Tuesday, December 7, 2010
The Estate Tax in the Midst of the Obama Compromise
Without legislation, we all know that the estate tax is set to return in 2011 with an exemption equivalent to $1 million and a tax rate of 45%. In the deal that Obama struck with the lawmakers, we could have an exemption equivalent to $5 million and a tax rate of 35% for 2011 and 2012. Stay tuned.....
Thursday, March 11, 2010
Benefits of a Disregarded Entity - Choosing the LLC
Are you running a one-man or one-woman operation? Looking for the limited liability protection of a corporation or LLC? Concerned about the complexity involved in the administration and tax obligations of that entity?
Why not consider an LLC?
One of the often overlooked benefits of operating a closely held business as an LLC is that, if there is only one member (owner), the entity is disregarded for tax purposes. This allows the LLC to report income and loss on the personal income tax return of the owner rather than having to file (and pay for) a separate partnership or corporate tax return.
In addition, the LLC would allow the owner to take "draws" from the business without having to set-up payroll. This is particularly attractive if there will be no other employees of the business. However, the owner is still responsible to pay estimated taxes (and self-employment taxes) on a quarterly basis.
Why not consider an LLC?
One of the often overlooked benefits of operating a closely held business as an LLC is that, if there is only one member (owner), the entity is disregarded for tax purposes. This allows the LLC to report income and loss on the personal income tax return of the owner rather than having to file (and pay for) a separate partnership or corporate tax return.
In addition, the LLC would allow the owner to take "draws" from the business without having to set-up payroll. This is particularly attractive if there will be no other employees of the business. However, the owner is still responsible to pay estimated taxes (and self-employment taxes) on a quarterly basis.
Friday, January 15, 2010
Estate Tax Repeal: Is it for Real?
The estate tax is officially repealed effective January 1, 2010. Unless new legislation is passed, the repeal will last for all of 2010. Then the current law will revert back to a $1 million exemption for 2011. This creates uncertainty for estate planning and some potential land mines for those subject to the tax.
To further complicate matters, many states, including Illinois, have not repealed estate taxes. They have de-coupled their tax, which also creates planning challenges.
The bottom line is that paying close attention to your estate plan is now more important than ever. If you already have a plan in place, it may be wise to sit down with your estate planner to review and possibly revise your plan. If you have no planning in place, uncertainties in the law make this an opportune time to establish a relationship with an estate planning lawyer and get yourself covered.
To further complicate matters, many states, including Illinois, have not repealed estate taxes. They have de-coupled their tax, which also creates planning challenges.
The bottom line is that paying close attention to your estate plan is now more important than ever. If you already have a plan in place, it may be wise to sit down with your estate planner to review and possibly revise your plan. If you have no planning in place, uncertainties in the law make this an opportune time to establish a relationship with an estate planning lawyer and get yourself covered.
Wednesday, December 30, 2009
Put Estate Planning on Your List of New Year's Resolutions
As 2010 approaches and you are planning resolutions for the New Year, why not consider putting estate planning on your list? If you have not completed any planning before, this is a great time to get organized and plan for your family's future. If you have completed an estate plan, but have not reviewed it in a long time, now is a great time to dust it off and have it reviewed by an estate planning attorney.
We all resolve to live healthier and fitter by eating right and visiting the gym. Why not resolve to have your financial house in order, as well?
Please accept my wishes for a wonderful, healthy and prosperous New Year!
We all resolve to live healthier and fitter by eating right and visiting the gym. Why not resolve to have your financial house in order, as well?
Please accept my wishes for a wonderful, healthy and prosperous New Year!
Wednesday, December 16, 2009
Health Care Power of Attorney, Part 2 - The Elements of the HCPA
What are the elements of the Illinois Statutory Short Form Power of Attorney for Health Care ("HCPA")?
1. An explicit appointment by you of your desired attorney-in-fact ("agent"). This designated individual will have the power under the document to "make any and all decisions for [you] concerning [your] personal care, medical treatment, hospitalization and health care..." They also will have the power to "require, withhold or withdraw any type of medical treatment or procedure, even though [your] death may ensue..." Finally, they will also be able to "authorize an autopsy and direct the disposition of [your] remains..."
2. You also have the right to explicitly limit any of the powers conferred upon your agent, like denying them the ability to initiate a type of treatment that may conflict with your religious beliefs.
3. A section is provided whereby three separate statements regarding life-sustaining treatment are set forth. You may, but are not required to, choose one of the statements if it matches your wishes regarding such treatment. You are also able to customize or create your own unique statement.
4. The HCPA is generally effective upon signing and terminates upon death, revocation, or replacement. However, you may specify a specific start date and/or a specific end date, if you wish. This is useful if the HCPA is only intended to be active for a limited amount of time (like during a vacation).
5. You may also designate successor agent(s) if your designated agent in paragraph 1 "shall die, become incompetent, resign or refuse to accept the office of agent or be unavailable..."
6. If a guardianship is required for you, you may also designate your agent as the person whom shall become your guardian of the person.
7. The form is signed and witnessed.
1. An explicit appointment by you of your desired attorney-in-fact ("agent"). This designated individual will have the power under the document to "make any and all decisions for [you] concerning [your] personal care, medical treatment, hospitalization and health care..." They also will have the power to "require, withhold or withdraw any type of medical treatment or procedure, even though [your] death may ensue..." Finally, they will also be able to "authorize an autopsy and direct the disposition of [your] remains..."
2. You also have the right to explicitly limit any of the powers conferred upon your agent, like denying them the ability to initiate a type of treatment that may conflict with your religious beliefs.
3. A section is provided whereby three separate statements regarding life-sustaining treatment are set forth. You may, but are not required to, choose one of the statements if it matches your wishes regarding such treatment. You are also able to customize or create your own unique statement.
4. The HCPA is generally effective upon signing and terminates upon death, revocation, or replacement. However, you may specify a specific start date and/or a specific end date, if you wish. This is useful if the HCPA is only intended to be active for a limited amount of time (like during a vacation).
5. You may also designate successor agent(s) if your designated agent in paragraph 1 "shall die, become incompetent, resign or refuse to accept the office of agent or be unavailable..."
6. If a guardianship is required for you, you may also designate your agent as the person whom shall become your guardian of the person.
7. The form is signed and witnessed.
Monday, December 14, 2009
Health Care Power of Attorney, Part 1
What if you are in an accident and are unable to communicate your wishes regarding your own medical care to the medical staff or your family? Who is entitled to make decisions for you? How will they know what you want? Would you want to be kept alive by artificial means if there is no reasonable chance of your recovery?
These are extremely important and difficult questions and unique to each individual's own set of circumstances. If you have completed no planning for this, Illinois has its own Health Care Surrogate Surrogate Act (755 ILCS 40/1-55) which lists, in order of priority, whom may make decisions for you. However, why leave this to the statute and potential disputes among your family regarding what they think your wishes might be? The easiest way to avoid this problem is to have an Illinois Statutory Short Form Power of Attorney for Health Care, otherwise commonly referred to as a Health Care Power of Attorney ("HCPA").
This document enables you to designate your choice for the person that you wish to be your health care agent, the person that may speak for you if you are unable to speak for yourself. This completely removes any question of your intent as to whom you wish to act on your behalf to protect you during a time of crisis. You may also designate one or more successor agents that may step in if your primary named agent is unable to act.
Stay tuned for Part 2, which will detail the elements of the HCPA.
These are extremely important and difficult questions and unique to each individual's own set of circumstances. If you have completed no planning for this, Illinois has its own Health Care Surrogate Surrogate Act (755 ILCS 40/1-55) which lists, in order of priority, whom may make decisions for you. However, why leave this to the statute and potential disputes among your family regarding what they think your wishes might be? The easiest way to avoid this problem is to have an Illinois Statutory Short Form Power of Attorney for Health Care, otherwise commonly referred to as a Health Care Power of Attorney ("HCPA").
This document enables you to designate your choice for the person that you wish to be your health care agent, the person that may speak for you if you are unable to speak for yourself. This completely removes any question of your intent as to whom you wish to act on your behalf to protect you during a time of crisis. You may also designate one or more successor agents that may step in if your primary named agent is unable to act.
Stay tuned for Part 2, which will detail the elements of the HCPA.
Friday, December 11, 2009
Time to Spend Some Money
Small business owners that are calendar year, cash-basis, taxpayers should consider paying all of their outstanding bills this month so that a deduction may be taken on the 2009 returns. You may even pay bills now that are not due until after January 1st and take the deduction for 2009.
If a small business anticipates needing to purchase equipment in early 2010, why not buy it this month if it will qualify for the Section 179 deduction? This will allow a deduction for tax year 2009 and will help boost the economy a few months earlier!
Likewise, individuals that itemize deductions should consider making any charitable contributions, paying off medical bills and making any state estimated tax payments (that would otherwise be due in mid-January) before the end of the year. This will enable the deduction for 2009.
As always, please consult with your tax professional to make sure these strategies makes sense for your own tax situation.
If a small business anticipates needing to purchase equipment in early 2010, why not buy it this month if it will qualify for the Section 179 deduction? This will allow a deduction for tax year 2009 and will help boost the economy a few months earlier!
Likewise, individuals that itemize deductions should consider making any charitable contributions, paying off medical bills and making any state estimated tax payments (that would otherwise be due in mid-January) before the end of the year. This will enable the deduction for 2009.
As always, please consult with your tax professional to make sure these strategies makes sense for your own tax situation.
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