accounts and documents regarding any other property.  These documents should be maintained in a central location and a trusted person should be made aware of their location.  For whoever must assemble your assets upon your death, their task will be easier if these records are readily available.

Bank Accounts.  Many people set up their bank accounts to go directly to their heirs when they die without going through probate.  These accounts are called payable or transferrable on death accounts, or “Totten Trusts.”  A bank officer should be able to help you to properly set up such an account.

Power of Attorney.  A power of attorney lets you appoint someone to handle your financial affairs.  A usual power of attorney automatically expires if you become incapacitated; however, a durable power of attorney stays valid until you die, as long as you do not revoke it.  If you want to limit a durable power of attorney to take effect only when you are unable to act, you can grant a “springing” durable power of attorney.  This will take effect in situations that you specify, such as if your doctor and a trusted family member agree that you are incapacitated.

Health Care Power of Attorney.  This lets you appoint someone to make your medical decisions if you are not able to make them yourself.  The decisions can cover a variety of medical matters, including consent for hospitalization and surgery.  You can also grant the power to review medical records and to discuss your medical condition with your physician through a health care power of attorney.

Living Will.  A living will lets you specify the types of life prolonging treatment that you want – or do not want – if you become terminally ill.

As you can see, estate planning involves arranging your affairs to be handled by the people you want when you become unable to handle them yourself due to illness, incapacity or death.  It involves thinking about the future and having all the necessary documents to help ensure your wishes are carried out.

This information is brought to you courtesy of The Law Offices of Kathleen M. Moore, LLC, at

351 S. Cypress Road, Suite 404B, Pompano Beach, Fl 33060.  You can reach Kathleen at (954) 366-3694, or visit her website at www.kmoorelaw.com.