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Los Angeles, CA Estate & Business Planning Blog

Saturday, August 30, 2014

Overview of the Ways to Hold Title to Property

You are purchasing a home, and the escrow officer asks, “How do you want to hold title to the property?” In the context of your overall home purchase, this may seem like a small, inconsequential detail; however nothing could be further from the truth. A property can be owned by the same people, yet the manner in which title is held can drastically affect each owner’s rights during their lifetime and upon their death. Below is an overview of the common ways to hold title to real estate:

Tenancy in Common
Tenants in common are two or more owners, who may own equal or unequal percentages of the property as specified on the deed. Any co-owner may transfer his or her interest in the property to another individual. Upon a co-owner’s death, his or her interest in the property passes to the heirs or beneficiaries of that co-owner; the remaining co-owners retain their same percentage of ownership. Transferring property upon the death of a co-tenant requires a probate proceeding.

Tenancy in common is generally appropriate when the co-owners want to leave their share of the property to someone other than the other co-tenants, or want to own the property in unequal shares.

Joint Tenancy
Joint tenants are two or more owners who must own equal shares of the property. Upon a co-owner’s death, the decedent’s share of the property transfers to the surviving joint tenants, not his or her heirs or beneficiaries. Transferring property upon the death of a joint tenant does not require a probate proceeding, but will require certain forms to be filed and a new deed to be recorded.

Joint tenancy is generally favored when owners want the property to transfer automatically to the remaining co-owners upon death, and want to own the property in equal shares.

Living Trusts
The above methods of taking title apply to properties with multiple owners. However, even sole owners, for whom the above methods are inapplicable, face an important choice when purchasing property. Whether a sole owner, or multiple co-owners, everyone has the option of holding title through a living trust, which avoids probate upon the property owner’s death. Once your living trust is established, the property can be transferred to you, as trustee of the living trust. The trust document names the successor trustee, who will manage your affairs upon your death, and beneficiaries who will receive the property. With a living trust, the property can be transferred to your beneficiaries quickly and economically, by avoiding the probate courts altogether. Because you remain as trustee of your living trust during your lifetime, you retain sole control of your property.

How you hold title has lasting ramifications on you, your family and the co-owners of the property. Title transfers can affect property taxes, capital gains taxes and estate taxes. If the property is not titled in such a way that probate can be avoided, your heirs will be subject to a lengthy, costly, and very public probate court proceeding. By consulting an experienced real estate attorney, you can ensure your rights – and those of your loved ones – are fully protected.
 


Wednesday, August 20, 2014

Employee Handbooks: Important Provisions

An employee handbook is an instrument that is widely used by employers to communicate their expectations and policies to employees.  There are many reasons to develop and distribute an employee handbook.  These written documents enable employers to clearly outline what is expected from employees and what employees can expect from the employer.  In the event of a dispute with an employee or when a claim is made with a government agency, the handbook can be invaluable in protecting employer’s position. 

When drafting an employee handbook, certain information should be included. This includes:

Wages, Salaries and Other Compensation

An employee handbook should cover how and when employees will be paid.  It should also note how time worked it to be recorded, what taxes will be taken out and explain overtime policies.

Schedules

This document should also cover daily schedules.  It should note hours to be worked, breaks, attendance, lateness, how to request time off and whether employees are entitled to paid time off and when.

Benefits

An employee handbook can also be used to give employees information about benefits. It should cover what benefits are offered and how employees can qualify for them.

Employee Conduct

This manual should also be used to let your employees know how they are expected to act while at work.  It should also detail the dress code, if one exists.  You might also want to include guidelines for behavior in common situations.

Disciplinary Matters

An employee handbook should always include a section on employee discipline in the event that an employee should violate company rules or guidelines.  This section should detail any disciplinary system that is in place, and, if one is not in place, explain that matters will be handled on a case by case basis.

Safety Concerns

Your employee handbook should also cover how to respond to any and all foreseeable safety concerns.  These might include safety issues relating to work conditions, employee disputes and inclement weather.

Employment Discrimination/ Sexual Harassment

Employment discrimination and sexual harassment in the workplace are real issues that can cost businesses a great deal of money.  By including your company’s firm stance on these matter and explaining that neither will be tolerated might help you avoid conflicts in the future. Employee handbooks differ greatly depending on business structure, size and even the industry in which it operates. Some manuals are just a few pages whereas others may be dozens.  In order to create a comprehensive employee handbook and ensure maximum protection for your business, you should consult with a business or employment law attorney to advise you on these matters.


Sunday, August 10, 2014

First Party and Third Party Pooled Income Trusts, Explained

Generally, a "pooled trust" holds assets for people that have a disability, and/or elderly individuals. The trust is established and run by a not-for-profit organization, which will establish separate accounts for each individual within their system. However, the money of all of the individuals served is added together (in other words, it is pooled together) for investment and management purposes.

There are typically two types of pooled trusts. The first type is sometimes referred to as a "first party" trust. In this type of trust the disabled person places his or her own assets into the trust. Doing so will cause those assets to be non-countable for government benefit programs, such as Medicaid. The trustee of the trust (the not-for-profit organization) can use that person's money to pay for things that Medicaid will not cover. So, the assets are still there for the benefit of the person but their use is restricted. In this type of "first party" trust, any assets that remain when the person dies must be paid to the state up to the amount that the state has paid out for the person's care under the Medicaid program.

The second type of pooled trust is referred to as a "third party" trust. This means that the money did not come from the disabled person. For example, a parent with a disabled child could leave that child's inheritance to a pooled trust for the benefit of the child. The benefit is that the money would still be there for the child but would not disqualify the child from receiving SSI or Medicaid because the money would not be counted for these government programs. Unlike the first party trust, upon the death of the disabled person (in this example, the child) any remaining assets do not have to go to the state but can pass to any other beneficiaries that the parent wanted to have them.

Whether a pooled trust would be of any benefit to you depends upon many factors. Seek the advice of a qualified estate planning attorney to determine your best course of action.


Wednesday, July 30, 2014

Obtaining Legal Authorization to Work in the US

There are thousands of foreign workers who enter the U.S. each year. Foreign workers must obtain legal permission to work in the U.S. or risk deportation.  There are also possible legal consequences to the employer should they hire an employee who does not have work authorization. There are several employment categories for admission that apply to different types of workers. Each category has different requirements, conditions, and periods of time that the worked may legally stay in the country

Temporary Workers

There are a variety of categories of temporary workers. In order to come to the U.S. for temporary employment, an employer must file an immigration petition on behalf of the immigrant with the U.S. Citizen and Immigration Services Department.

Permanent Workers

There are over 100,000 immigrant visas given each year to aliens who want to come to the U.S. to fill positions that require unique job skills. For some people with the right skills, education, and experience, they may be able to live permanently in the U.S. This usually applies if there is a shortage of experts in the particular field(s) in which the immigrant has expertise.

Students and Exchange Visitors

There are two types of immigration visas for full-time students in the U.S. enrolled in both academic or vocational programs which allow them to work on a limited basis in a position related to their field of study.

Temporary Visitors for Business

Those who wish to come to the U.S. for a short period of time in order to conduct business may be able to obtain a Temporary Visitors for Business Visa.

Each type of visa comes with its own special rules regarding the type of work that the immigrant can perform and includes guidelines on the length of stay, and whether family members can accompany the immigrant as well as tax obligations.


Wednesday, July 23, 2014

Umbrella Insurance: What It Is and Why You Need It

Lawsuits are everywhere. What happens when you are found to be at fault in an accident, and a significant judgment is entered against you? A child dives head-first into the shallow end of your swimming pool, becomes paralyzed, and needs in-home medical care for the rest of his or her lifetime. Or, you accidentally rear-end a high-income executive, whose injuries prevent him or her from returning to work. Either of these situations could easily result in judgments or settlements that far exceed the limits of your primary home or auto insurance policies. Without additional coverage, your life savings could be wiped out with the stroke of a judge’s pen.

Typical liability insurance coverage is included as part of your home or auto policy to cover an injured person’s medical expenses, rehabilitation or lost wages due to negligence on your part. The liability coverage contained in your policy also cover expenses associated with your legal defense, should you find yourself on the receiving end of a lawsuit. Once all of these expenses are added together, the total may exceed the liability limits on the home or auto insurance policy. Once insurance coverage is exhausted, your personal assets could be seized to satisfy the judgment.

However, there is an affordable option that provides you with added liability protection. Umbrella insurance is a type of liability insurance policy that provides coverage above and beyond the standard limits of your primary home, auto or other liability insurance policies. The term “umbrella” refers to the manner in which these insurance policies shield your assets more broadly than the primary insurance coverage, by covering liability claims from all policies “underneath” it, such as your primary home or auto coverage.

With an umbrella insurance policy, you can add an addition $1 million to $5 million – or more – in liability coverage to defend you in negligence actions. The umbrella coverage kicks in when the liability limits on your primary policies has been exhausted. This additional liability insurance is often relatively inexpensive in comparison to the cost of the primary insurance policies and potential for loss if the unthinkable happens.

Generally, umbrella insurance is pure liability coverage over and above your regular policies. It is typically sold in million-dollar increments. These types of policies are also broader than traditional auto or home policies, affording coverage for claims typically excluded by primary insurance policies, such as claims for defamation, false arrest or invasion of privacy.
 


Wednesday, July 16, 2014

8 Things to Consider When Selecting a Caregiver for Your Senior Parent

As a child of a senior citizen, you are faced with many choices in helping to care for your parent. You want the very best care for your mother or father, but you also have to take into consideration your personal needs, family obligations and finances.

When choosing a caregiver for a loved one, there are a number of things to take into consideration.

  1. Time. Do you require part- or full-time care for your parent? Are you looking for a caregiver to come into your home? Will your parent live with the caregiver or will you put your parent into a senior care facility? According to the National Alliance for Caregiving, 58 percent of care recipients live in their own home and 20 percent live with the caregiver. You should consider your current arrangement but also take time to identify some alternatives in the event that the requirements of care should change in the future.
  2. Family ties. If you have siblings, they probably want to be involved in the decision of your parent’s care. If you have a sibling who lives far away, sharing in the care responsibilities or decision-making process may prove to be a challenge. It’s important that you open up the lines of communication with your parents and your siblings so everyone is aware and in agreement about the best course of care.
  3. Specialized care. Some caregivers and care facilities specialize in specific conditions or treatments. For instance, there are special residences for those with Alzheimer’s and others for those suffering from various types of cancer. If your parent suffers from a disease or physical ailment, you may want to take this into consideration during the selection process
  4. Social interaction. Many seniors fear that caregivers or care facilities will be isolating, limiting their social interaction with friends and loved ones. It’s important to keep this in mind throughout the process and identify the activities that he or she may enjoy such as playing games, exercising or cooking. Make sure to inquire about the caregiver’s ability to allow social interaction. Someone who is able to accommodate your parent’s individual preferences or cultural activities will likely be a better fit for your mother or father.
  5. Credentials. Obviously, it is important to make sure that the person or team who cares for your parent has the required credentials. Run background checks and look at facility reviews to ensure you are dealing with licensed, accredited individuals. You may choose to run an independent background check or check references for added peace of mind.
  6. Scope of care. If you are looking for a live-in caregiver, that person is responsible for more than just keeping an eye on your mother or father—he or she may be responsible for preparing meals, distributing medication, transporting your parent, or managing the home. Facilities typically have multidisciplinary personnel to care for residents, but an individual will likely need to complete a variety of tasks and have a broad skill set to do it all.
  7. Money.Talk to your parent about the financial arrangements that he or she may have in place. If this isn’t an option, you will likely need to discuss the options with your siblings or your parent’s lawyer—or check your mother’s or father’s estate plan—to find out more about available assets and how to make financial choices pertaining to your parent’s care.
  8. Prepare. Upon meeting the prospective caregiver or visiting a facility, it is important to have questions prepared ahead of time so you can gather all of the information necessary to make an informed choice. Finally, be prepared to listen to your parent’s concerns or observations so you can consider their input in the decision. If he or she is able, they will likely want to make the choice themselves.

Choosing a caregiver for your parent is an important decision that weighs heavily on most adult children but with the right planning and guidance, you can make the best choice for your family. Once you find the right person, make sure to follow up as care continues and to check in with your mother or father to ensure the caregiver is the perfect fit.

 


Monday, June 30, 2014

Questions You Shouldn't Ask or Answer During an Interview

Job-seekers have to be ready to respond to any interview question asked of them, but not every question has to be answered. 

To ensure that employers do not discriminate against candidates based on age, gender, race, health and family arrangements, there are certain regulations which restrict the type of questions which are permissible during an interview. Below, we explore several topics that may be problematic and should not be asked of potential employees: 

Questionable Questions

Let’s take a look at a few topics that may be problematic. 

  • Age: Does anyone like to be asked their age unless just turning 21? Probably not. While an interviewer may ask whether a candidate is over the age of 18 or 21, he or she may not ask for a specific age.  
  • Nationality: An interviewer can ask whether a candidate is legally allowed to work in the U.S., but he or she can’t ask about the applicant’s nationality or status as a citizen. 
  • Religious beliefs: Same goes for questions that ask about religious beliefs. The interviewer may be in the right if he or she needs to know if the interviewee can work on certain holidays, but otherwise, this topic should be off limits.
  • Health: While in many states an interviewer cannot ask if a candidate smokes, he or she may inquire as to whether the applicant has ever violated any corporate policies on alcohol or tobacco. Furthermore, an employer may ask whether the person being interviewed uses illegal drugs, is able to lift a given weight, or can reach items at a specific height. They also can ask if the individual is capable of completing certain tasks associated with the job and if any reasonable accommodations might be needed.
  • Family status: Employers want to know about an applicant’s availability which may sound like a legitimate concern.   They cross the red line, however, when they try to determine if a candidate has children or plans to have children in the future. An interviewer also cannot ask about an applicant’s maiden name or marital status.
  • Criminal record: A prospective employer is allowed to ask the applicant whether or not he or she has ever been convicted of a crime that relates to the job, but may be restricted from asking whether the candidate has ever been arrested.
  • Military service: An interviewer cannot discriminate against a member of the National Guard or Reserves. He or she can, however, ask if a candidate will anticipate any extended time away from work. 

Acing the Interview Process

The interview process can be a stressful time for employers and employees alike, but it will be a smoother process if you have a basic understanding of what can and can’t be asked during these initial meetings. 

As a candidate being interviewed, remember that if you’re asked a question which you’re not comfortable answering, or you think may be illegal, be sure to keep a positive attitude and try not to focus on the negative and instead deliver an answer which showcases your ability to fulfill the requirements of the job. For example, you may be asked if you can have a babysitter in a moment’s notice if an unexpected work emergency pops up. In answering this question, you may be concerned that you will be divulging too much information about your family life and, like many mothers, you may fear that they may not hire you because of the responsibilities that come along with motherhood. Rather than answering the specific question about a babysitter, you may instead wish to say “I am very flexible and am able to travel or work late when the need arises.” This answer addresses the interviewer’s question while preserving your privacy and also keeps the conversation going in a positive direction-one which showcases why you are the best candidate for the job. 

As an employer looking to hire a new employee, it’s important that everyone in your organization from the receptionist to the hiring manager who might come in contact with the candidates have a basic understanding of what topics and questions are off limits. You might even consider having a list of approved questions and a list of questions which are prohibited, regardless of the position being filled. These procedures should be a matter of strict company policy and should be reviewed each year to ensure compliance with all discrimination laws. 


Friday, June 20, 2014

When will I receive my inheritance?

For many Americans, retirement accounts comprise a substantial portion of their wealth. When planning your estate, it is important to consider the ramifications of tax-deferred retirement accounts, such as 401(k) and 403(b) accounts and traditional IRAs. (Roth IRAs are not tax-deferred accounts and are therefore treated differently). One of the primary goals of any estate plan is to pass your assets to your beneficiaries in a way that enables them to pay the lowest possible tax.

Generally, receiving inherited property is not a transaction that is subject to income tax. However, that is not the case with tax-deferred retirement accounts, which represent income for which the government has not previously collected income tax. Money cannot be kept in an IRA indefinitely; it must be distributed according to federal regulations. The amount that must be distributed annually is known as the required minimum distribution (RMD). If the distributions do not equal the RMD, beneficiaries may be forced to pay a 50% excise tax on the amount that was not distributed as required.

After death, the beneficiaries typically will owe income tax on the amount withdrawn from the decedent’s retirement account. Beneficiaries must take distributions from the account based on the IRS’s life expectancy tables, and these distributions are taxed as ordinary income. If there is more than one beneficiary, the one with the shortest life expectancy is the designated beneficiary for distribution purposes. Proper estate planning techniques should afford the beneficiaries a way to defer this income tax for as long as possible by delaying withdrawals from the tax-deferred retirement account.

The most tax-favorable situation occurs when the decedent’s spouse is the named beneficiary of the account. The spouse is the only person who has the option to roll over the account into his or her own IRA. In doing so, the surviving spouse can defer withdrawals until he or she turns 70 ½; whereas any other beneficiary must start withdrawing money the year after the decedent’s death.

Generally, a revocable trust should not be the beneficiary of a tax-deferred retirement account, as this situation limits the potential for income tax deferral. A trust may be the preferred option if a life expectancy payout option or spousal rollover are unimportant or unavailable, but this should be discussed in detail with an experienced estate planning attorney. Additionally, there are situations where income tax deferral is not a consideration, such as when an IRA or 401(k) requires a lump-sum distribution upon death, when a beneficiary will liquidate the account upon the decedent’s death for an immediate need, or if the amount is so small that it will not result in a substantial amount of additional income tax.

The bottom line is that trusts typically should be avoided as beneficiaries of tax-deferred retirement accounts, unless there is a compelling non-tax-related reason that outweighs the lost income tax deferral of using a trust. This is a complex area of law involving inheritance and tax implications that should be fully considered with the aid of an experienced estate planning lawyer.


Tuesday, June 10, 2014

Do Local Police Have to Detain Illegal Immigrants?

Are local law enforcement agencies required to detain undocumented immigrants on behalf of the federal government? A new finding suggests that jurisdictions that partake in Secure Communities, a program whereby the FBI crosschecks the fingerprints of any individual taken into custody by local law enforcement officials against a U.S. Immigration and Customs Enforcement (ICE) database, do not have to adhere to federal requests to retain undocumented immigrants. The findings come from documents obtained from the Internal Department of Homeland Security and could drastically affect the way local law enforcement agencies treat undocumented immigrants.

According to documents, obtained by Benjamin Cardozo School of Law, requests from federal immigration officials for police to hold undocumented individuals in custody are not enforceable.   Currently, the detainers ask law enforcement agencies to hold arrested undocumented individuals for 48 hours – regardless of the severity of the crime. But the revelations find that while local law enforcement officials are asked to honor detainer requests, there are no legal consequences for a failure to comply with an ICE detention request.  

These documents provide additional clarity to law enforcement agencies and counties that are uncomfortable or unwilling to comply with immigration enforcement.   Cost remains one of the biggest concerns for local law enforcement when it comes to retainer requests.  Opponents of detention argue that enforcing the Secure Communities program can cost counties millions each year, despite the promise of reimbursements from the federal government.

Officials stress that this only applies to those undocumented immigrants with misdemeanors who ordinarily would not be detained, not serious offenses. The findings provide a clear loophole for law enforcement agencies and counties that are unwilling to detain undocumented individuals with low-level offenses.
    
 


Friday, May 30, 2014

Paying for Your Grandchildren’s Education

The bond between a grandparent and grandchild is a very special one based on respect, trust and unconditional love. When preparing one’s estate plan, it’s not at all uncommon to find grandparents who want to leave much or all of their fortune to their grandchildren. With college tuition costs on the rise, many seniors are looking to ways to help their grandchildren with these costs long before they pass away. Fortunately, there are ways to “gift” an education with minimal consequences for your estate and your loved ones.

The options for your financial support of your heirs’ education may vary depending upon the age of the grandchild and how close they are to actually entering college. If your grandchild is still quite young, one of the best methods to save for college may be to make a gift into a 529 college savings plan. This type of plan was approved by the IRS in Section 529 of the Internal Revenue Code. It functions much like an IRA in that the appreciation of the investments grows tax deferred within the 529 account. In fact, it is likely to be "tax free" if the money is eventually used to pay for the college expenses. Another possible bonus is that you may get a tax deduction or tax credit on your state income tax return for making such an investment. You should consult your own tax advisor and your state's rules and restrictions.

If your granddaughter or grandson is already in college, the best way to cover their expenses would be to make a payment directly to the college or university that your grandchild attends. Such a "gift" would not be subject to the annual gift tax exemption limits of $14,000 which would otherwise apply if you gave the money directly to the grandchild. Thus, as long as the gift is for education expenses such as tuition, and if the payment is made directly to the college or university, the annual gift tax limits will not apply.

As with all financial gifts, it’s important to consult with your estate planning attorney who can help you look at the big picture and identify strategies which will best serve your loved ones now and well into the future.


Friday, May 23, 2014

Buying an Existing Franchise

While purchasing and establishing a new franchise unit may seem easier than starting from scratch with your own business model, it is still a time consuming and expensive undertaking. Franchisees must find a location, make needed renovations and secure various licenses or permits. Of course, even after the business opens its doors, it will take more time to acquire loyal customers and generate revenue. With big expenses and minimal revenue, it should come as no surprise that most new businesses operate in the red for the first year or two. If you are an aspiring entrepreneur who is looking to hit the ground running, it might be a good idea to avoid the laborious setup process and consider buying an existing franchise, often referred to as a “resale.”

As with any business venture, buying an existing franchise can be profitable and rewarding but it doesn’t come without risks. If you are contemplating the purchase of an existing unit, consider the following:

Get to Know the Franchisor
Although you will own the unit, you will have to continuously work with the franchisor. It’s important that you take time to understand the company’s approach to business, what type of resources they will provide to you and understand any requirements that might be set forth for the businesses that bear its name. Take time to speak with other franchisees to learn about their experiences as owners and carefully review the Uniform Franchise Offering Circular (UFOC).

In some cases, the franchisor may have a right of first refusal meaning that they ultimately have a say in whether you can join the franchise group as an owner. A business law attorney can help you sort through these issues and position you for success.

Identify the Real Reason the Existing Owner is Trying to Sell
There may be many reasons why a current franchisee is looking to sell his or her unit. In some cases, it may be because the owner is planning to retire or wants to relocate. In other situations, you may find that the business isn’t profitable and the owner wants to cut his losses and try his hand at something else. Understanding the reason for sale will help you to better understand whether it makes sense for you to buy the business. If it is a failing franchise unit, you have to reasonably ask yourself if you will be able to turn it around. On the other hand, a retiring owner may have amassed a loyal customer base which will help you to be immediately profitable.

Review the Current State of the Unit
During the discovery process, it’s imperative that you carefully review all of the financials for the resale unit. You will also want to look at things like employee turnover and speak to current employees to learn whether or not they are interested in continuing on with the business once ownership is transferred. If not, you may have the burden of hiring and training a new team very early on. Another thing you will want to examine is the state of the building and equipment – has everything been serviced regularly? A repair to a machine may seem minor but it could cost you a great deal.

The sale of an existing franchise unit can be complex. Not only do you have to understand the motives and terms of the seller, but you must also understand the role and requirements of the franchisor. Due to the complicated nature of these types of transactions, it’s absolutely imperative that you consult a business law attorney who can help you perform your due diligence and make sure all of the proper legal steps are taken during the transaction.

 


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