18October
2018
A Trust to Help Fund the Payment of Estate Taxes

Consider this dilemma faced by a high-net worth individual: He doesn’t want his heirs to be burdened with estate taxes so he takes out a life insurance policy to cover the tax bill. But then the proceeds of the insurance policy wind up as part of his estate — only to be included for estate tax purposes. In this case, the individual might solve the problem by setting up an irrevocable life insurance trust (ILIT). What Are ILITs and How Are They Used? There are many estates that are subject to estate taxes, either the federal estate tax, or an…

18October
2018
Beware of Deductions Claimed for Certain Business Expenses

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that’s helpful and appropriate for your business. The IRS sometimes challenges deductions claimed for certain types of business expenses. In doing so, an examiner might claim that payments made by a corporation to a shareholder for personal items or that are above or below fair market value constitute “constructive dividends.” Reclassifying business expenses as dividends has adverse tax consequences, as a recent case demonstrates. No Deduction for Dividends…

18October
2018
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…

04October
2018
A Legally Binding Contract

The success of your business depends to a great extent on the quality of the contracts you sign. A good contract protects everyone, while a bad contract could ruin you. Every time you promise to exchange services or property, you create a contract — either written or unwritten. Oral contracts present several problems. They can be ambiguous, difficult to enforce and hard to prove in court. “Contracts of choice” are always written to help eliminate potential disputes. They contain precise terms about the people or companies involved, the property or services offered, and of course, the agreed-upon price. Contracts may also include…

04October
2018
Make Your Workplace Drug Free

Employee drug and alcohol abuse can cost your company in many ways, including increased absences, workplace accidents and high health costs. In addition, studies show that drug users are five times more likely than other employees to file a worker’s compensation claim. To protect themselves, many companies now routinely administer drug and alcohol tests to job applicants and employees. If your firm isn’t among them, the Department of Labor (DOL) warns that you may become an “employer of choice” for drug abusers who are unable to get — or keep — a job with employers that do drug testing. In…

04October
2018
‘Partnership’ Culture is Best for Success

Certain workplace culture characteristics consistently bring about higher financial performance, according to a study done by one researcher. Organizational psychologist Dr. Richard Petronio surveyed 200,000 employees at 50 companies in a cross-section of industries — high-tech, health care, insurance, transportation, manufacturing, finance, services and retail. The study identified the workplace culture characteristics that correlate with financial success. It categorized five major types of employer-employee culture styles: Entrepreneurial (“leader-follower”), Paternal (“parent-child”), Mechanical (“machine-part”), Exploitive (“master-slave”) and Partnership (“partner-partner”). Although many companies aspire to an entrepreneurial style, the study found the partnership style is the one where employers outperform. Certain employers consistently…