31December
2015
Decanting a Trust: What Is it? When is it a Good Idea?

An irrevocable trust is usually created to take assets out of the estate of the grantor mostly to: Save on federal or state taxes; Remove the assets from potential creditors; or Help protect assets when applying for governmental assistance such as Medicaid. Not All States Allow Decanting: Questions to Ask The strategy of decanting a trust is only permitted in some states. Even if states do allow it, there are certain restrictions. Here are some questions that should be answered if you are interested in decanting: 1. Does your state have a decanting statute? 2. Does your state statute allow a…

31December
2015
Tax Rules When Your Business Trip Involves a Passport

If you travel a lot on business, you may make some international trips — as well as trips within the United States. When traveling abroad, you may want to add a few extra days to a trip for relaxing and sightseeing. Keep in mind that the tax rules for foreign business travel are different from those for domestic travel. Whenever you spend any time vacationing on a foreign business trip, the general rule says you must allocate all your travel expenses –- including transportation costs — between business and personal days. The good news: You might be able to take advantage of…

31December
2015
Prenuptial Agreements as an Estate Planning Tool

Prenuptial agreements and domestic law vary from one state to another but nearly every state has laws that prevent one spouse from entirely disinheriting the other. However, with a prenuptial agreement, one spouse can waive his or her right to the other’s estate. Let’s say you are getting married and have children from a previous marriage. Your spouse-to-be also has children and is financially secure. You may want to change your will to leave the bulk of your estate to your children and perhaps a small amount to your new spouse. However, the change in your will may not completely…

17December
2015
Sports: The Language of Business

Have you seen the Chevrolet commercial where the boss tells a group of employees to “take a knee, team?” One young man drops into a quarterback kneel and the boss asks, “What’s he doing?” With the rest of the group looking confused, the employee responds, “You said ‘take a knee.‘” “I will remember that it’s my job to call balls and strikes and not to pitch or bat.”— Supreme Court Justice John Roberts comparing himself to an umpire at his confirmation hearing in 2005 The boss responds: “That’s what that means?” The advertisement illustrates the growing use of sports metaphors…

17December
2015
Develop a Strong Hand to Negotiate Loan Covenants

If you are about to ask for a business loan, expect to deal with the issue of covenants — constraints lenders impose on your company to keep it operating within specified financial ratios and to prevent it from taking certain actions. These clauses are meant to help the lender mitigate risk and get its money back. But if you are not careful, they can put your company in a stranglehold. Under some very strict loan agreements, if your firm violates a covenant, it can automatically go into default and be forced to pay the loan in full immediately. Typical commercial-loan…

17December
2015
What is the Value of Your Business?

Only 30% of all businesses put on the market for sale are actually sold, according to the National Federation of Independent Business.1 As a business owner, ascertaining the value of your business is important for a variety of reasons, including business succession, estate tax estimates, or qualifying for a loan. There are a number of valuation techniques, ranging from the simple to the very complex. Outlined below are three of the different approaches to valuing a business. Asset Based: Calculates the value of all tangible and intangible assets held by the business. This approach ignores the future earning potential of…

03December
2015
The Investment Risk No One Has Ever Heard Of

Knowledgeable investors are aware that investing in the capital markets presents any number of risks —interest-rate risk, company risk, and market risk. Risk is an inseparable companion to the potential for long-term growth. Some of the investment risks we face can be mitigated through diversification.¹ As an investor, you face another, less-known risk for which the market does not compensate you, nor can it be easily reduced through diversification. Yet, it is a risk that may be the biggest challenge to the sustainability of your retirement income. This risk is called the sequence of returns risk. The sequence of returns…

03December
2015
Europe: In-House Legal Professional Privilege

If your company conducts business in the European Union (E.U.), it’s important to keep this in mind: In-house attorney-client privilege does not automatically apply to international communications when the issue at hand is governed by E.U. law. This position held by the E.U.’s Court of Justice, and reaffirmed in a case against the manufacturer Akzo by the court’s advocate general, is a potent reminder for U.S. based companies that the protection for communications provided by in-house attorney-client privilege in the U.S. does not automatically work overseas. (See right-hand box.) While you may consider that opinion inequitable because U.S. courts do not emphatically…

03December
2015
Retirement Accounts and Your Estate Plan

Successful estate planning generally involves passing on your assets to your heirs at a low tax cost. To help achieve that goal, there are a few things to keep in mind about retirement accounts. First, tax-favored retirement accounts, such as traditional IRAs, Roth IRAs, SEP accounts and 401(k) plans, are not good candidates to use for funding bypass trusts. These trusts, which are sometimes called credit shelter trusts, are set up by married couples as estate tax minimization tools. The main advantage of a bypass trust is that the assets used to fund the trust are not included in either…