The post Do I Really Need a Will or Trust for Personal Asset Protection? appeared first on Costello Legal Services, Ltd..
]]>There is also the issue of who will make decisions for you while you are still alive but are incapacitated in some way such as in a coma or suffering from dementia or other mental impairment. These conditions can occur at any time, often without warning, such as the result of an auto accident. Wouldn’t it be wonderful to have a plan in place so when the unexpected happens, there is a trusted relative or friend who knows your wishes and has the legal authority to act on your behalf and in your best interests?
Nobody really wants to think about end of life decisions, but failure to do so almost always causes great stress, not to mention substantial expense to the people left behind. This is in addition to the normal grieving they will surely experience when faced with losing a loved one. The good news is you have the power to spare your family this pain and expense by taking the time to meet with an experienced Estate Planning Attorney to discuss personal asset protection.
For many people, a simple Last Will and Testament coupled with Durable Powers of Attorney for Healthcare and Property will provide peace of mind and ensure your wishes are followed. The Last Will dictates specifically who receives your property when you die and can include virtually any division you can think of if there are more than one recipient. It can also specify who will raise your minor children and the manner you want them raised from an education, religious, geographic or any other standpoint. The Healthcare Power of Attorney allows you to name someone else to act in your name and on your behalf to speak with your treating physicians and make crucial medical decisions, including end of life choices, in accordance with your wishes. The Property Power of Attorney allows you to name someone who will pay your bills when you can’t and manage all your assets in your best interest and the best interests of your heirs.
Many people mistakenly believe a Living Trust is only for the very wealthy. While that may have been true many years ago, changes in the laws have made it an attractive choice for people of all income levels who own real estate and desire personal asset protection. With a Living Trust, the trust becomes the legal owner of record over any property you transfer into it. You are the grantor or creator of the trust and the initial trustee and beneficiary. The key is the trust continues on after you die and successor trustee(s) can continue to manage all the assets of the trust or, if you so direct, can immediately sell and distribute the assets according to your plan without court involvement or additional expense and with complete privacy.
With a Living Trust you still make all the same decisions about the trust assets you are currently making and can amend or revoke the trust any time you wish. The trust only becomes irrevocable when you die. One of the greatest benefits of having a Living Trust is your successor trustee can sell your home and any other real estate you own immediately upon your death without court involvement and in compete privacy so long as it is done in the best interests of your beneficiaries.
If you only have a will or die without a will, before your real estate can be sold your family will need to retain an attorney to file a petition with the Probate Division of the Circuit Court and in most cases, obtain permission from the judge before taking any action. Probate cases can take more than a year to complete and the total associated cost can easily exceed $10,000 to $20,000 when you consider your family still has to pay the mortgage, utility bills, insurance premiums and all other expenses until the court gives permission to sell the property. In addition, because probate is a matter of public record, anyone can learn who your beneficiaries are and what they have inherited from you.
No two people or families are the same but they all share one thing in common, the need for personal asset protection. For this reason, Costello Legal Services will develop a personalized estate plan for each client to address their specific needs. The whole process can be completed in as little as two weeks for a fraction of the cost associated with probate. Please consider contacting us for a complimentary consultation. You and your family will be glad you did!
Costello Legal Services, Ltd.
630-515-9980
The post Do I Really Need a Will or Trust for Personal Asset Protection? appeared first on Costello Legal Services, Ltd..
]]>The post Are My Personal Assets Really Protected by My Corporation? appeared first on Costello Legal Services, Ltd..
]]>Most business owners form a corporation or limited liability company (LLC) so their personal assets are safely out of reach from business creditors. In the vast majority of cases (easily 80-90% of the cases we review), they fill out the necessary forms, file them with the Secretary of State along with the required fee and stop there. Unfortunately, this alone will not protect the owner from unlimited personal liability for business debts and obligations. It is a very real possibility that you could lose your home, savings and all other assets not protected by bankruptcy.
Illinois statutes and case law require substantially more. The Second District Illinois Appellate Court laid out numerous factors the courts must consider when determining whether to “pierce the corporate veil” and hold the owners personally liable for business debts. Here are some of the most frequent mistakes businesses make:
Failure to observe corporate formalities like annual meetings, minutes, elections, resolutions.
Failure to issue stock or properly authorize and record un-certificated stock..
Absence of corporate records like by-laws, tax returns, annual reports, deeds, titles, leases.
Commingling funds between owner and corporation.
Token officers or directors. If someone holds an office they must participate.
Non-payment of dividends to shareholders.
Not enough net assets in the corporation’s name considering the business risk involved. High risk ventures generally require more capital.
The courts will review all the facts to determine whether the corporation is truly separate from the owner or is only a sham or alter ego. They also look at whether allowing the corporate shield to protect the owners would sanction fraud, promote injustice or inequitable consequences. The point is, why take the chance of losing everything you’ve worked for when the cost of compliance is minimal.
Many single shareholder corporations and single member LLCs believe that holding annual meetings is unnecessary, but doing so and documenting things is a great way to memorialize what was accomplished over the past year and what still needs to be done. It really pays off when you need to look up a prior action taken and is invaluable if you ever plan to sell your business.
A common mistake many business owners make when they put money into the business after paying for and receiving their initial stock, is failing to properly document that new money as either an additional capital contribution, which requires additional stock to be issued or a loan, which requires a repayment agreement and promissory note. Many owners also occasionally take money or property out of the business for personal use and fail to properly document it as salary (subject to withholding taxes) or a dividend (requiring a board resolution).
While it’s true LLCs were intended to offer limited personal liability protection without the usual corporate formalities, they are a relatively new legal creation compared to corporations. Some recent cases suggest that when courts are faced with deciding whether to disregard an LLC and hold the owner personally liable, the judges look to older established corporate cases. It’s clearly in your best interest to do more than the bare minimum if you truly want to avoid personal liability. Remember, it’s a balancing act once you’re in court and with a little advance planning, you can greatly increase the odds you’re never held personally liable for the debts of your corporation or LLC.
At Costello Legal Services, we perform a 25 point corporate check up to ensure your company is in perfect health. Why risk losing everything you’ve worked so hard for when you can ensure your business is in full compliance with the law for a fraction of the cost of defending and possibly losing a lawsuit. Please consider giving us a call for a complimentary consultation. You, your family and your co-owners will be glad you did!
Costello Legal Services, Ltd.
630-515-9980
The post Are My Personal Assets Really Protected by My Corporation? appeared first on Costello Legal Services, Ltd..
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