Yes. At wh Law | We Help, we offer free bankruptcy consultations. There is no cost to you for the consultation and you don’t have to file bankruptcy. We will simply evaluate your financial situation and determine if bankruptcy is the right for you. During a consultation with our law firm, our attorneys will be able to determine which chapter is right for you. (Chapter 7, Chapter 9, Chapter 11, Chapter 12, or Chapter 13). We will also let you know what it will cost to file and how much the bankruptcy is going to cost. You can set up a free bankruptcy consultation by calling us at 501.261.2594 or you can fill out our consultation request.
For most people, it is a legal process designed to help those who cannot pay their bills receive a fresh financial start, either by discharging debt through Chapter 7, through which many debts are wiped clean through a process that lasts only a few months, or through the completion of a “repayment” plan under Chapter 13 of the Bankruptcy Code, which lasts between three (3) to five (5) years.
When a bankruptcy petition is filed the “automatic stay” provision of the Bankruptcy Code prohibits your creditors from contacting you to try to collect money from you – at least until your debts are sorted out according to law, which assigns different debts specific classifications of priority by which most creditors are bound. The automatic stay that stops all lawsuits, foreclosures, garnishments, and other collection activity from the moment a bankruptcy petition is filed.
The Bankruptcy Code permits any qualified person, partnership, corporation or business trust to file a case. If the debtor (person or entity who owes the money) files a petition to start the bankruptcy, it is a “voluntary” bankruptcy. If the creditors (people or entities to whom the money is owed) file a petition against a debtor to start the bankruptcy, it is an “involuntary bankruptcy.” When an involuntary case is filed, the debtor must contest the bankruptcy case within a certain time period to oppose the bankruptcy. Only married persons can file a joint petition; unmarried persons, corporations and partnerships must file separate cases. An individual with a business may not file a joint petition, but must instead file separate cases.
Your cost to file may vary depending on the Chapter you file under for bankruptcy relief, your financial circumstances, and the complexity of your case. The Cost with consist of fees to pay and the attorney’s fees for bankruptcy.
Currently, the filing fee charged by the court to file a Chapter 7 bankruptcy case is $335, whether you are filing individually or with your spouse. For an individual, the cost of the courses and credit reports are $57 total. This is the typical cost, although different cases can have different costs.
Under Chapter 13, the initial fee to file includes $310 that is paid to the Court to open the case, plus an additional $57 for the required classes and a comprehensive copy of your credit report.
Under certain circumstances, the Court may allow you to pay the filing fees ($335 or $310) in installments if you are unable to pay them all at once. Talk to us about whether an installment plan for filing fees is a good option for you. For additional information, please visit the U.S. bankruptcy court’s website.
Attorney’s Fees: Attorney’s fees are determined based on the individual circumstances of each Chapter 7 case and may vary depending on the existence of judgments, previous garnishment efforts, whether there are secured debts that the client wishes to reaffirm, etc. At wh Law | We Help, , our bankruptcy fees start at $500.00
wh Law | We Help, , services all customers:
Chapter 7 is the liquidation chapter of the Bankruptcy Code, and cases filed under Chapter 7 are commonly referred to as liquidation cases. This is what people commonly do when all their debt is gone when they complete the bankruptcy and they do not have to make payments. Chapter 7 requires a you to give up property which exceeds certain limits (“exemptions”) so the property can be sold or liquidated by the appointed Chapter 7 Trustee to pay creditors, and to keep property and avoid liquidation to pay unsecured creditors. In other words, “liquidation” is the sale of a debtor’s property for the purpose of distributing the sales proceeds to the debtor’s creditors. Potential debtors should realize that the filing of a petition under Chapter 7 may result in the loss of property.
Also known as a payment plan form of bankruptcy, Chapter 13 is the debt repayment chapter. In a Chapter 13 case, debtors may keep their property by repaying creditors over the life of a plan that may extend from 36 to 60 months. The length of the plan may be fixed by law, depending on the debtor’s income. When a debtor files Chapter 13, the debtor proposes to make monthly payments to a Chapter 13 Trustee, who in turn disburses funds to various creditors according to the Plan, once the Plan has been approved by the Court. Upon completion of the payment plan, most debts are discharged.
Other types of bankruptcy are set forth under Chapter 9, 11, and 12 and include:
Chapter 9 (“Municipal or Governmental Bankruptcy”) is only for municipalities and governmental units, such as schools, water districts and similar entities.
Chapter 11 (“Reorganization Bankruptcy”) this chapter generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. The plan of reorganization which must be approved by the Court. In addition to the filing fee, a quarterly fee is paid to the U.S. Trustee in all Chapter 11 cases.
Chapter 12 is designed for “family farmers” or “family fishermen” with “regular annual income.” It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years. Generally, the plan must provide for payments over three years unless the court approves a longer period “for cause.” But unless the plan proposes to pay 100% of domestic support claims (i.e., child support and alimony) if any exist, it must be for five years and must include all of the debtor’s disposable income. In no case may a plan provide for payments over a period longer than five years.
Although the laws offer different options that may be available to a you, the decision to file, or under which chapter to file, depends on your situation.
Those who quality for either Chapter 7 or Chapter 13 have an advantage in that they are able to choose the type of bankruptcy that makes the most sense for their particular circumstances.
If a person can choose between Chapter 7 and Chapter 13, most people who file for bankruptcy choose to use Chapter 7 because Chapter 7 does not you require you to pay back your debts. But Chapter 13 may be a more attractive alternative for those who may have missed house payments and want to safely make up those missed payments over time, instead of losing their home in foreclosure.
Considering your personal facts, comparing them to each chapter’s requirements, and deciding which chapter to select, is considered legal advice. While it is possible to file bankruptcy “pro se,” or without legal representation, the decision of whether to file a bankruptcy and under what chapter is an extremely important decision and should be made only with competent legal advice from an experienced bankruptcy attorney after a review of all the relevant facts. Moreover, if you do file bankruptcy pro se, you must know that the Court is not permitted to give legal advice, assist with the preparation of forms, or assist you during various meetings and proceedings that may be scheduled in your case.
It may make it possible for you to:
When a case is filed, the petition, schedules and other related documents become a matter of public record. Credit reporting agencies regularly collect information from bankruptcy cases to report on their credit reporting services. Bankruptcy may appear on your credit record for ten years from the date your case was filed, pursuant to the Fair Credit Reporting Act, 6 U.S.C. § 605, as opposed to the seven years other credit information may remain on a credit report.
For those with large or a high number of delinquent accounts, the credit score may already be so low that a bankruptcy may actually help. Because it wipes out old debts, bankruptcy may free up income so that a consumer can pay current bills and obtain new lines of credit after filing bankruptcy. The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor depending on the type of credit requested.
Debts discharged should only be listed as having a balance of $0, with no remaining balance owed on the debt. Debts incorrectly reported as having a balance owed will negatively affect the credit score and ability to get credit after the case is discharged. Everyone should regularly review his or her credit report, before and after bankruptcy, to resolve any disputes in debts reported with the various credit bureaus.
The three main credit Reporting Agencies are:
P.O. Box 9558
Allen, TX 75013
Attn: Public Records Department
555 West Adams Street
Chicago, IL 60661
P.O. Box 740241
Atlanta, GA 30374
Long-term care insurance covers the risk that you may at some point in your life be placed into a nursing home by paying for some or all the expenses associated with nursing home care. It also frequently covers assisted living care or care in your home. Long-term care insurance can be a very valuable tool that can help you avoid depleting your estate in order to pay for nursing home care. Nursing homes greatly vary in cost depending on the quality of the home and the geographic area of the country in which the care facility is located. At a minimum, you can expect to pay several thousand dollars a month for decent nursing home care, which can rapidly deplete an individual’s savings.
Medicaid is a federal program that will pay for nursing home care. Medicaid is not to be confused with Medicare, which in most cases will not pay for extended nursing home care. Medicare is a program which people pay into during their working years, while Medicaid is a needs-based program intended to help impoverished Americans with medical expenses.
Medicare does not provide coverage for long-term care, such as nursing home care. Medicare will pay for up to 100 days of skilled nursing care per illness. A patient must be hospitalized for the illness, and the patient must receive a high level of care in a nursing home that couldn’t be provided at home or on an outpatient basis. After 20 days of nursing home care, there is a large copayment required of the patient for the remainder of the stay.
Medicare will also pay for home health benefits if you are housebound and if a doctor has ordered home health services for you, at least some of which are skilled. Medicare will pay for up to 35 hours of services per week, and patients only have to pay for 20 percent of the cost of medical supplies.
Medicaid planning is legal. Elder law attorneys work to protect clients’ assets within the bounds of the law. Congress allows citizens to qualify for Medicaid after meeting certain requirements, and those requirements could be changed if Congress felt they were being abused. Medicaid planning is not any more illegal than planning to avoid taxes.
There’s no simple answer as to how long it might take an individual to qualify for Medicaid. There are many variables in every situation that must be taken into consideration and ultimately affect the eligibility timeline, including the state in which you live, whether your application is complete, your assets, income and expenses, any asset transfers you’ve made to individuals or trusts, and more. Before applying for Medicaid, you should consult an elder law attorney in your area. The attorney can help you understand both eligibility and the application process, and should be able to give you an estimate of the time frame you can expect.
If a child removes money from your joint account, that could be considered a transfer to him. Currently, Medicaid has a “look back” period on transfers of assets within the past 60 months. This means that any gifts or other transfers of assets you made in the 60 months before you applied for Medicaid will be assessed in order to determine your eligibility. If you did transfer assets in the five year period before applying for Medicaid, you could be subjected to a penalty. Therefore, if you made a transfer of assets in the past five years, you should not apply for Medicaid without consulting an elder law attorney because the penalties could be severe.
First, how is the nursing home ranked by accreditation agencies or state regulators? Have there been violations or complaints against the nursing home? How does the nursing home rank when compared with other homes in the area? You should also visit the facility in person and request a tour.
Another important factor to consider is location. Is the nursing home located in an area that is convenient for family and friends to visit? Would family members be more likely to visit a nursing home located in another area?
Before choosing a nursing home, take a tour and ask for references of family members of current residents. If possible, take the tour at an unscheduled time, so that you know that what you are seeing isn’t staged for your benefit. During the tour, look carefully at the interactions between staff and patients. Does the staff seem caring and concerned? Do the residents seem content? What is the quality of the food served?
Choosing a nursing home can seem overwhelming at first, but often after visiting a few and evaluating their quality of care, the decision becomes easier.
No, if you anticipate needing Medicaid at any point in the foreseeable future, it’s prudent to seek the advice of a qualified elder law attorney. There are steps you can take to protect your assets which may not be available when you actually need Medicaid. Some of those steps may include transferring your assets or establishing trusts. An elder law attorney with expertise in Medicaid planning can evaluate your situation and advise you on the most prudent steps to take in order to preserve your rights and maximize benefits.
The cost of an elder care lawyer depends on the specific situation our clients are in. The situation could call for little work, or it could call for moving many assets, retirement accounts, the house, the farm, the family, etc. For that reason the fee can vary depending on the client. The practices we use save our clients money, even after our fee. If you need help in this area of law, please Contact Us.
Clients often come in and talk about their business. I often tell them they should either start and LLC (Limited Liability Company) or convert their S-Corporation into a LLC. That brings up the question, “What is an LLC?” LLCs are statutory. They are formed by filing official documents with the Arkansas Secretary of State’s Business and Commercial Services Office. To start a sole proprietorship or a partnership, you don’t need to file anything. To start a LLC, you do. LLCs have extraordinary legal and tax flexibility and have rapidly become the entities of choice for business start-ups in Arkansas, and many non-LLC entities are converting to LLCs.
Like corporations, a Limited Liability Company can provide their owners—called “members”—with a strong statutory liability shield that protects their personal assets from claims against their business. Indeed, the LLC shield is arguably stronger than the corporate shield. This is because, unlike the corporate shield, the LLC shield is immune to the classic corporate “veil-piercing” argument of “failure to comply with statutory formalities.” In Arkansas, LLCs are not subject to the same statutory formalities as corporations.
However, clients must understand that no statutory liability shield—corporate, LLC or otherwise—can protect them from liability for their own negligence or misconduct in conducting their business. Business liability insurance is still a necessity.
The default management structure of limited liability company is much simpler than that of corporations. The management structure of single-member LLCs is essentially the same as that of sole proprietorships. Although a corporate structure is available, most multi-member LLCs use a general or limited partnership management structure.
Asset protection. Multi-member LLCs provide their members with powerful statutory asset protections known as “pick-your-partner” and “charging order” protections. These protections are available to corporations only through complex provisions in shareholder agreements.
Statutory flexibility. Compared to corporate statutes, LLC statutes provide business owners with more flexibility to tailor the legal structure of their business to meet owner needs and interests. For example, if a client wants co-members in their LLC, they can draft an operating agreement that will:
Protect them from claims if the other members ever turn against them; and
Make it easy to remove the other members.
Like LLC law, the federal taxation of a limited liability company and their members is characterized by extraordinary flexibility.
Single-member LLCs whose members are individuals. Single-member LLCs are considered to be “disregarded entities” by default. Disregarded entities are ignored for federal tax purposes and their tax items are treated as those of their members. If the owner of a disregarded single-member LLC is an individual, all income of the LLC will be taxable to the owner as a sole proprietor under the default rules. If the owner of a disregarded entity is an entity, all income of the LLC is reported on the owner’s tax return. While the default rules are often the best choice for tax purposes, the LLC can elect to be taxed as a subchapter C corporation or, if all requirements are satisfied, as a subchapter S corporation.
Disregarded entities allow the creation of multiple levels of liability protection without additional tax complexity. If a client’s new business will have valuable operating assets, they should consider using a holding and operating company where:
The holding company will be either a single-member or a multi-member LLC, depending on whether they want to add additional members; and
The operating company will be a single-member LLC and will be owned by thier holding company and ignored for tax purposes as a disregarded entity.
Multi-member LLCs. By default, multi-member LLCs are taxed as partnerships under IRC Subchapter K. Subchapter K is often the best choice of tax regime for most businesses with multiple members, but multi-member LLCs can also elect to be taxed as C corporations or, if they meet applicable eligibility and election requirements, as S corporations.
Social Security Taxation. The owners of S corporations only pay Social Security and Medicare taxes on the portion of the corporation’s income that is treated as compensation. All non-salary distributions are not subject to Social Security and Medicare taxes. In the right circumstances, the ability to treat an LLC as a subchapter S corporation can help LLC owners save Social Security and Medicare taxes. If a client’s LLC will have employees or significant capital investment and they want to minimize Social Security Tax exposure, Subchapter S may be the ticket.
The heart of estate planning is determining what happens to your assets when you die. In one way or another, any property you own at the time of your passing must pass on to someone else. And in the vast majority of cases, you, as a competent adult living in the United States, have the right to determine who that someone will be. (This right is not absolute, however: most states observe spousal right of election, which doesn’t allow a spouse to be completely disinherited.) A proper estate plan dictates what should happen with your home, investments, business, life insurance, employee benefits (including a retirement plan), and other property in the event of death or disability. In addition, a good estate plan employs strategies to reduce any potential estate taxes and settlement costs. It’s also wise to include instructions to carry out your wishes regarding health care: in the event you are unable to make your directions known, your chosen representative can do so on your behalf.
Estate planning is not just for the rich and famous; it can very often be an extremely useful tool for many different people. This is because the default process for distributing a deceased person’s property is more complex, time-consuming, and generally burdensome than many people realize. Contrary to popular belief, a person’s assets are not automatically shared among their children after he or she passes. Without sufficient legal preparations in place at the time of your passing for the management of your assets and affairs, the intestacy laws of the state will take over. Not only will the courts control the distribution of your estate, often resulting in the wrong people receiving your assets, your beneficiaries may face higher estate taxes as well.
This court-managed distribution of your estate is called probate, and is smart to avoid. Probate is public, can be expensive, and frequently keeps the assets of the deceased in limbo and unavailable to one’s beneficiaries for a substantial amount time. Lack of clear direction on your part can also leave your family members to fight among themselves for the opportunity to be appointed to manage your affairs. It is not uncommon for a family to fall into feuding over small sums of money or a family keepsake.
Your estate is everything that you own, no matter the location, including:
For children under eighteen years of age, it is vital to choose a person or persons to be appointed guardian(s) to look after them and their property. Naturally, if a surviving parent lives with and has custody over the minor children, he or she will automatically remain their sole guardian, even if you have named another guardian in your estate plan. You should also prepare for the possibility that the primary guardian is unable to serve or is not appointed by the court; as a contingency, you should name at least one alternate guardian.
After in-depth consultation about your specific financial and family situation, an attorney should prepare the following documents to make up your comprehensive estate plan:
A Living Trust allows you to manage your property by transferring the ownership rights of your assets to the trust. During your lifetime, you (and your spouse) serve as the Trustee(s) and beneficiaries, but you also choose any successor Trustees to fulfill your instructions upon your death or incapacity. A trust differs from a will, in that it typically takes immediate effect after death or incapacity. You are allowed to make changes to and even terminate your Living Trust; this is referred to as being “revocable”. A properly funded Living Trust also enables you to reduce the costs, publicity, and time associated with probate, and may even allow you to avoid the process altogether.
A Living Trust-based estate plan also requires the use of a pour-over will. This document lists your choice of guardian if you have minor children. A pour-over will also makes sure that the executor of your estate is able to transfer any assets owned by you into your trust so that they are distributed according to your wishes.
A Will (known formally as a Last Will and Testament) has the primary purpose of transferring your assets according to your wishes. It also usually appoints someone to be your Executor, who, as the name suggests, is the person you choose to execute your instructions. You should also use your Will to designate a Guardian to care for any minor children; alternate Guardians should be appointed as well in case your first choice is unable to serve. A Will becomes effective upon your death, but only after its admission by a probate court.
A Durable Power of Attorney for Property grants the ability to continue your financial affairs should you become incapacitated. Without a well-drafted power of attorney, finding someone to make decisions on your behalf during a period of disability may require applying to a court to have it appoint a guardian or conservator. Like probate, the guardianship process is tedious, costly, and can also take quite an emotional toll.
Durable powers of attorney for property generally come in two varieties. A present durable power of attorney immediately transfers power to your agent (also known as your attorney in fact), while a springing or future durable power of attorney takes effect only upon a later disability. The most common choices for an agent are a spouse or domestic partner, a trusted family member, or a friend, though anyone can appointed. Designating a power of attorney makes sure that your wishes are followed precisely, enables you to choose who will make decisions on your behalf, and takes effect immediately after a later disability.
A different, but related estate planning document is a Durable Power of Attorney for Health Care or Health Care Proxy. Should you lose the ability to make medical treatment decisions for yourself, this power of attorney allows you to designate someone you trust to do so for you. If you wish, you can limit the scope of the decisions your health care agent can make and also provide instructions that he or she has to follow. This keeps “you” in charge: health care professionals must respect your agent’s decisions as if they were coming from you.
A Living Will serves to tell others of the medical treatment you prefer in the event of permanent unconsciousness, terminal illness, or any other situation which leaves you incapable of making or communicating decisions regarding treatment. When included in your estate plan, a Living Will can help provide peace of mind and security and prevent unnecessary expenses and delays should you become incapacitated in the future.
Finally, you should also include a signed HIPAA authorization form with your other documents. This is because certain medical providers in the United States have refused to release medical information on the basis that HIPAA (the 1996 Health Insurance Portability and Accountability Act) does not allow such releases. Even close relatives, such as spouses and adult children, who would otherwise have permission through durable medical powers of attorney have been denied. Signing a HIPAA authorization form will ensure the release of medical information to whomever you choose, including your agents, successor trustees, and family.
Probate is a court supervised process used to distribute your property. The process takes a minimum of six months in Arkansas and can take years to complete if it is complicated or people disagree with the validity of the Will or the distributions. It often requires that lawyers or other professionals be hired. If you die without a will, your property will still have to pass through the probate system. If you die without a Will, your estate will be distributed according to the Arkansas intestacy statute.
There are three main reasons to avoid probate: 1) Cost, 2) Privacy, and 3) the length of time probate takes.
Probate is not cheap or quick. Probate requires a hearing in busy Arkansas courts; the process will tie up your property for a minimum of 6 months and possibly years. This means your loved ones will not get the property you intended for them until the probate process is complete.
In addition, probate is very expensive. The Executor and attorney’s fees add up. If they were both allowed the maximum fees by Arkansas statute on a $500,000 estate the probate attorney fees would be $14,050 and the Executor’s fees would be $15,150 and that does not include court costs and other expenses. And unfortunately, you’re no longer around to do anything about it.
Not the Kind of Publicity You Want
The courts are public and do not afford privacy. Everything that comes before a judge is public record and the same is true with your estate. A Will is a very personal document, and may reveal private family and financial issues and concerns. After it enters probate it becomes public and can be inspected by anyone.
A living trust, also known as a Revocable Living Trust or a Family Trust is a legal document that holds legal title or ownership to your property and assets. When you create a Revocable Living Trust you transfer ownership of your assets to your trust. When you transfer assets into the trust it is called “funding” the trust. When you transfer title you do not lose any control. You can still buy, sell, borrow or transfer any of your property.
To many a living trust is very similar to a will. It includes the details and instructions for how you want your estate to be handled at your death. Unlike a Will, however, a properly funded trust:
A properly drafted and funded revocable living trust offers a number of estate planning advantages over dispositions under the terms of a Will.
Management of Assets in Event of the Grantor’s Incapacity: The trust can provide for management of the trust assets by a person you can select if the grantor becomes incapacitated through physical disability, incompetency, etc. Third parties frequently question the authority of an agent when they are attempting to use a power of attorney, so the revocable living trust is generally superior to that instrument.
Continued Property Management after Death: The trust provides management of the trust assets both before and after the grantor’s death. If the trust is funded properly, then it controls without interruption for probate and estate administration.
Avoidance/Reduction of Probate and Estate Administration Costs and Delays: The trust insulates the trust assets from the probate and estate administration process that assets passing under a Will are subject to, thereby saving those fees and costs. Moreover, it reduces if not eliminates the delays in distribution of estate assets that may result from probate. This could be particularly helpful if the grantor owns real estate in other states, which may otherwise require a separate probate proceeding in each state.
Avoidance/Reduction of Litigation: It is more difficult for a unhappy heir to contest a revocable living trust than a Will. During the probate of a Will, the heirs must be given written notice of their opportunity to contest the Will. A trust is not subject to this requirement.
Confidentiality of Dispositions and Identity of Beneficiaries: Upon your death, the Will is filed in the probate court and become available to the public and more and more is posted online through the court website. A living trust agreement is typically not filed in court system and does not become public record.
Selecting Law Most Favorable to Property Disposition and Administration: The trust may enable the grantor to avoid restrictions on disposition and administration of his property imposed by the law of the state of his domicile. These laws would apply to property passing under his Will. A living trust allows him to choose more favorable laws of another state to apply to the disposition and administration of the property placed in the trust.
To Act as a Receptacle for Non-Probate Assets: The trust can act as a receptacle for non-probate assets (life insurance proceeds, retirement plan death benefits, etc.) after death to coordinate their disposition under the plan along with the other assets you own.
No. Your property is still considered your property and you can use and enjoy however you desire. You still retain full control over your property, you may use the equity in your property, continue to take the tax write off from the interest on your mortgage, exchange one piece of property for another. Everything you could do before you had the trust, you can do after you have the trust in place. There are no changes in your income taxes. There are no new Tax Identification Numbers to obtain. A Living Trust is revocable, that means you can modify it at any time or revoke. You can transfer property in and out of the trust however often you desire. Upon your incapacity, the individuals you designate will be able to manage the trust on your behalf and they must follow the instructions you have given in the Living Trust. Upon your passing, the Living Trust can no longer be modified and the successor trustee(s) you have designated must then proceed to implement your wishes as directed by the trust.
wh Law | We Help, recommends that all property that can go into the trust be titled in the trust’s name. Sometimes our firm gets the call or is that the client has a small checking account that they do not want to “bother” to put into the living trust. The disadvantages to leaving it outside the trust depend on the circumstances for each situation. It can be very difficult to deal with the bank after the death of the account holder and having money outside the trust and outside the flow of distribution set up by the trust can cause problems.
Assets with beneficiary designations such as a life insurance policy or an annuity payable directly to a named beneficiary do not need to be transferred to your living trust. Furthermore, money from IRAs, Keoghs, 401(k) accounts, and most other retirement accounts transfer automatically on the death of the account owner outside of probate. Bank accounts can be set up as payable-on-death account (POD for short) with a named beneficiary and pass to that beneficiary without having to be titled into your trust. It is important, however, to seek the counsel of an experienced estate planning attorney who can advise on and assist with transferring necessary assets to your trust.
No. As long as you continue to live in that home .federal law prohibits financial institutions from accelerating your loan because you transferred the mortgaged property into your living trust. The only exception to the federal law is it does not provide the protection for residential real estate with more than five dwelling units.
Running your own business demands a lot of perseverance and determination. This often leaves little time to deal with the legal issues that constantly permeate running small businesses. Having a business lawyer on your side can make a big difference in the day-to-day operations of your business, helping you deal with a wide range of issues related to:
According to the Internal Revenue Service, all businesses fall into one of five basic structures that define how it is organized, how it operates, and how it is taxed, and liability issues. Each structure has its own benefits and drawbacks, and what works for one company may prove disastrous to another. Learning the differences between business structures can help an entrepreneur successfully plan his company:
Sole proprietorship: A sole proprietorship is the simplest business structure. It allows a person to conduct business as themselves. Under this structure the owner and his or her company are viewed as one and the same. While this is an easy way to start doing business, it is important to be aware that a sole proprietorship does not protect the owner from any business liabilities.
Partnership: A partnership is a simple business structure for businesses with more than one owner. There are two types of partnerships: general partnerships and limited partnerships. When considering this business structure, understand that owners maintain personal liability for the business. In a limited partnership, the limited partners may have limited liability.
Corporation: Forming a corporation establishes a business as a separate legal entity, providing owners with limited liability protection. There are two types of corporations: C-corporations and S-corporations. There are several key differences between these two types of corporations, including tax issues and shareholder restrictions.
Limited Liability Company: Limited liability companies are separate legal entities from their owners, but allow owners to report business gains and losses on their own personal tax returns. Owners are shielded from business liabilities under this structure. In Arkansas LLCs can elect to be taxed as a C-Corp, S-Corp, Sole Proprietor, or Partnership.
In the end, C-Corps and S-Corps are very similar. The following traits are common to both:
Liability Protection: Shareholders are generally not responsible for business debts or business liability. Liability protection can be sacrificed, however, if the company does not remain compliant.
Corporate Structure: Unlike LLCs, corporations must have a structure that breaks down into shareholders, directors and officers.
Corporate Documents and Compliance: Both need to file certain documents with the Secretary of State in Arkansas. Typically, these are the Articles of Incorporation. Furthermore, corporations have obligations such as issuing stock, paying fees, adopting and enacting bylaws, and holding shareholder and director meetings (as well taking meeting minutes at these meetings).
The main differences between the two fall into three categories: ownership, shareholder rights, and taxation.
Ownership: C-Corps allow unlimited amounts of shareholders and thus are a great choice for larger businesses. S-Corps may have no more than 100 shareholders and these shareholders must all residents of citizens of the United States. Furthermore, while C-Corps can be owned by other corporations, LLCs, or even trusts, S-Corps cannot.
Shareholder Rights: When forming a C-Corp, you can choose to have several different strata of shareholders, ones whose votes count for more or less than other members. Typically, early owners or founders have a more sizable say in voting, and thus, the operation of the business. S-Corps, on the other hand, have just a single type of shareholder. As such, it can be easier for C-Corps to expand, and sell shares, as additional flexibility is a solid advantage.
Taxation: First off, for either entity, personal income tax is paid on dividends salary drawn from the company. That said, C-Corps also pay taxes at the corporate level, while S-Corps, like LLCs, are pass-through entities. What’s all this mean? That C-Corps have a possibility of double-taxation. In a C-Corp, corporate income is taxed at the corporate level, and dividends are taxed at a personal level.
A key reason that business owners choose to form a separate business entity is so they won’t be held personally liable for business liabilities. However, courts will sometimes hold a business’s owners, members, and shareholders personally liable. When this happens it’s called “piercing the corporate veil.”
Generally, when evaluating if a corporation is legitimate – if the corporate veil should be pierced – courts look at the following factors:
Corporate Formalities: Did the corporation follow proper procedure, for example in its formation and appointment of directors, issuance of stock, the holding of its annual meetings, the filing of annual reports with the state, and the maintenance of its own property, and financial books and accounts? Or were the procedures not followed, was the corporation dependent on property or assets of a shareholder which it did not technically own or control, or were the corporate finances commingled with those of its shareholders?
Individual Control: What amount of financial interest, ownership and control did the principals maintain over the corporation?
Personal Use: Did the principals use the corporation to advance personal purposes?
Most people think of joint venture and partnership business as the same idea. However, they are two agreements that have very clear-cut differences.
A Joint venture involves two or more companies joining in business. In a partnership, it is individuals who join together. When two or more companies engage in a joint venture it is often to overcome business competition. While engaging in a partnership, the individuals involved become partners in an organization to make a profit.
A Joint Venture can be termed as a contractual arrangement between two companies to undertake a specific task. Compare, a partnership involves an agreement between two parties wherein they agree to share the profits as well as take the burden of loss incurred.
When it comes to your business structure you might need to think about organizing your venture as a nonprofit corporation. Unlike a for-profit business, a nonprofit may be eligible for certain benefits, such as sales, property and income tax exemptions at the state level. The IRS points out that while most federal tax-exempt organizations are nonprofit organizations, organizing as a nonprofit at the state level doesn’t automatically grant you an exemption from federal income tax.
Another major difference is the treatment of the profits. With a for-profit business, the owners and shareholders generally receive the profits. With a nonprofit, any money that’s left after the organization has paid its bills is put back into the organization. Some types of nonprofits can receive contributions and those contributions will be tax deductible to the individual who contributes to the organization.
If a business entity undertakes a major change or transaction, then it should be reflected in its minutes. Moreover, the company may want to hold meetings of the shareholders or members, and directors or officers should take place at least annually. Failure to adhere to the formality of regular meetings can jeopardize the business’s ability to shield its officers, directors and shareholders or members from personal liability for the corporation’s actions.
In today’s business climate, businesses cannot afford to make mistakes. Yet there is one legal mistake that many small and medium-size businesses often make – they don’t have a buy-sell agreement in place. This can create several big issues. For example: 1) without an agreement in place, a business owner may wake up one morning to find out that a stranger owns part of his business; 2) an owner that is getting ready to retire may find out that he can’t force his company to buy his stock; 3) and perhaps most troubling, the majority owner of a company who wants to sell his or her business may find out the sale is vetoed by his minority shareholders.
These problems can all be avoided if a proper buy-sell agreement is in place. Who needs such an agreement? The answer to that question is easy – any small or mid-sized company that has more than one owner really needs a solid buy-sell agreement. It doesn’t matter whether you are a corporation, partnership or limited liability company. If there is more than one shareholder, partner or member, an agreement should be in place.
Personal liability arising from business obligations can consume the wealth that is tool a lifetime of work to build. The liability may extend to business losses, but other obligations may also reach individuals, including:
Limited liability offered by corporations and other business entities shelters business owners from personal liability. Nonetheless, if an owner or director performs certain personal acts, behaves illegally, or fails to uphold statutory requirements for corporate status, he or she may face personal liability despite the corporate shelter.
Having a business lawyer can definitely benefit you. Feel free to give us a call if you have questions.
Arkansas Misdemeanors are divided into three categories:
A-level Misdemeanors – 0-1 year, and a fine of up to $2,500
B-level Misdemeanors – 0-90 days, and a fine of up to $1,000
C-level Misdemeanors – 0-30 days, and a fine of up to $500
There are several classifications for felony charges:
Y-Felony – 10-40 years, or life
A-Felony – 6-30 years, and a fine of up to $15,000
B-Felony – 5-20 years, and a fine of up to $15,000
C-Felony – 3-10 years, and a fine of up to $10,000
D-Felony – 0-6 years, and a fine of up to $10,000
This will depend on how much criminal history you have. Someone who has been previously convicted of 2 or 3 felony charges can be charged under Arkansas law as a Small Habitual Offender. The ranges for felony crimes when charged as a small habitual offender are as follows:
Y-Felony – 10-60 years or life
A-Felony – 6-50 years
B-Felony – 5-30 years
C-Felony – 3-20 years
D-Felony – 0-12 years
Someone who has been previously convicted of 4 or more felony charges can be charged as a Big Habitual Offender. The ranges for felony crimes when charged as a big habitual offender are as follows:
Y-Felony – 10 to life
A-Felony – 6-60 years
B-Felony – 5-40 years
C-Felony – 3-30 years
D-Felony – 0-15 years
If being charged simply as Possession of a controlled substance:
Less than 4oz is a Misdemeanor. 5-64-419(b)(5)(A)
If being charged as Possession of a Schedule VI controlled substance with the purpose to deliver:
Less than 14 grams is a Misdemeanor.
Yes, they are a schedule II drug and thus, without a script any amount is a felony amount.
Yes, they are a schedule II drug and thus, without a script any amount is a felony amount.
Yes, they are a schedule II drug and thus, without a script any amount is a felony amount.
In most cases, one of the following conditions must be attached to the drugs found:
There are two types of death taxes that you should plan for: the federal estate tax and state estate tax. The federal estate tax is calculated as a percentage of your net taxable estate, which itself consists of all assets under your ownership or control after subtracting certain deductions. These deductions can range from charitable contributions to administrative costs (including funeral and burial expenses). Currently, the federal estate tax applies to estates with net assets of $5,250,000 or more.
Even if you believe that the federal tax won’t apply your estate, it is still necessary to determine whether state estate and inheritance taxes will. It’s also possible that your estate may be taxable in the future as your assets appreciate in value. For these reasons, going over your estate plan with an estate planning attorney on a regular basis is an important part of your future planning. Doing so will also ensure your estate plan makes adjustments for alterations in tax laws as well as changes in your individual circumstances.
Your taxable estate consists of the total value of the assets you own, minus liabilities and deductions.
Your assets include:
And examples of the liabilities and deductions you would subtract from your assets are:
Any taxes assessed on the taxable part of the estate are paid from the estate itself before the assets are distributed to your beneficiaries.
As a married individual, you are allowed by the federal government to give an unlimited amount of assets to your spouse, tax free, so long as they are transferred by gift or bequest. This unlimited marital deduction has the effect of delaying the payment of estate taxes: upon the death of the first spouse, all assets may pass to the surviving spouse. Then, at the passing of the surviving spouse, all remaining assets in the first spouse’s estate over the applicable exclusion amount ($5,250,000 in 2013) will be included in the survivor’s taxable estate. Application of the Unlimited Marital Deduction is limited, however, to surviving spouses who are United States citizens.
A Credit Shelter Trust (sometimes known as a Bypass or A/B Trust) can be used to avoid or decrease federal estate taxes. It is most often used by a married couple when the value of their estate surpasses the federal estate tax exemption.
Thanks to the Unlimited Marital Deduction, the federal government allows a married person to gift or bequeath an unlimited amount of assets to his or her spouse, tax free, and leave any of his or her estate tax exemption untouched. For individuals with substantial assets, however, the Unlimited Marital Deduction only succeeds in delaying estate taxes, rather than eliminating them. This occurs because, when the second spouse passes away with an estate valued at more than the federal exemption total, the amount of the estate exceeding the exemption may be subject to estate tax. By that time, of course, the first spouse’s estate tax credit was never taken advantage of and now cannot be used. It is possible to avoid this situation by establishing a Credit Shelter Trust, which works to preserve both of the spouse’s exemptions. Upon the first spouse’s passing, two things should happen: (1) even if no taxes are due, an estate tax return is filed, and (2) the Credit Shelter Trust creates a separate, irrevocable trust comprised of the decedent’s assets, but funded only to the extent of his or her exemption. The rest of the estate is then bequeathed to the surviving spouse. As a result, the irrevocable trust makes full use of the first spouse’s estate tax credit and the assets in the trust are not taxed, even if they appreciate in value. In a Credit Shelter Trust, the surviving spouse is the beneficiary and any children are beneficiaries of the remaining interest.
Our homes frequently hold great value for us, both sentimental and material; as they are often among the largest parts of our estate, they can also hold great value to federal and state tax agencies. One way to reduce the tax burden generated by a home is to establish a Qualified Personal Residence Trust or QPRT (pronounced “cue-pert”). With this type of trust, you can still live in your home or vacation house, but transfer ownership for a substantial discount and freeze its value when it comes to estate taxes. It works like this: You grant the title to your house to the QPRT (often to benefit your family members), but specify that you can continue to live in the house for a certain length of time, usually years. After that period has passed, the property passes to your beneficiaries without any additional estate or gift taxes, despite any appreciation in value the house may have accrued. Once that happens, you are allowed to continue living in the home but must pay rent to your family or beneficiary so that the property is not included in your estate. This can be advantageous, serving to further decrease the value of your taxable estate, although the rent income will be taxable as income for your family. On the other hand, should you die before the end of the period, inclusion of the total value of the house in your estate is unavoidable, but in the majority of cases you are no worse off than you would have been had you not established a QPRT. A QPRT also provides great protection from creditors: once the QPRT is created and your residence is transferred to it, the property is technically owned by the trust, rather than you.
It is commonly understood that the proceeds of a life insurance policy paid to your beneficiaries are not subject to income taxes. Unfortunately, this does not hold true for Federal Estate Taxes. In fact, since life a insurance pay-out is considered part of your taxable estate, your family or beneficiaries could stand to lose up to half of its value to estate taxes. This is where an Irrevocable Life Insurance Trust can help. The goal of an ILIT is to own your life insurance policy, keep the policy outside of your estate, and prevent the proceeds from being taxable as part of the estate. There are a number of ways to set up an ILIT. As one option, ILITs can be built to provide income to a surviving spouse while granting the rest to your children from a previous marriage. And in the case of a child who is not financially responsible, you can arrange for distribution of a restricted amount of the insurance proceeds over a given length of time.
A Family Limited Partnership (FLP) is a type of limited partnership formed among members of a family. A limited partnership has two kinds of partners: (1) general partners, who manage the trust, and (2) limited partners, who are passive investors. While general partners hold unlimited personal liability for partnership responsibilities, limited partners bear no liability aside from their capital contributions. This kind of partnership is often established by older generation family members who contribute assets to the FLP and receive both a small general partnership interest and a large limited partnership interest in return. These family members then transfer the limited partnership interests to their children and/or grandchildren, but retain the general partnership interests that allow for control of the partnership.
The FLP has several benefits. First, by transferring limited partnership interests to family members, older family members can reduce the amount of their estate subject to taxation, while also continuing to direct decisions about the partnership’s assets and any distributions. Furthermore, because the limited partners are not responsible for the partnership’s operations, a minority discount can be applied to their interests to reduce their value for purposes of gift and estate taxes. Finally, a well-constructed FLP may provide protection from creditors, since the general partners are not required to distribute the partnership’s earnings.