Posts Tagged ‘Kehr Law’

How to Handle Trust Administration | Kehr Law

Wednesday, November 9th, 2011

How to Handle Trust Administration | Kehr Law

San Diego Business Lawyers and Contracts Attorneys providing a first class “one stop shop” for all your business, contract, will, tax, estate planning, and intellectual property legal needs. Contact Kehr Law today: (619) 400-4942.

Contact Kehr Law today
Phone: (619)400-4942
Text Message: (619)823-8230
Email: dan@kehrlaw.com

HOW TO HANDLE TRUST ADMINISTRATION

After the death of a spouse or a parent, I often find that the surviving beneficiary/trustee has no idea that they need to “do anything” with the trust or the assets. When the trustee is the same person as the beneficiary, whether it is the surviving spouse or the adult child, they will just leave things “as is” and take no action. They may be overwhelmed, or reluctant to contact an attorney for fear of what it will cost, or they may suspect that there will be legal or tax consequences that they would rather not face. So they do nothing. Time will pass, sometimes even many years, before they bump into some obstacle that leads them to our office and we need to discuss a Trust Administration.

As a Trust Lawyer, it’s our job to set proper expectations with our clients on the front end, when they are doing their initial estate planning. This means communicating that while it is true that the administration and distribution of assets held in trust following the death of the trust owner is considerably easier and much less time consuming than having to deal with probate, there are still many things that need to be done by the successor trustee before the assets of the trust can be distributed to heirs.

With the rise in blended families and non traditional families, it is even more important to let clients know that contacting a lawyer after a death is really not optional, it is the trustee’s fiduciary duty to take certain required actions. And on a practical level, they should know that burying their head in the sand or pleading ignorance is only going to hurt them in the long run.

THE TRUST ADMINISTRATION PROCESS IN GENERAL:

Here are just a few things that are the responsibility of the trust administrator:

1. Notifying beneficiaries

2. Valuations and liquidation of assets

3. Paying debts and taxes of the trust

4. Distribution of remaining assets to beneficiaries

5. Filing tax returns

6. Reporting and accounting requirements of the state and courts

7. Defending the trust against claims of creditors or excluded heirs

This is a lot to handle, especially for someone who is grieving the loss of a loved one.

LAWYERS ASSISTANCE

An experienced trusts lawyer can help those responsible for trust administration through this difficult time by preparing appropriate documents and guiding them through their fiduciary duties.

But they need to at least be aware that they need professional advice to help them through these responsibilities and how important these duties are. They will then be motivated to find a trusts lawyer experienced in trust administration who will be able to provide sound legal advice and strategies that will reduce the risks and burdens that will be faced.

This Article used with permission and copyrighted by WealthCounsel, LLC and written by WealthCounsel Member Darlynn Morgan.

Contact Kehr Law today
Phone: (619)400-4942
Text Message: (619)823-8230
Email: dan@kehrlaw.com

See other Kehr Law practice areas including: Business Law, Estate Planning, Real Estate, Wills, Trusts, Corporations, Contracts, and Asset Protection.

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Tags: administration, asset, assets, Attorneys, Business, Estate Planning, Kehr Law, law firm, law office, Lawyers, San Diego, Trust, trust administration, wealth, will
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TRADEMARK VIOLATIONS MAY BE OCCURING IN YOUR BUSINESS

Wednesday, September 7th, 2011

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Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

The United States Patent & Trademark Office

The United States Patent & Trademark Office handles registration of all trademarks in the United States. Domestic and International filings can be made in order to protect a persons or a business’ ideas, drawings, art, word marks, slogans, brand, and other unique and creative works. A business makes use of a mark to create or develop a brand.

When starting your business and creating its name, logos, slogans, website, content, and other creative materials, it is a good idea to visit the USPTO site and perform a check to make sure no other company across the United States has registered the same exact content or something of the like. Skipping this step may cause many headaches and a potential lawsuit down the road for violating a person’s or business’ intellectual property rights.

Registering or Defending Your Work

If you are starting a business or if you already have your business running and make use of word marks, slogans, logos, and other creative materials, contact an attorney to determine how to better protect your ideas or prevent any legal troubles in case of a similarity with an already registered trademark.

Attorneys at Kehr Law have experience with both registering and defending intellectual property rights and we may assist you too regardless of whether you are an individual, sole proprietor, or a corporation. Contact us and schedule a consultation today.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

See other Kehr Law practice areas including: Business Law, Estate Planning, Real Estate, Landlord-Tenant, Wills, Trusts, Corporations.

Tags: Attorneys, Brand Management, Business Law, Copyrights, Intellectual Property, Internet Law, IP, Kehr Law, Lawyers, Litigation, Litigator, San Diego, San Diego Business Attorneys, San Diego Business Lawyers, Trademarks, United States Patent & Trademark Office, USPTO
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SPECIAL REQUIREMENTS FOR CALIFORNIA NON-PROFIT CORPORATIONS

Wednesday, August 31st, 2011

San Diego Business Lawyers and Contracts Attorneys providing a first class “one stop shop” for all your business, contract, will, tax and estate planning legal needs. Contact us today: (619) 400-4942.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

If you have incorporated in California recently, allow us to extend a Congratulatory message to you. If you are taking on the task of incorporation on your own, be sure to review the statutory requirements the State of California imposes on your business entity type. California imposes special requirements that may differ from regular corporations in the State for both IRC 501(c)(3) and IRC 501(c)(4) nonprofit corporations.

Such special requirements apply to both the incorporation provisions in forming your corporation as well as tax limitations. If you are have recently incorporated with a 501(c)(3) or a 501(c)(4) nonprofit corporation, or if you have been operating your corporation for a number of years, contact an attorney to ensure your corporation documents meet the statutory requirements. Attorneys at Kehr Law can assist you review your corporation documents such as your bylaws or even your agreements that you have entered, or plan to enter

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

See other Kehr Law practice areas including: Business Law, Estate Planning, Real Estate, Landlord-Tenant, Wills, Trusts, Corporations.

Tags: 501(c)(3), 501(c)(4), Attorneys, Business Attorneys, Business Lawyers, Kehr Law, Lawyers, Non-Profit, San Diego
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USE OF FOREIGN TRUSTS FOR ASSET PROTECTION

Thursday, August 11th, 2011

San Diego Business Lawyer and Contracts Attorney providing a first class “one stop shop” for all your business, financial, contract, will, tax and estate planning legal needs. Contact us today: (619) 400-4942.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: mailto: dan@kehrlaw.com

Because foreign trusts no longer provide tax relief in most situations involving U.S. grantors and beneficiaries, their utility is to be found in such special situations as foreign grantor trusts with a foreign grantor, testamentary foreign trusts, pre-immigration foreign trusts for incoming aliens, special-situation foreign trusts to accommodate tax write-offs, and net operating loss carry-forwards and foreign-asset protection (or asset preservation) trusts (APTs).

Anyone who has accumulated substantial assets that are subject to liability in a lawsuit is a potential candidate for an asset protection trust. For example—

1. a surgeon, attorney, architect, or other professional who is vulnerable to a malpractice suit and who may not be able to obtain or afford suitable malpractice insurance;

2. the director of a company in a highly regulated field (e.g., the production of nuclear energy);

3. entrepreneurs who are cashing out of their business at substantial gains; and

4. high net-worth individuals ($100,000 in liquid assets), including parents who want to preserve assets during the course of a long-term gift-giving program or in the event of a child’s divorce.

Several foreign jurisdictions—the Cook Islands, Nevis, Bermuda, the Bahamas, Belize, the Cayman Islands, Cyprus, Gibraltar, the Turks and Caicos Islands—have enacted specific laws that are notably debtor-friendly to encourage the use of asset protection trusts in their respective jurisdictions. Other countries, such as Barbados, may do likewise. The Isle of Man, however, does not afford foreign trusts statutory protection from fraudulent conveyance claims by creditors of the grantor.

We here at Kehr Law work with and recommend using the Cook Islands or Nevis as the jurisdiction of choice since their laws are most similar to those in the United States and they provide, in our opinion, the best protection for client’s who have greater than $100,000.00 in liquid assets. The Cook Islands is recognized as the world leader in formation of asset protection trusts, safeguarding the assets of high net worth clients. Cook Islands law contains a number of unique features that make the operation of an asset protection trust administratively friendly and highly protective.

We work with trusted fiduciaries, banks and trustees in these jurisdictions and can help you establish not only a wonderful tax deductible vacation to a warm and tropical destination every year, but also customize your asset protection trust to provide you with maximum flexibility while minimizing your risks and liabilities.

Kehr Law offers free consultations for your financial and asset protection needs.

Find directions to our Downtown San Diego office or leave your questions at the Contact Us page.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: mailto: dan@kehrlaw.com

Tags: ASSET PROTECTION TRUSTS, Business, Corporate Formations, Corporate Forms, Corporations, Kehr, Kehr Law, Lawyer, Limited Liability Company, LLC, San Diego, San Diego Business Attorney, San Diego Business Lawyer, USE OF FOREIGN TRUSTS FOR ASSET PROTECTION
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DOCUMENTING THE DECISION OF ENTITY SELECTION

Friday, July 8th, 2011

San Diego Business Lawyer and Contracts Attorney providing a first class “one stop shop” for all your business, contract, will, tax and estate planning legal needs. Contact us today: (619) 400-4942.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

Once the business entity has been selected, attention needs to turn to documenting the decision and actually completing the formalities of forming and organizing the entity. In the case of a corporation, for example, this means the preparation of the articles of incorporation, bylaws, shareholders’ agreements, and organizational minutes and actions. The articles of incorporation will need to be filed with the Secretary of State. Legal counsel should be able to assist the principals in drafting all the required documents, often using much of the information collected to select the appropriate entity.

Documentation may be necessary even before the business is formed. For example, the principals should consider entering into some form of preformation agreement or letter of understanding which sets out their agreement regarding the key economic terms of the new business and legal relationships. This document should always cover the form of entity, and the principals can select from among the following examples:

Limited Partnership. We agree that the business will be organized and operated as a limited partnership under the laws of the State of California. Over the next two weeks, we will work with our counsel to prepare a certificate of limited partnership meeting the requirements of the State of California and prepare a limited partnership agreement that reflects our agreement regarding management of the business and allocation of profits and losses from the business.

LLC. We agree that the business will be organized and operated as a limited liability company under the laws of the State of California. Over the next two weeks, we will work with our counsel to prepare articles of organization meeting the requirements of the State of California and prepare an operating agreement that reflects our agreement regarding management of the business and allocation of profits and losses from the business.

Corporation. We agree that the business will be organized and operated as a corporation under the laws of the State of California. Over the next two weeks, we will work with our counsel to prepare articles of incorporation and bylaws meeting the requirements of the State of California and prepare a shareholders’ agreement that reflects our agreement regarding management of the business. In addition, we shall cooperate in preparing and filing all documents necessary for the election of Subchapter S corporation status under the federal income tax laws.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

Tags: Business, Corporate Formations, Corporate Forms, Corporations, Kehr, Kehr Law, Law, Lawyer, Limited Liability Company, LLC, San Diego, San Diego Business Attorney, San Diego Business Lawyer
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SECTION SPOTLIGHT: Law Practice Management and Marketing Section

Tuesday, June 28th, 2011

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Phone: (619) 400-4942
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Published in San Diego County Bar Association Bar Report, June 2011 Edition. Read the full article at: SDCBA Bar Report June 2011 – Section Spotlight. This article originally appeared in the June 2011 issue of Bar Report. It is posted with the permission of the San Diego County Bar Association.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

Tags: Business, Corporate Formations, Corporate Forms, Corporations, Kehr, Kehr Law, Law, Law Practice Management and Marketing Section, Lawyer, Limited Liability Company, LLC, LPMM, San Diego, San Diego Business Attorney, San Diego Business Lawyer, San Diego County Bar Association, SDCBA
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BUSINESS ENTITY SELECTION PROCESS

Wednesday, June 22nd, 2011

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Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

Once the principals have a good understanding of the various alternatives available to them in the entity selection process, they should work with their professional advisors to collect and evaluate all the information necessary to make an informed decision. The legal or accounting professional will generally distribute a list of required information, including business and financial information on the proposed business and each of the principals. If possible, a business plan and detailed projections should be prepared so that proper consideration can be given to specific risks and amount and timing of profits and losses from the enterprise.

Once the information is collected, a good deal can be sorted out by asking the following basic questions:
• Are there any nontax factors that would require utilizing the corporate form? These might apply when the business activities are particularly risky or the principals intended to raise significant amounts of capital from outside investors.
• Will the business generate losses during the early years of operation that makes it desirable that one of the forms of “pass-through” entities (i.e., partnership or S corporation) be used?
• Are there any special tax planning considerations that must be taken into account? Anticipated transfers to family members for estate planning purposes may dictate the use of a limited partnership. If flexibility with employee benefits is desired, a corporation may be the best choice of entity.
• Are there any special nontax considerations that must be considered when no clear choice has emerged from the balance of the above referenced factors? Formation and administration costs are sometimes very important for very small businesses.

Even when a preliminary choice has been made based on the foregoing analysis, a variety of other issues must be considered, if not already taken into account. They include the following:
• The participation of various types of entities, such as a corporation, a nonresident alien, or certain types of trusts, may prevent use of a S corporation, as may the number of participants.
• Participants who must be actively involved in managing the business must be general partners, members, or shareholders, with the choice depending upon the need for limitations on liability from the entity itself, rather than from insurance. The degree of involvement in the business may also impact the deductibility of losses for partners under the “passive activity” rules.
• Transfers of ownership interests may result in a variety of adverse tax consequences when the partnership form is used. Also, planning for the withdrawal, retirement, or death of a principal may have an impact on the form of business entity selected.
• The need to reinvest profits from the operation of the business may require using a C corporation, since the “pass-through” forms will tax the profits at the ownership level, thereby necessitating some distribution of assets to meet the current tax liabilities.
• If the principals are related to each other, any disproportionate relationship between the property and services contributed to the entity and the proprietary interests of the owners in the business may result in a reallocation of income between the parties if the partnership or S Corporation is used.

Evaluating each of these factors requires extensive consultation with professional advisors. They can assist the principals in comparing the various alternatives, often by reference to a chart that lists how each of the entities addresses specific tax and nontax issues. Software programs are also available to create projections of the anticipated tax liabilities for the entity and each of the owners based on an assumed selection of a particular organizational form.

The participants are not necessarily limited to a single organizational form. For example, there may be situations where certain elements of the business should be separated, perhaps because of the disparate functional skills associated with the activity or the degree of potential liability. A separate entity might also be formed to handle activities associated with a specific product line or in order to gain access to benefits provided for businesses organized in specific localities. However, before two or more entities are used, consideration must be given to the added complexities, including the need to keep multiple sets of books and records.

Selection and use of any entity organized under laws other than those of the state of California is also a possibility; however, as mentioned above, this decision should not be made with consulting experts in the law of the chosen jurisdiction. For example, businesses contemplating an eventual public offering of their securities may incorporate under Delaware law because of perceived advantages of Delaware corporate law as it relates to public companies. However, certain provisions included in California’s corporations laws effectively override Delaware law until the specific conditions based on the number of shareholders and situs of business activities are satisfied.

Finally, the principals need to remember that while the initial selection of the form of business entity is important, changes in the form of entity can be made as the needs of the business and its owners evolve over the life of the enterprise. For example, California law allows for conversion of one form of entity into another with a minimum of regulatory paperwork as long as the economic interests of the owners remain essentially the same after the conversion. Also, a sole proprietorship may be converted into another entity to admit additional owners and/or limit the liability of the principals.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

Tags: Business, Corporate Formations, Corporate Forms, Corporations, Kehr, Kehr Law, Law, Lawyer, Limited Liability Company, LLC, Partnerships, San Diego, San Diego Business Attorney, San Diego Business Lawyer, Sole proprietorship
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COMPARING LLCs TO PARTNERSHIPS

Wednesday, June 15th, 2011

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Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

The most important distinction between LLCs and general partnerships is that the partners of a general partnership are personally liable for the debts of the general partnership whereas the members of an LLC generally have limited liability. Partners acting in the ordinary course of business may bind the general partnership. However, a member who is not acting as a manager has no power to bind a manager managed LLC in transactions with third parties. Finally, a general partner in a general partnership may cause a dissolution of the general partnership when no definite term or particular undertaking is specified. A member of an LLC does not have any such right.

The striking distinction between LLCs and limited partnerships is that while every limited partnership must have at least one general partner who is potentially liable for all the obligations of the partnership, all members of an LLC have limited liability regardless of their participation in the management of the business. While this problem can usually be resolved through the use of a corporate general partner, this increases the organizational complexity and administrative and compliance costs. Moreover, despite changes in the California limited partnership statute that permit greater participation in management by limited partners, limited partners may jeopardize their limited liability status if they actively participate in the business of the limited partnership.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

DISADVANTAGES OF LLC’S IN RELATION TO CORPORATIONS

Thursday, June 9th, 2011

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Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

While LLCs enjoy significant advantages over corporations, there are some disadvantages that need to be considered. For example, members of an LLC will not enjoy all the advantages of the numerous fringe benefits available to shareholder-employees of a C corporation. For example, members of an LLC: may not receive tax free life insurance and medical benefits; may not participate in a cafeteria plan established for the LLC’s employees; and will find significant restrictions with respect to qualified retirement plans (e.g., inability to borrow from the retirement plan). Members of an LLC may also be subject to higher marginal tax rates than corresponding corporate tax rates.

In addition, until LLCs become more widely known and used, there may be practical inconveniences in using an LLC rather than a corporation for certain transactions or business activities. For example, banks are not accustomed to dealing with LLCs, and such unfamiliarity may delay or prevent the LLC from obtaining loans. There are likely to be many situations in which business promoters and investors will prefer the more formal structure and certainty of corporations over the relative uncertainty of LLCs.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

ADVANTAGES OF LLC’S OVER CORPORATE FORMS

Thursday, May 12th, 2011

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

The fact that an LLC can be treated as a partnership for tax purposes provides it with several tax advantages over C and S corporations. Of course, because it is treated as a partnership for tax purposes, an LLC will not be subject to double taxation and the members are free to allocate income and loss under the rules applicable to partnerships. Also, an LLC that is taxed as a partnership does not generally recognize gain or loss upon liquidation. Only the members may be subject to tax on distributions received from the LLC’s liquidation. In addition, a C corporation may have a portion of the salary deduction for an officer-shareholder disallowed as unreasonable compensation. Any disallowed portion would typically be treated for tax purposes as a dividend rather than as salary. In contrast, a LLC member’s income is either taxed as a guaranteed payment or as the member’s distributive share of LLC income.

LLCs are often compared to S corporations, since both offer limited liability and pass-through taxation. In general, LLCs offer a great deal of flexibility in relation to S corporations. For example, while S corporations are subject to certain restrictions on the number and type of shareholders they may have, as well as the number and variety of ownership interests that may be issued, LLC’s are not subject to any of these restrictions. In addition, S corporations may not hold more than 80% of the total voting power and total value of another corporation’s stock. LLCs are not subject to this restriction. Furthermore, unlike LLCs, S corporations are not permitted to specially allocate income, gain, deduction, or loss among their shareholders or make disproportionate distributions to their shareholders. Finally, S corporations are subject to certain penalty taxes for built-in gains and excessive passive income that do not apply to LLCs.

On the nontax side, LLCs are attractive in that they are not subject to the same formalities as corporations, such as the requirements for calling and conducting meetings, and annually electing directors and officers. The rights, duties, privileges, and preferences of an LLC’s members are usually defined in the operating agreement, which is not a publicly filed document. While amendments to the articles of incorporation of a corporation that may adversely affect one or more classes of stock generally require approval of at least a majority of all shareholders, amendments to an LLC’s operating agreement may generally be done without a separate class vote unless specifically required in the operating agreement.

Contact Kehr Law today
Phone: (619) 400-4942
Text Message: (619) 823-8230
Email: dan@kehrlaw.com

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