Brent Kelly Law, LLC

Free Online Estate Planning Workshop Friday, March 27th

Tue, 17 Mar 2020 22:02:00 GMT

Andrew Hoffman Law PC, LLO will be holding a Free Online Estate Planning Workshop on Friday, March 27, 2020 at 12 p.m. CST. Please join Andrew as he discusses current law updates and trends in estate planning. To pre-register, please e-mail: “REGISTER ME” to Amber@AndrewHLaw.Com .

The workshop will be a live interactive web-video conference. At the workshop, you will learn:

Hope you can join us!

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Entity Annual Meeting Meetings

Fri, 22 Nov 2019 14:27:00 GMT

Why doing annual meeting minutes for your LLC or Corporation is so important

By: Andrew Hoffman, Attorney

When it comes to preparing annual meeting minutes, your responsibility for a business entity varies, depending on whether it is an LLC or a corporation. Each are discussed below.

Corporations

Under Nebraska law, an annual meeting is required to be held by the shareholders. See Neb. Rev. Stat . §21-253. Notwithstanding the technical legal requirement, completing your annual meeting minutes, each year, will go a long way in providing you with the benefit of the liability protection that you are wanting to maintain.

LLC’s

Although annual meeting minutes are not technically required under Nebraska law, they are strongly recommended by virtually all legal practitioners. Moreover, most standard operating agreements require that annual meetings be conducted, which then does make it a required formality for your business entity. Not doing them can spell disaster for the members, from a liability standpoint.

Piercing the Corporate Veil

While you may have formed a business entity for various reasons, one of the primary benefits of utilizing an LLC or a corporation is that it affords you with liability protection. Whether it be tort liability or contract liability, if something goes sour in the course and scope of your business activities, a business entity may operate to shield and protect your personal assets from being exposed to the liability creating event that occurred through the LLC or corporation. This is a good thing.

However, in a lawsuit, if your LLC or corporation is sued, a process known as discovery will occur. During this discovery process, a good plaintiff’s attorney is going to try to find a reason for the Court to ignore the LLC or corporation liability protection and will attempt to attack your personal assets. A plaintiff’s attorney may be successful if they are able to show that the shareholders (corporation) or members (LLC) did not properly maintain their business formalities . A lack of utilizing good business formalities, may result in an action known as “piercing the corporate veil.” If a pierce occurs, then not only is your LLC or corporation liable, but your personal assets are likewise exposed.

During the business formation process, we educate our clients as to what the business formalities are, and why it is so important to follow them. Business formalities include, but are not limited to:

Accordingly, the availability of annual meeting minutes for your company will be an extremely valuable tool to have in your defense arsenal in the event of a lawsuit. If you are sued, your annual meeting minutes will be requested by the other side. If you cannot produce them, it will put your personal assets at risk, regardless of the state law requirements.

Business Maintenance Plan

As a service to our business clients, Andrew Hoffman Law PC, LLO offers our clients a Business Organization Maintenance Plan. This plan will take care of your annual meeting minutes in a hassle-free manner, while at the same time providing other value-added benefits to your business.

We generally finalize our annual meeting minutes for the prior year during the first quarter of the following year. If you would like our office to prepare your 2019 annual meeting minutes, and for the subsequent years, please contact us by sending an e-mail to Andrew@AndrewHLaw.Com .

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Why Farm and Ranch Couples Should Strongly Consider A Revocable Living Trust Based Plan

Thu, 31 Oct 2019 18:37:00 GMT

By: Andrew J. Hoffman, Attorney

If you are reading this article, then you have at least considered the possibility that you may need to graduate your estate plan from the basic Last Will and Testament to a Revocable Living Trust.

A lot of people have a hard time conceptualizing what a Revocable Living Trust is. A Revocable Living Trust is like a 5-gallon bucket. Instead of water, it is a place to put your assets. The Trustor, to use the analogy, grabs the handle of their 5-gallon bucket, and then places their real estate, equipment, cows, and any other assets, into the 5-gallon bucket. Those assets travel into the 5 gallon bucket using tools like a deed, a bill of sale, or other similar transfer devices. Then, upon the Trustor’s death (you), the successor Trustee simply grabs a hold of the bucket handle, reaches into the bucket and then distributes the assets using the same types of transfer instruments that were used to put the assets into the bucket in the first place (i.e., deed, bill of sale, and so forth).

Often, when we prepare traditional estate plans for farm and ranch couples, we begin the process by preparing two individual Revocable Living Trusts. A trust for the husband and one for the wife. After we have prepared the his and hers trusts, we then discuss “funding” each trust. The funding stage, is where we “put things” into the bucket. Frequently, when reviewing a client’s estate plan, we run across trusts that have not been appropriately funded, that is assets have not been transferred into the bucket, or in the alternative, assets have been put into the wrong bucket.

In determining what goes into a husband’s trust or wife’s trust, we take a very pragmatic approach. We review each asset individually, and then discuss that asset on a case-by-case basis.

For example, lets assume that Farmer Godfrey is like many rural Nebraskans, and owns a quarter of real estate, 50 head of cattle, and a nice solid line of farm and ranch equipment. Farmer Godfrey is 75 years old and is still actively engaged in the operation. His wife Jane, occasionally hauls grain in the fall, but is otherwise toiling in the kitchen.

When Farmer Godfrey comes into our office, figuratively speaking, there are a few realities that we face during our discussions. First and foremost, according to the Nebraska Department of Health and Human Services statistical database, the average length of life for a male in Nebraska is 71 years old and the average length of life for a female in Nebraska is 77 years old. Thus, statistically speaking, we know that Farmer Godfrey is likely going to die first, thus leaving his assets to his lovely wife.

Setting aside for a moment those grim details about who dies first in a marriage, we know that pursuant to §1014 of the Internal Revenue Code that beneficiaries of an asset receive what is called a step-up in basis. Therefore, if Farmer Godfrey dies with farm and ranch equipment and cattle in his name, which have been fully depreciated, and he leaves those to his lovely wife, that his lovely wife will be able to “inherit” those assets and receive a full step-up in basis. Thus, assets that would have cost Farmer Godfrey an arm and a leg in income taxes to sell, his wife will be able to sell those assets after his death, tax free.

Based upon real world experiences, on a number of occasions I have assisted widows in having a farm and/or ranch sale or cattle disbursement sale, after the passing of their husband. Often times when a husband dies first, a farm and ranch wife does decide to sell assets. Of course, there are exceptions to this rule, and I am certainly not one to categorize or stereotype farm and ranch wives. There are a number of farm and ranch wives that “keep on keeping on” after the loss of their husband. However, on enough occasions, we see a spouse actually selling out. Knowing that, we try to set up estate plans so that a surviving spouse (wife), can have a tax-free cattle disbursement sale and farm and equipment sale, if those are the facts presented to us.

If Farmer Godfrey owns the equipment and the cattle in his name, then those assets will have to be transferred to his wife, in order for her to receive the step-up in basis. The manner in which assets are transferred to a beneficiary, in this case his wife, at death, can vary. For assets like cattle and farm equipment, essentially, those assets either have to be probated (with Farmer Godfrey’s will) or passed down through a Revocable Living Trust (without a will and without probate). As most people know, probate is the judicial process used to retitle assets. This can be wildly expensive. Minimally, Farmer Godfrey’s wife, can expect to pay well in excess of $10,000.00 in probate fees to transfer his farm and ranch equipment to the surviving spouse. This can be an unfortunate event, for a surviving farm wife.

The alternative, and the approach that we recommend to our clients, is to transfer all of the cattle and equipment into Farmer Godfrey’s trust. By having the farm equipment and cattle in Farmer Godfrey’s “bucket”, upon his death, the surviving wife takes over as Trustee, and simply transfers those assets to her trust through a series of transfer documents. Through this method, she avoids probate, while at the same time receiving a step-up in basis in those vital assets. While this estate plan is not for everybody, it certainly fits a fair number of families in out state Nebraska farm country.

Importantly, it may not just be farm and ranch assets. It may be other types of business assets at play. Regardless of the situation, we will review each estate plan on a case-by-case basis, and make recommendations based upon the circumstances.

If you would like to learn more, please attend one of our free upcoming Estate Planning Workshops. Otherwise please consider a free, no hassle, consultation regarding an estate plan, at any one of our three locations in Atkinson, O’Neill or Central City.

AHL FALL & WINTER 2019-20 WORKSHOP DATES

The post Why Farm and Ranch Couples Should Strongly Consider A Revocable Living Trust Based Plan appeared first on Brent Kelly Law, LLC .

Andrew Hoffman Law PC, LLO Announces Fall and Winter 2019-20 Estate Planning Workshop Tour

Thu, 31 Oct 2019 18:28:00 GMT

Andrew Hoffman Law PC, LLO is proud to announce its late fall and early winter Estate Planning Workshop Tour that has been scheduled for 2019-20. At these workshops, attendees can expect to learn about the following:

Stay tuned for an Estate Planning Workshop near you. If you cannot attend a workshop personally, please note the webinar that is scheduled below. We hope to see you at one of our workshops!

Workshop Dates and Times :

November 26, 2019
Ainsworth, Nebraska
Civic Center
4:00 p.m. to 6:00 p.m.

December 10, 2019
Aurora, Nebraska
The Leadership Center
4:00 p.m. to 6:00 p.m.

December 12, 2019
Tilden, Nebraska
4:00 p.m. to 6:00 p.m.

December 19, 2019
Webinar Online Workshop
7:00 p.m. to 9:00 p.m.

The post Andrew Hoffman Law PC, LLO Announces Fall and Winter 2019-20 Estate Planning Workshop Tour appeared first on Brent Kelly Law, LLC .

Triggering Events in Estate Planning

Thu, 12 Sep 2019 22:04:00 GMT

TRIGGERING EVENTS IN ESTATE PLANNING: Top Six Reasons to Have Your Estate Plan Reviewed Immediately

By: Andrew J. Hoffman, Attorney

After signing a new estate plan with a husband and wife, I am frequently asked the following question: “How often do we need to come and see you to do reviews?” While many law firms sell review packages to clients, which require reoccurring monthly or annual fees, this pragmatic rural attorney does not believe that that is required. Instead, I am in favor of a sensible approach to estate plan reviews. Essentially, it is my advice to clients, that an estate plan be comprehensively reviewed upon the occurrence of a “triggering event”.

While a triggering event is not necessarily the nomenclature of all estate planning attorneys, it is a phrase that we frequently use when advising clients as to the necessity of an estate plan review. The Andrew Hoffman Law definition of a triggering event, in the estate planning context, is the occurrence of an event that is of such significance and importance, in one’s life, that they must pause and reflect upon how this materially affects them. More directly, a triggering event is when something bad happens that causes your plan to go haywire if carried out after the triggering event.

When a triggering event happens in your life, we recommend that you have your estate plan reviewed, within the first 30 days of the occurrence of the triggering event. Below are the top six triggering events, wherein you should, without question, reach out to your estate planning Attorney for advice and consult:

This is the most important triggering event that can occur in one person’s life. The tax implications of the loss of a spouse, are quite significant. There are certain elections that may need to occur within specified periods of time. While losing a spouse can be extremely paralyzing, it is important to remember the reasons as to why it is important to obtain legal consultation soon. These reasons include, but are not limited to, the following:

There are many other reasons as to why this is a triggering event. The above is a small sampling of why it is so important that you obtain legal counsel, upon the loss of a spouse.

It is unthinkable that a parent would have to bury a child. However, and unfortunately, this occurs every year to many Americans. Whether it is a small child due to an accident or illness, or an adult child who leaves behind grandkids for you, this a very real event that occurs in many people’s lives.

The loss of a child is a significant triggering event. Usually a child is one of the beneficiary’s of your estate. Therefore, you will want to review your plan so as to make sure that their share, now passes to either their children (your grandchildren) or to your other kids. If your child was an only child, you will want to review the implications of your assets going to somebody who may not be a child, such as a niece or a nephew (which can increase the inheritance taxes). Often times, if an elderly parent loses a child, their grandchildren will receive that child’s inheritance. However, if that child is a minor, then their parent (your daughter-in-law or son-in-law) would be charged with the care and custody of those assets. Often times that scenario can be avoided, by holding your grandchild’s assets in a trust, until they reach a certain age. However, that must be set up in advance.

Additionally, a person frequently has their children named as a Successor Personal Representative or Trustee, or Successor Power of Attorney. In those cases, you will want to update your planning documents so that you have replacement fiduciaries named. There are other important considerations as well, however these are the highlights.

Sometimes life is just not fair. If you have a child who suffers a traumatic brain injury in an automobile accident, it is possible that that child may be on Medicaid for the rest of their life. Or, alternatively, perhaps you have a grandchild who has been recently diagnosed with a disability or illness. If the illness is of such a type and kind that they may become permanently disabled in the future, and it is foreseeable that they may be a beneficiary of your estate plan, it is important that you get your estate plan updated.

Assume for a moment that you have a son or a daughter in an automobile accident and they sustain a traumatic brain injury. Assume also, that you do nothing to update your estate. When you die, if that child inherits a fractional interest in your estate, and if that child is on state Medicaid, that child will be taken off state Medicaid, and instead their share of your estate will be used to pay for the care that the government would have otherwise paid for. This result could have been avoided with a well drafted estate plan that included supplemental needs trust provisions.

Speaking from personal experience, I have seen firsthand how a person can have kids healthy one day, and medically challenged the next. In 2011 my son was diagnosed with a pediatric brain tumor. Today, thankfully, he is 13 years old and doing well. However, children with pediatric brain tumors often times, if they are able to reach adulthood, can have severe permanent mental and physical disabilities. I frequently use this example, when counseling clients, to have stand-by supplemental needs trust provisions in their planning documents, even if they don’t currently have a child or grandchild that are suffering from any ailments. The truth is, it can happen in a New York second.

When Andrew Hoffman Law prepare an estate plan, this frequently includes a Revocable Living Trust, a Pour-Over Will, a Healthcare Power of Attorney, a Durable Power of Attorney, as well as other ancillary documents. Inside each of the aforementioned documents, individuals are named to be in charge of your finances and/or healthcare, in the event that you are unable to act or if you should die. If, for example, you name a Trustee or a Personal Representative, who dies or becomes disabled, we recommend that you update your estate plan immediately to account for this. Recently I was assisting an elderly gentleman with his estate plan that our office did not prepare. When a different attorney prepared his planning documents, he had a financial power of attorney that named only his wife as his financial power of attorney and his healthcare power of attorney. However, this elderly gentleman’s wife was in the nursing home and had Alzheimer’s. I informed him that it was critical that he update his plan immediately, so that his family would not need to get a conservatorship appointed over him, should something happen to him. It is always a good idea to name three successors to all of your fiduciary appointments, to avoid this from occurring.

It is always an exciting time when a new child enters the world. If you are a parent, and you either have no will, or have a pre-existing will, it is a good idea to freshen up your estate plan to include the name of your new child. Not only do you want your new child to be a beneficiary of your estate plan, but you will also want to include guardianship provisions inside your Last Will and Testament. Likewise, you will want to include trust provisions. These guardianship and trust provisions are important in case something happens to you while your child is a minor. It is critical that a child have a guardian nominated for them in your Last Will and Testament, so that in the event that something happens to the child’s parents, the court will be able to carry out your wishes.

Likewise, if you have a grandchild that is born, it may be a good idea to freshen up your estate plan as well. It is important, as a grandparent, that you make provisions for assets for your grandchildren to be held in trust, in the event that they are minor children and they inherit from you, because their parents predeceased you.

Frequently, state and federal legislative bodies adopt law changes so serious that they can create consequences to a person’s estate plan. A few years ago, LB268 caused a sort of panic among estate planning Attorneys. This new law created a new Medicaid lien that would apply to any deed transfers to children with a life estate reserved. This was a monumental moment, in Nebraska’s estate planning attorney’s lives.

Another monumental shift occurred in December of 2012. With the fiscal cliff looming, on midnight of December 31, 2012 the federal estate tax exemption was scheduled to crash from $5 million dollars to $1 million dollars. This had several panicked estate planning Attorney’s and their clients, contemplating whether or not they should gift a sizable portion of their assets away to their children. Fortunately, on January 2nd, 2013, the American Taxpayer Relief Act (“ATRA”) was passed, and everyone was saved. Currently, there is an $11.4-million-dollar federal estate tax exemption. However, this is scheduled to be reduced, on January 1st, 2026. However, because the federal estate tax exemption is a political football, it is possible that, after the 2020 Presidential election, this could face yet another change. Stay tuned.

It is important to stay dialed in on those laws that could potentially affect your estate, which could include long term care issues, estate and inheritance tax issues, income tax issues, and federal estate tax issues. If a law change or shift is causing those around you to consider an estate planning review, that would be a good sign that you should have an estate planning review scheduled.

Conclusion .
It is never a bad idea to have your estate plan reviewed. We do not require clients to have annual or semi-annual reviews. However, we do think that frequent reviews are good, so as to ensure that your trusts are properly funded, beneficiary designations are correct and other items are appropriately taken care of. We work very hard to prevent probate, in our practice. We want to be able to help you do that.

Please note that Andrew Hoffman Law provides free estate plan reviews for both existing clients, former clients, and new clients. We would be delighted to sit down with you, on a complimentary basis, and review your estate plan. Based on that review, we can either make suggestions or changes, or simply encourage you to keep your plan the way that it is.

It is important to be a good steward when you have assets or minor children. Your legacy depends on it.

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Top 5 Things to Consider Doing Before December 31st

Tue, 06 Dec 2016 09:46:00 GMT

The last month of the year is always a busy time. Christmas shopping. Holiday parties. School programs. The list goes on forever.

In the midst of it all, it is important to keep your business priorities in place. Whether you have procrastinated until now, or just recently thought of doing it, there is still time to get it done. But you have to act fast. Here is a quick look at some of the top year-end business activities you should consider participating in, if the situation fits you.

1. Form A New Business Entity .

Without diving into the pluses and minuses of forming a corporation or a limited liability company, if you have made the decision in your mind that you want to form a new entity, now is the time. The last month of the year is the best time to start that new LLC or corporation. By forming it now, you are setting yourself up for a seamless transition effective January 1 ^st .

The best part about having an effective start date of January 1 ^st for your new business entity, is that you are avoiding the necessity of doing a split year return. Let’s say for example you own a trucking business and want to start an LLC. If you do this at the beginning of July, half of your business will be reported on your Schedule “C”, while the other half will be on your business entity tax return. You will have to juggle checking accounts and records as you try to allocate profits and losses between the two tax returns all within the same calendar year. Why not just stop cold turkey at the end of the year and start fresh at the beginning of the next one?

Savvy entrepreneurs do this time and time again. If you are starting a new business, having it formed by year end is not as big of a deal. However, if you are converting an existing business activity from a sole proprietorship to an entity, doing it at year end will save you headaches and tax preparer fees. Take advantage of the new calendar year by forming that business entity prior to January 1 ^st .

Let us know by as late as December 29 ^th , and we can have your entity formed. Please visit /business-planning/ to get started today!

2. Fully or Partially Complete A Real Estate Transaction .

When real estate is sold, a 1099 is filed with the IRS, reporting the sale proceeds on behalf of the seller for the year in which it is sold. If you sell real estate in 2016, 100% of the sale proceeds will be reported this year. However, if you have not closed on your land sale yet, and want to split the income between multiple years, it is not too late. Perhaps selling half of it in 2016 and half in 2017 will lower the tax for you. Perhaps a multi-year installment sale approach will work best. Regardless, take advantage of your ability to slip in some of the sale in 2016, and the balance of it in the future years to come.

By carefully discussing this with your tax professional, we can help you paper the transaction in a manner to provide maximum legal security while at the same time maximizing your tax savings. Sometimes just closing on an undivided one-half interest on December 30 ^th , and the other undivided one-half interested on January 2 ^nd , can save thousands of dollars. Depending on your tax bracket and the overall net earnings from the sale, this simple two-step sale technique can create a huge savings.

If you are closing in on a year-end real estate transaction, carefully consider how you allocate the sale among the various tax years. Take advantage of a new year being just right around the corner. It might be the best Christmas present you can give yourself.

3. Complete Year end Gifting .

An individual can give up to $14,000 per year to as many people as you wish in 2016. This gift is free of any gift or estate tax. While the annual estate tax exemption is $5.45 million (currently), and slated to increase to $5.49 million in 2017, if you are concerned about someday having an estate in excess of this amount of value, then you should be considering an annual gifting program. Whether it be units or shares in a closely held business, or something more tangible like cows, corn or cash, you should consider reducing the size of your estate by transferring assets to your children on an annual basis.

It is important to remember that you get a new annual gift tax exclusion each and every year. This is Uncle Sam’s Christmas gift to you. It can be reckless to let it go to waste.

Just so it is clear in your mind, think of it this way. You have a bucket which allows you to put $5.45 million of assets into it and give it to your children tax free. If that bucket overfills, to say $6.45 million, then the last $1 million of spillage will be subject to the federal estate tax. If, during your lifetime, you give away $1 million, your “at-death” bucket shrinks to $4.45 million. Such “gifts” chew-up the lifetime exemption amount. But wait. You get a freebie. It is the $14,000 annual exclusion. You can give away $14,000 to 10 different people each year (or as many as you want), and your $5.45 million exemption “bucket” will be left undisturbed. This is a fantastic way to mitigate your federal estate tax exposure.

There are other considerations before a person goes hog-wild with gifting. What is your overall net worth? Do you have a surviving spouse? You will need to consider portability (the ability to stack a deceased spouse’s exemption onto a surviving spouse) as well the new presidency and how this could affect you.

Bottom line, if you have questions, contact legal assistance to evaluate all of these considerations before the end of the year .

4. Consider Making an S-Election for an Existing Limited Liability Company .

Are you operating your existing business as a Limited Liability Company? Are you paying a pile in self-employment taxes each year? If so, it might be time to consider having your LLC taxed as an S-Corporation, rather than as a partnership. While the liability protection will remain the same, the taxing aspects will be different.

The conversion of your LLC to an S-Corporation for tax purposes is something to only consider after a careful conversation with your CPA and legal counsel. It might be necessary to pull out depreciated assets prior to the conversion, or take other proactive steps.

If after consulting with your professional team you decide to convert your LLC tax structure to an S-Corporation tax structure, you must act quickly. You can only request S-Corporation status within the first 75 days of a new tax year.

5. Sign-Up for the Andrew Hoffman Law Business Maintenance Plan .

As the owner of a business corporation or limited liability company, you are required to maintain certain business formalities. The failure to do so can be devastating to your business—the complete disregarding of your entity for liability purposes. One of those business formalities includes the preparation of annual company minutes.

At our law practice, we have a program that may be just the thing you need. For only $199 per year, we will:

Even if we did not form your business entity, we would be happy to help you with this. As a year end special, if you sign-up before January 1 ^st , we will “catch-up” all of your minutes as part of your 2017 Business Maintenance Plan package.

Note that a second business entity can be added at a sharp discount. Please contact us to discuss your particular situation. You will be glad you did.

In this last month of the year, be certain that you are doing all of the right things to help your family build wealth. We are here to help with all of your family business needs. Have a great December. Finish 2016 strong.

NOTE: Please be advised that the above is not legal or tax advice. Andrew Hoffman Law PC, LLO does not give tax advice, but consults with your tax professional collaboratively, if engaged.

The post Top 5 Things to Consider Doing Before December 31st appeared first on Brent Kelly Law, LLC .

4 Important Things to Know When Owning Real Estate in a Different State

Tue, 11 Oct 2016 21:06:00 GMT

I grew up on a Nebraska farm about 10 miles from the South Dakota border, as the crow flies. High school classmates lived in each state. Families farmed land that they owned, in each state. Whether it be for real estate or wives, we were not shy about going to South Dakota. And vice versa.

Nowadays I frequently consult with clients that own summer vacation properties up on the Missouri River. While a South Dakota landowning Nebraskan is the most common scenario that I see, I often have the opportunity to visit with families from places like Iowa, South Dakota, California, Virginia, or other states that own farm or ranch ground real estate here in Nebraska. All of these scenarios create a different set of factors that a real estate owner must consider.

While there are important considerations such as real estate taxes, insurance coverage, and other business items, this commentary is focused on asking, and answering, one simple question: what happens if I die while owning real estate in another state? In that context, here are 4 important things that you need to know about owning real estate in a different state from the one that you live.

1. If You Die a Resident of Nebraska, and Own Real Estate in Another state, You May be Signed up for Two Probates . If you die in Nebraska, it is quite possible that you will need a personal representative appointed in Nebraska to assist with the re-titling of assets to the proper beneficiaries. If you also happen to own land in South Dakota (or any other state for that matter), then your personal representative will have to open up another estate proceeding in South Dakota, to transfer that real estate through the probate courts. If you don’t think two probates are expensive, go ahead and sign-up to purchase two. This can become an even more serious issue if you die owning real estate in California or Florida, where legal fees can be substantially more than in the Midwest. This basic rule of thumb also holds true if you live out of state, and own real estate in Nebraska.

Probate is a judicial process used to re-title assets. A court’s probate jurisdiction in one state, cannot reach into a neighboring state to probate assets owned in that state. Therefore, two probates are required under the above scenario.

While there are exceptions and nuances to this reality, generally speaking, if your estate needs probated in the state where you live, it will likely need probated in the state where else you own real estate. This article presupposes that a person dies with probate assets, in each state (assets that will need re-titled at death).

2. A Revocable Living Trust Can Avoid Probate Out-of-State . A revocable living trust is a common estate planning tool that people use to transfer their assets to their children upon death. While there are several pluses, and a few minuses to using this as a tool, in the context of owning land out of state it can become invaluable. Analysis of a basic fact pattern will illustrate how this works.

Let’s say John Doe owns a 160 acres in Gregory County, South Dakota. Mr. Doe creates a Revocable Living Trust (which is an agreement with himself to create a trust), naming himself as the Trustee. He then transfers his real estate (via a deed) to John Doe, Trustee of the John Doe Revocable Living Trust. Years after this transfer, Mr. Doe dies as a Nebraska resident. While Mr. Doe’s departure is heartbreaking, his family can be comforted by the fact that his dutiful estate planning will have saved them thousands of dollars on a South Dakota probate. Instead, in an instant a successor trustee is named for the trust, who can then transfer the South Dakota real estate, as set forth in the trust instrument. No court action in South Dakota is required, at all. Had Mr. Doe not done this, then his family would have had to probate his estate in both Nebraska and South Dakota.

3. A Limited Liability Company Can Avoid Probate Out-of-State . Another tool in the arsenal of avoiding out-of-state probate for your out-of-state real estate is the use of a Limited Liability Company (LLC). When a person forms an LLC, they create an entirely different entity. By placing real estate into your LLC, you have essentially converted the nature of the asset that is owned. Ownership in an LLC is reflected through Unit Certificates (the titling document for your ownership interests in the LLC). Once real estate is transferred into your LLC, you no longer own the real estate as real estate–your LLC does. It becomes a part of the assets held inside your LLC. Notably, your ownership certificates are not “real property,” but are instead classified as “personal property.” As such, personal property that you own, at death, is subject to the probate jurisdiction of the state that you live in at death.

Sticking with the above hypothetical, say Mr. Doe transfers his South Dakota real estate into “Doe Properties, LLC.” Now, if he dies, his family will not have to probate in South Dakota. Instead, his family has a personal property interest in unit certificates, which are subject to probate jurisdiction in Nebraska. However, this can become dicey, given the potential taxability of these unit certificates in Nebraska. Keep reading.

Other business factors may also weigh in on the decision. From helping reduce self-employment taxes, to unifying your multi-state business operation, an LLC may be just what you need.

4. Consider Death Taxes in the State Where You Live and the State Where Your Land is . If you are living in Nebraska, your estate will be subjected to Nebraska inheritance taxes. This tax will not apply to real estate owned out of state. Depending on the value of the out-of-state real estate and tax rate of the beneficiary (which is determined based upon familial status of the beneficiary with the deceased), it may be financial suicide to put your land into an LLC. So in Mr. Doe’s case, if that 160 acre tract is valued at $1,000,000 (due to improvements and such), and he is giving it to his girlfriend (who he is unrelated to), she is going to pay $180,000 in tax on this bequest (18% for Class III heirs–those heirs that a person is not related to). In that situation, Mr. Doe should consider a trust. However, if the heir is a child (Class I heir–with a 1% tax rate), he may consider just leaving it in an LLC because it works better for him, and just plan on paying the tax.

But what if Mr. Doe lives in South Dakota, and owns a $1,000,000 tract in Nebraska? Then he should sprint to forming an LLC and convert his Nebraska real estate to a personal property item (general intangible), so it can then be subjected to the probate jurisdiction of South Dakota.

Closing Remarks

There is no one-size-fits-all approach to simplifying your multi-state estate. It is not always as simple as outlined above. There are a number of other considerations, any time a person is doing estate planning. It is important that the estate planning aspects jive with the business planning components, as well as the overall distribution plan. Moreover, perhaps there are serious federal estate tax gifting considerations as well–which may dictate the LLC. In the end, as long as a person has a general awareness about this problem–avoiding probate in multiple jurisdictions–that will be sufficient to at least start the conversation with your estate planning attorney.

We are excited about getting to help people make the right decision for their family. We make doing business with us convenient. Get started right now by visiting us online at /estate‑planning/ or by calling 402.925.2268.

Diagnosed with Cancer? Top 5 Reasons You Should Visit a Lawyer.

Fri, 09 Sep 2016 20:52:00 GMT

No word invokes more fear than the word cancer. When this devastating disease invades a person’s household, it can be paralyzing. I know this from personal experience. Five years ago my son was diagnosed with pediatric brain cancer. By the grace of God, he is still with us today.

This personal tragedy has made our family stronger and has taught us many important life lessons. But what is more, is the fact that it has helped me become more aware of everyone else’s personal battles with this disease, and the havoc that it wreaks on all families. I am deeply aware of the family, medical, financial, and sometimes life ending tragedies that this disease can weave into a person’s life.

As we grow older as adults, one of the biggest fears that all of us have is this–is that back pain or stomach ache an early sign of cancer, or did I just sleep wrong?

While everyone does what they can to treat and beat the disease medically, one of the things that often times gets overlooked or completely forgotten about is the legal health of the patient and the family. When cancer strikes, it is counter intuitive to say: “oh no, I need to go see my lawyer.” While that is true, here are the Top 5 reasons you should visit a lawyer when a cancer diagnosis hits home.

1. Cancer Treatments May Cause A Person To Be Unavailable To Handle Their Personal Business . Oftentimes cancer treatments send a person to an urban center far away from home. With lots of days and sometimes months away from home, who is going to sign your farm service agency paperwork, tax returns, write checks, or handle any other dozens of business items? Without a durable power of attorney, a spouse or other family member will be unable to sign financial documents for you on your behalf. Do you really want to have to go to the bank to handle a business matter, when you are experiencing pain or nausea from treatment?

Unfortunately, periods of complete incapacitation or other disability may have you unable to perform these business tasks. In these situations, a power of attorney becomes critical. To learn more about all of the benefits of a power of attorney, please consider reading this prior blog article .

2. Having A Will Is Important . It goes without saying that the one thing anyone immediately thinks of when a cancer diagnosis hits is this–am I going to die? While there are many benefits to having a well drafted last will and testament, having a will helps ensure that your assets go to where you want them to go, that the right person is in charge of your estate, and that your children are cared for if you have minor children.

These estate planning conversations may also help you consider other items like putting a spouse on an individually owned account or maybe changing a life insurance beneficiary. If a person’s death could cause a surviving spouse to have to probate, you may consider changing ownership status on items to keep that from happening. Discussion will also be had about potential tax considerations.

3. Asset Protection Strategies Should Be Considered . Health insurance companies are getting better at avoiding payment for medical bills or leaving huge gaps in coverage if you should happen to receive treatment at an “out-of-network” facility. When you are fighting cancer, you want the best. You shouldn’t have to decide where to treat based upon who your insurance company is in alignment with. Unfortunately, that decision could leave a mountain of unpaid medical bills.

While it may be too little too late, especially if the bills have been already incurred, once a diagnosis strikes it may be time to shift assets into a limited liability company or into some other kind of vehicle. These simple steps may help better protect your family. Of course, there must be careful consideration of the Uniform Fraudulent Transfers Act to ensure that these steps are taken in advance of medical expenses being incurred.

Other asset protection strategies may involve your parents’ estate plans. If they are getting closer to death, they may want to consider placing any of your future inheritances into an appropriately drafted trust. This will keep your inheritance from being attacked by medical creditors.

4. A Supplemental Needs Trust Should Be Established In Some Cases . Often times “beating” cancer isn’t as simple as just taking treatment and being cured. Sometimes it involves a lifetime chronic condition or may include several relapses. Because of the toxic treatments involved, especially for children, a cancer victim may not ever be able to work again, and may have to receive public benefits. In those cases, you will want to be certain that your parents or other generous family members do not directly bequeath you assets. Instead, you will want them to consider placing your assets into a supplemental needs trust.

Simply put, a supplemental needs trust is an instrument that allows a trustee to manage your money for you, inside a trust vehicle that still allows you to stay eligible for governmental assistance. A supplemental needs trust will “supplement” your lifestyle and includes purchases for things like tickets to the movie and supper at a restaurant.

5. Taking Action Is Healing . You are likely to beat your cancer. You probably won’t need any of the tools discussed herein. But, remember this — cancer is an emotionally exhausting disease. By taking the steps to do the things necessary to protect your family’s financial well-being, will give you added piece of mind as you go through the process.

It is often said that beating cancer can be attributed to state of mind. But how can you have a strong state of mind, if you do not have any peace of mind? The items that will be discussed during a thorough planning session will bring about a great sense of peacefulness. The value of this cannot be overstated.

I once read on a t-shirt: “Cancer Sucks.” No one can say it any better than that. But it doesn’t have to suck so bad. As a part of the weapons in your arsenal against this disease, consider handling your personal financial and estate planning matters. This often overlooked step is invaluable for more than five reasons.

An attorney is the last person you want to visit with when dealing with any form of cancer. But you may consider placing it to closer to the top of the list. If you need help getting through this difficult time, feel free to call or e-mail us. We like helping people.

5 Reasons You Must Have a Power of Attorney

Tue, 02 Aug 2016 15:00:00 GMT

We all need a Last Will and Testament. Anyone who calls us for an estate plan, is motivated almost entirely by this innate desire to have a will. And rightfully so. After all, don’t you want to decide who receives your holdings?

But, beneath the surface, there is so much more to the story. When it comes to our family business law approach, we prepare estate plans that are comprehensive. Death isn’t the only thing to plan for. Stroke. Heart attack. Car accident. Any one of these can render us out of commission for any given period of time.

I am a member of Wealth Counsel–a highly regarded estate planning practice group. Last week a poster on one of the listserves asked the question: How much for a conservatorship? The answer was astonishing. The prices ranged from $5,000 to $15,000. This cost could be avoided with an $85 power of attorney.

Before I give the “Top 5 Why”, a person must first have a basic understanding of what a power of attorney is. Simply put, it is a document that you sign, authorizing a person to act for you on your behalf while you are still alive but unable to . Often times, before we die, we are incapacitated. Not all of us are lucky enough to go from being able to manage our affairs to just being dead.

A list that David Letterman would be proud of, here are the Top 5 reasons you need a power of attorney:

1 . Money . If you are unable to act, and a legal document needs to be signed for you on your behalf (Farm Service Agency paperwork, IRS tax return, checks, loan documents, Medicaid or Social Security benefits, or anything else important) then your family will have to ask the Court to appoint a conservator over you. A conservator is a judicially appointed “trustee” who will manage your legal and financial affairs while you are recovering or waiting to die. This will require your loved ones to hire an attorney, get an insurance bond ($3,000 or so), possibly litigate over who is in charge, and then require public filings galore of your most private business matters. This is just the beginning. Your family will love the required training involved and annual reports. Simply put, a power of attorney may save you thousands.

2 . You Pick . Do you want a Judge picking who manages your money, real estate and business affairs, or do you want to? By signing a power of attorney, you get to pick who takes the wheel after you can no longer drive. A power of attorney allows you to stay in charge.

3 . Family Harmony . Death changes everything. And so does incapacitation. Do you have a son renting land from you? Do you have a jealous child from out of the area that wants to be in charge of the family farm from afar? A power of attorney puts the blame on your shoulders, as you rest peacefully, instead of leaving it to an all out boxing match in the courtroom between your kids. You can account for the family dynamics, ahead of your departure.

4 . Efficiency . Lawyers can be slow. By the time your family realizes that they need someone to sign documents for you, they probably should have seen a lawyer 3-4 weeks ago. Then, by the time a conservator is appointed, it will be another 4-5 weeks later. Pleadings will have to be drafted and a court date set. It is a process. By the time a conservator is appointed, it could be 6 weeks following your incapacitation. Who knows, by then, you might be ready to golf 9 holes and feeling great. Or, your farm could be in foreclosure because you couldn’t get loan paperwork signed in time because you didn’t have an authorized representative to sign your loan extension. Regardless, a power of attorney can act now .

5 . Advanced Estate Planning . Incapacity oftentimes forces a spouse to “check things out.” What happens if you head to the nursing home and are unable to act, and it is discovered by your wife that you failed to change the deed on your house from 50 years ago because it was only in your name when you got married? With you only a few days from death, what happens to the house? With your power of attorney, your wife could act quickly by executing a deed conveying it to you and her, as joint tenants, so that your estate could avoid probate and your spouse get the home.

Notably, not all powers of attorney are created equal. In some instances, we have seen insurance companies reject certain powers of attorneys. At Andrew Hoffman Law PC, LLO, our estate planning platform utilizes the most elaborate and sophisticated planning documents available. When you need it, you need it to work.

Get started right now on your estate plan, which will include a power of attorney, by going to: http:// andrewhlaw.com/estate-planning/ and entering your information. We will be honored to help you get started on your plan.

Let us help. Andrew Hoffman Law …providing legal services for your family business needs.

Top 3 Reasons An Attorney Should be Consulted Before Selling Real Estate

Wed, 13 Apr 2016 10:08:00 GMT

Law students all across America, when introduced to property law, are introduced to the mythical text book real estate referred to as “Blackacre.” Blackacre is the mythical dream property that travels through a parade of title issues and problems as it is sold and litigated over through hypothetical fact patterns on law school exams.

Selling real estate can be tricky. It is not always as simple as exchanging a deed for a payment. There are a lot of moving parts into a well executed real estate transaction. Some of them are surface level and basic, others of them not so much. Even if you do not intend on having an attorney handle the transaction the entire way through, there is considerable benefit to having an attorney help guide the transaction.

Here are the Top 3 reasons to consult with legal counsel, when selling real estate.

1. Capital gains taxes . It is extremely gratifying to help a client avoid or reduce the payment of capital gains taxes. It seems very simple, however it is often times overlooked, until the issue comes into my office. There are a number of tactics, some simple, some not-so-simple, to reduce capital gains taxes. If you are selling the property on your own without any professional guidance, a simple step may be missed. Depending on your income level, the easiest sale solution may be to set-up an installment sale. This is a transaction where you split the sale over a period of two or more years. By doing this, you are allocating the taxable gain over more tax years. Depending on your income level (consult CPA), your capital gains tax rate may be zero. However, if you dump all of the gain into one tax year, you may be eligible to give your money away to the government. It is an analysis that should be done before signing a purchase agreement, so that the seller can dictate the terms of the deal.

A more complicated alternative could be a 1031 exchange. This is where a seller sells the real estate, and then parks the money from the sale with an exchange intermediary. This allows the seller to then use those same sale proceeds to purchase a different property (replacement property). This strategy works if you are selling real estate for the purpose of purchasing other real estate. There are a lot of tricky rules and requirements, so legal counsel needs consulted from the get go. While there are some fees involved, it oftentimes pales in comparison to the taxes that would be paid on a straight sale.

Remember, the sale of a primary residence, under Section 121 of the Internal Revenue Code, is exempt from tax, so long as the specific rules of the section are met (sale price, years in the house, etc). If you are thinking you want to rent your home, and then later sell it for a profit–be careful. You may be converting it into a taxable property.

2. Lease issues . When a person sells real estate, they will have to sign a warranty deed. A warranty deed “warrants” the title. This warranty also includes the “warranty” that the buyer can have possession of the real estate. If you are selling a tract of land, and failed to give your tenant proper notice, your buyer may be in for a big surprise. The buyer of real estate takes real estate subject to any tenancy that is on the property, so long as they are legally holding over.

I am a proponent of sending September 1st notices each year to agricultural tenants (whether farm or ranch). A person never knows what is going to happen in the off season. Your tenant could file bankruptcy, and then you are obligated to lease to them again because you failed to give notice. Then try to sell your real estate. The bottom line is this. If you have any inkling of selling real estate, give your tenant proper notice.

Commercial property, rentals, agricultural land–all of these examples of “Blackacre” need a clean slate if you want to fetch top dollar. Unless, of course, the rents are so lucrative that that is what is attractive to a buyer. In that case, the reverse may be true–which is to get them tied up into a longer term written lease agreement.

3. Protection of the Deal . When it comes to real estate transactions, the little things matter. Closing dates matter. Earnest deposits matter. Being comprehensive matters. For example, did you know that in Nebraska, a seller must provide a buyer with a property condition disclosure statement before a purchase agreement is ever signed, relative to the sale of a home? See Neb. Rev. Stat . Section 76-2,120. Does Blackacre have a leaky roof? Disclosing that after the deal is inked, puts the entire deal in jeopardy and the seller at risk of being sued.

My personal favorite is the scheduling and setting of a closing date. This is one of the essential terms that is the least thought about in transactions. Seller and Buyer agree to “close” the sale of Blackacre on May 1st, 2016. May 1st comes and goes. Seller and Buyer are getting along just fine, so neither are too concerned. But then Buyer decides that they are no longer interested. Unless Seller “tendered” and tried to close the deal on May 1st, the Seller could be accused of failing to perform the transaction and the Buyer then excused from performance. While this is not necessarily this cut and dried, you get the point. If you can’t make a closing date–get it extended–no matter what. Even if you are selling to a family member.

It is not off-putting to anyone to get a lawyer. Just tell your buyer that it is just for good business measure. It is another layer of insurance to make sure you are protected. To learn more about real estate transactions, please visit the Andrew Hoffman Law PC, LLO Real Estate Section .

The No. 1 Question You Must Ask Your Insurance Agent

Wed, 24 Feb 2016 11:11:00 GMT

Unlike most Americans and many of my clients, I rarely complain about the insurance products that surround my daily life. Frankly, when it comes to insurance as an investment, I am way ahead of the game. Seems as though Atkinson gets hit with a hail storm every other year, giving me a recovery of 10 years of premiums in one fell swoop. Had a catastrophic health insurance claim in my family nearly 5 years ago. I will never pay enough Blue Cross/Blue Shield premiums to even put a dent in the insurance proceeds our family has benefited from. What a blessing it has been, truly.

We all get it. You need to insure your house and your health. Sure cars, life and other things too. As you go through the motions of buying and shopping insurance, we are all asking the wrong question: How much will this cost? This question comes up especially in the car insurance world. Time to set that question aside.

The No. 1 question that you should be asking your insurance agent is this : does that umbrella insurance policy provide excess uninsured / underinsured motorist coverage?

That question won’t exactly roll right off the tongue. You may need to print this out and take it to your next insurance meeting. Here’s the a quick hypothetical, to understand the question, and its importance.

HYPO: Joe Husker is driving down the road. He just bought new car insurance for his new car. He bought the cheapest insurance he could find. He has $50,000 of liability coverage and $50,000 of uninsured/underinsured motorist coverage. Sally Texter carries even cheaper insurance, because she has had several tickets and other auto scrapes, because she likes to drive and tweet. Sally has $25,000 of liability coverage. Texting her way along, Sally hits Joe Husker. Joe breaks his leg and punctures his lung. He is out of work for 8 weeks. Joe has over $250,000 in medical bills, including the just-in-case life flight which only cost $50,000.

Joe hires a lawyer. The lawyer shares the bad news: your recovery is very limited. You can collect $25,000 from Sally because she had only $25,000 of coverage. And, you can collect another $50,000 from your own auto insurance on the underinsured portion of the policy. But wait–health insurance didn’t cover the whole flight, and the health insurance company which paid $250,000 in medical bills is subrogated to your other recoveries–the health insurance company may get all of the insurance proceeds on the table (subrogation: insurance company’s right to stand in the shoes of the insured to be reimbursed for money they paid out). Joe Husker might get ZERO. Or even worse, might owe money. There are other factors, but you get the point.

What should Joe Husker have done? Simple. Not be such a tight wad for starters. Joe should have maxed out his auto liability insurance portions to $250,000/$500,000 which would have given him $250,000 of underinsured coverage. That is a good step one. Then, he should have had an umbrella policy which provided at least $1,000,000 of excess coverage above his uninsured / underinsured motorist coverage. Joe Husker would have then had at least $1,250,000 of coverage to protect himself against injury, even though Sally Texter only had $25,000 of coverage.

When we think of an umbrella, we think of protection in case we cause an accident. Most farmers, ranchers and small business owners want an umbrella for the liability protection. If one of their employees hurts someone, they want the excess coverage. Kudos. However, you haven’t asked the No. 1 question if you stop there–does that umbrella insurance policy serve as excess above the uninsured / underinsured coverages on my auto insurance? The answer may surprise you. Fewer and fewer insurance companies are carrying this critically important coverage. Some do. Some don’t. Find one that does.

I have seen the lack of this coverage end in a catastrophic result for many families. Time and time again it happens.

By becoming an educated, proactive insurance consumer, you can save your family from financial devastation in the event of a serious auto accident. You should insist on maximum protection if you’re in an accident with an at-fault driver that either doesn’t have insurance, or doesn’t have enough insurance. In too many cases, neither have enough insurance. You can control the one, but not the other. It’s up to you.

When working with and serving families, we spend a lot of time educating clients about their insurance needs. Take the time to educate yourself and ask the No. 1 question.

5 Signs You Need an LLC, or Something Just Like It

Tue, 09 Feb 2016 11:13:00 GMT

Regardless, there are plenty of tax and non-tax reasons to do or not do an LLC. Here are 5 signs that you need an LLC, or something just like it (like its big brother the S-corporation):

1. You have an employee . Jet skis, boat, CDs, retirement account, and all of your other toys and savings are currently exposed to huge liability if you are hiring an employee in your own individual capacity. If you are running a business that employs people, and it is a sole proprietorship, all of your personal holdings are exposed to all of the negligent acts of your employee that they undertake during the scope and course of their employment . Send an employee after supplies, and they hit someone while texting on their phone–tag, you’re it. You get to find out if you had enough insurance to keep your jet skis, boat, CDs, retirement account and other personal holdings. With an LLC (or other business entity), you could have trapped all of that liability inside of the LLC.

2. You Own a Business with Someone Other than your Spouse . If you own a business with someone other than your spouse, get an entity. Unless you have a “partnership account”, you are splitting bills out of each of your accounts, as they come in. Then, you are turning around and trying to split income between the two accounts. Take the income, put it into one account, pay all the bills, and then split any leftover income. If you’re short, each member loans money to the entity, and it is properly documented. An LLC will clean things up dramatically for the messiest of business relations. A simple year-end entity tax return will have you asking why you didn’t do this sooner.

3. You Own Rental Property . In addition to a good lease agreement and lots of insurance, an LLC is a great addition to your leasing business tools. When you lease real estate, whether it be commercial, agricultural, or residential, you are inviting people onto your land. With guests, comes risk. The list of things that could happen while someone is an invited guest onto your rental property is a mile long. Suffice it to say that if you have an LLC, you limit your potential exposure to just the asset or assets contained inside the LLC.

4. You are Paying a Lot of Self-Employment Tax . This blog article is no substitute for good tax advice. And we are not offering any tax advice. That said, here is a tax concept for you to consider. The self-employment tax eats roughly 15% of every self-employed person’s lunch. This is a tax on active income. The self-employment tax is the employer portion of Medicare and Social Security taxes that self-employed people must pay. Everyone who works must pay these taxes, which for 2016 are 7.65% for employees and 15.30% for the self-employed. How do you reduce this? Convert your active income to passive income. What is passive income? Examples would be dividends, rent , or interest income. Passive income (confirm this with your tax advisor) is not subject to the self-employment tax. So how does this work, in practice? Take your real estate that you are running a business on (agricultural, commercial activity, etc.,) and place it into an LLC. Then, begin making rent check payments to your LLC from your commercial activity. The inverse of this would be to place the commercial activity into a business entity, but that is for a closer examination of your situation. Regardless, separate the business activity from the premises owning activity (land or commercial property) and begin paying rent . But remember, rent must be fair and reasonable. Moreover, all of what I am saying here is subject to you obtaining good sound tax advice.

5. You Own Real Estate Out-of-State . When you die, your estate may need probated. This is especially likely if you own real estate. Probate is nothing more than the process of re-titling assets from a decedent’s estate, to their rightful beneficiaries. It is true that probate can be expensive. What is more true, however, is that two probates can be twice as expensive. If you own real estate in two different states, then you are inviting probate in two different states, because the real estate will need re-titled in each state to the correct heir(s). The solution is an LLC. If you own real estate out-of-state, and you place that into an LLC, then upon your death the LLC is probated once in the state where you lived, regardless of where the other land that is located, that is placed inside of the LLC. HOWEVER, a word to the wise: you may be inviting an unwanted inheritance tax if you are taking real estate from a non-inheritance tax state and transferring it into a state with inheritance tax. But, with the low rates of inheritance tax (as low as 1% for most estates in Nebraska), it may still be cheaper than paying for two probates. This is best analyzed during an in-depth conversation with your planning professionals.

Notably, there are countless other reasons as to why an LLC can be a valuable tool. From helping reduce your Federal Estate Tax exposure to keeping the family ranch as a cohesive unit for the next generation, this can be an amazing planning tool.

An LLC is not as expensive as you think. Get started today by entering your information at the section where we will give you a no-charge, no hassle analysis of and opinion as to whether or not you could benefit from an LLC.

A New Year’s Resolution Worth Keeping

Wed, 29 Apr 2015 04:32:00 GMT

If you have recently been on Twitter or Facebook—for any appreciable amount of time—you have been exposed to an onslaught of blog articles, personal posts, and re-shared articles all trying to help you get your life together in 2015. Self-proclaimed “experts” are busy giving everyone tips and hints on how to lose weight, what the keys to a happy marriage are, or how to become better organized. Regardless, all of these gurus agree on one thing—we should all start the new year with a resolution.

Of all your resolution options, here’s an easy one to start and finish in a short amount of time: resolve to get an estate plan for your family. The No. 1 reason families do not take the time to make this a priority is because they are waiting for the right time. They are waiting for their net worth to grow. Waiting until they are old enough. Waiting until they can afford it. Waiting until they are done having kids. Waiting until they aren’t so busy. Waiting, waiting, waiting, waiting.

The truth is, the people that can least afford a will (they think), are actually the same people that need it the most—parents of young children. We all know what a will does. It directs where your assets should go when you die. It appoints a personal representative to manage your estate. It helps handle all of the money things. Often times 20-something parents are of the attitude that they don’t need to will their mortgage and car payments to anyone. These things will just take care of themselves.

These same people are also frequently raising minor children. Often infants and toddlers. If you are a parent with young children, ask yourself this question: What happens if you and your spouse suddenly die tragically in a car accident together on icy Nebraska January roads? If you do not have a will, here’s what you are looking at: Your brother, Uncle Fred, says he’s suppose to get the kids, because that’s what you told him one night when you were drinking beer. Aunt Sally, your wife’s sister that you are not fond of, says that she is supposed to get them, because “that’s best and what everyone wanted.” Meanwhile both sets of grandparents have grown fond of the children and they then throw their name in the hat. In the end, a petition will get filed with the Court, whereby a Judge, who you have never met, will get to pick where your children end up going to grade school and high school. The Judge will pick your child’s care giver. All because you were too busy.

There is an easy solution. A basic, no hassle will which sets forth who it is you want to have serve as the guardian over your children, in case you die. Upon your death, the document is filed with the Court, and the Judge is then directed by it to appoint the guardian that is set forth therein, as the custodian of your children. Case closed.

What is more, is that inside the same basic will, you can also set forth what is called a “testamentary trust”. This is trust language contained inside the body of the will itself, which names a trustee to manage the assets for your minor children, until they reach an age that you specify in the trust. While a young mom and dad may not have substantial assets, while they are alive, to pile into a trust, the result might change if they have life insurance. And in fact, such an insurance product is highly recommended for parents of minor children. In a perfect scenario, upon the death of parents of small children, they will have a life insurance policy which names the “testamentary trust trustee set forth in my last will and testament” as the contingent beneficiary. That creates the ideal interplay between a life insurance policy and the will. Otherwise, without a will and without the trust language, not only will the children’s custody be fought over, but who manages their money from the life insurance proceeds will also be unclear. Moreover, unless the life insurance proceeds are managed in a trust (which generally terminates at a later age like 30 or 35), the money will be managed by a court appointed (Judge selected) conservator. Not only will the conservator probably not be your first choice of money manager, but his or her job will terminate automatically when the minor child reaches the age of 19. Speaking from experience, a 19-year old is not likely ready to manage more than this week’s lunch and gas money.

In the end, to prevent a scenario where your evil sister-in-law is raising your kids and your irresponsible younger brother is managing your child’s money until they reach 19, get a will. If you have time to hop on the treadmill, change your eating habits, and start going to bed earlier, then you have time to call your family attorney and get a will. It is the best New Year’s Resolution you can keep.

By Andrew J. Hoffman,
Attorney at Law