From its office in Clayton, Missouri, Danna McKitrick, P.C., delivers legal representation to new and growing businesses, financial institutions, non-profit and government-related entities, business owners, individuals, and families throughout the greater St. Louis region and the Midwest.
Danna McKitrick attorneys practice across many areas of law, both industry- and service-oriented.
I recently discussed the importance of using a power of attorney to protect yourself, your business, and your loved ones. Without a power of attorney, no one – not your spouse, parent, or adult child – has an automatic right to your medical records or can make medical or financial decisions. Your business partner has no automatic right to make business decisions on your behalf.
What happens if you will be in the hospital for an extended stay and your business needs to pay its employees or sign a contract for a vendor? Who is best suited to make these decisions on behalf of a business owner? Continue reading »
01/2/23 8:00 AM
Estate Planning, Health Care | Comments Off on The Importance of Using Power of Attorney to Protect Yourself, Your Business, and Your Loved Ones |
Yes, small businesses need estate plans. Business estate plans determine what happens if the owner can no longer operate the business due to death or disability. A plan must be in place to address either potentially devastating situation.
Businesses with multiple owners commonly use Buy/Sell Agreements for such a plan. These provisions can be inserted into the Operating Agreement if the business is a limited liability Company (LLC) or can be provided in a separate agreement if the business is a corporation or partnership. There are two general forms used:
Buy/Sell Provisions: Remaining owners (whether shareholders, members, or partners) buy the deceased owner’s interest from the estate. A life insurance policy can provide funds for the purchase.
Redemption Agreement: The company buys the deceased owner’s interests from the estate. The remaining owners own the company. Proceeds from the sale go to the estate. This arrangement can also be funded by a life insurance policy.
Because of the tax and legal considerations involved, it is critical that these plans be thought out and planned in advance with the advice and input of the business’ attorney, accountant, and insurance professional.
If no agreement exists, the remaining owners must deal with the deceased owner’s estate, possibly controlled by the spouse, children, or other persons not involved in the business. This can be very disruptive. The business may have to be sold or liquidated to the detriment to all concerned. The value of the business is not passed on to the estate. The remaining owners must deal with a hostile party and potential litigation which could destroy the business.
The loss of an owner can also cause a vacuum in the management of the company. Continue reading »
Cryptocurrency is a hot topic for business owners and individuals alike. But have you considered the importance of updating your estate plan to include your cryptocurrency? If not, read If You Own Cryptocurrency, It’s Time to Update Your Estate Plan! where I discuss the importance of updating your estate plan if you own any cryptocurrency or other digital assets.
Cryptocurrency and other digital assets were not considered in many older estate plans. And with the increase in the number of business owners and individuals acquiring cryptocurrency and other digital assets, estate planning is crucial. Your estate plan documents need to include language that covers your digital assets, just as it covers your more traditional assets. Continue reading »
Most small business owners today are aware of the importance of forming a legal entity before beginning their business operations. However, more individuals and families are turning to rental properties as an investment strategy, and they do not necessarily think of themselves as small business owners. But that is exactly what they are. It is critical to ensure that if you or your family own rental or other investment properties, you protect your personal assets from liability by setting up a legal entity to be the owner of the properties.
The best option for most of these types of small businesses is to form a Limited Liability Company (LLC). Limited Liability Companies require less formality than corporations and are generally less costly to form. They also offer the benefit of pass-through taxation. Though liability insurance offers protection, the one-time cost of setting up an LLC is typically less than the cost of an umbrella insurance policy over time. However, there are still coverage limits with an umbrella insurance policy: If the rental property is owned in your individual name and your liability exceeds the coverage limits, your personal assets could be at stake. LLCs shield their members from personal liability when formed and operated properly.
If you are going to own multiple properties, it may be wise to form a different LLC for each property to shield each property from the liabilities of the other properties. You will want to consult with an experienced attorney to make certain that you are following the correct procedures in establishing your LLC, such as registering the LLC with the Secretary of State, creating an operating agreement, and obtaining a tax ID number for the business.
As you can see, LLCs are extremely useful as a means of asset protection. They are also a great tool for estate planning purposes. Continue reading »
These misconceptions involve: wills; trusts and trust funding; asset distribution to heirs and beneficiaries; protection for yourself and your assets while you are living and after your death; probate; and succession planning for your business.
If you have any questions regarding estate planning as a small business owner, contact me or one of our other estate planning attorneys at 314.726.1000.
Posted by Attorney Rachel A. Quinley. Quinley is an estate planning and probate attorney who focuses her practice on the creation and administration of trusts and estates, wills, beneficiary deeds, financial and medical powers of attorney, guardianships, and other matters related to estate planning.
08/3/21 10:17 AM
Business Law, Estate Planning | Comments Off on Small Business Owners: Misconceptions About Estate Planning |
You expect to transfer funds to your descendants through an individual retirement account (IRA); or
You have inherited an IRA from a relative.
The U.S. Supreme Court has ruled in Clark v. Rameker that the money in an inherited IRA does not qualify for the protection from creditors as provided in the Federal Bankruptcy Code.[1]
The Court concluded that funds in an IRA which was inherited from someone else are not really retirement funds. It gave three reasons for this conclusion. The holder of an inherited IRA:
Can never invest additional money into the account.
Is required to withdraw money from the account, no matter how far away retirement may be.
May withdraw the entire balance of the account at any time – and use it for any purpose – without penalty. Continue reading »
If you directly inherited an IRA and are facing bankruptcy, these funds are no longer protected from creditors.
In Clark v. Rameker (In re Clark), No. 13-299, the U.S. Supreme Court unanimously ruled that inherited IRAs do not qualify under the “retirement funds” bankruptcy exemption. As a result, non-spouses inheriting an IRA may no longer protect the funds from creditors after filing bankruptcy and spouses have more incentive to “roll over” inherited IRA funds.
Before the Supreme Court decided Clark, there was a split between the 5th and 7th Circuit Courts of Appeals regarding exactly what the “retirement funds” bankruptcy exemption covered. In Chilton v. Moser, the 5th Circuit previously held that inherited IRAs were exempt from the bankruptcy estate because the “retirement funds” exemption never stated that the retirement funds had to be the debtor’s. In Clark v. Rameker, the 7th Circuit disagreed and held that inherited IRAs were not exempt because they were an “opportunity for current consumption, not a fund of retirement savings.” The disagreement stemmed from the interpretation of what “retirement funds” included. Continue reading »
Married couples in Missouri who file joint federal tax returns, including those not recognized as married by the state but recognized as married in other states, must also now file jointly in the state of Missouri.
Governor Jay Nixon issued the executed order clarifying that, under Missouri law, couples filing joint federal income tax returns must also file joint state returns.
Almost every expert out there is weighing in on the legal implications of last month’s Supreme Court decision striking down the Defense of Marriage Act (DOMA). Unfortunately, the IRS has not issued guidance regarding how married couples treat income in states that do not recognize their marriage, whether the IRS will allow income tax returns to be amended for the previous three years, or whether the IRS will allow married couples to file as married in states that do not recognize the marriage.
While IRS guidance is likely on the way, affected couples may have to sort through a confusing minefield of regulations for some time yet.
Families now have clarification on when parents may use leave to care for an adult child with a mental or physical disability.
On January 14, 2013, the Wage and Hour Division of the Department of Labor issued additional guidance to help employers determine eligibility of employees to take leave under the Family and Medical Leave Act (FMLA) when the employee has an adult child with a mental or physical disability incapable of self-care due to a serious health condition.
Generally, entitlement to FMLA leave ends when a child is 18 years old. “Incapable of self-care” means that the individual requires active assistance or supervision to provide daily self-care in three or more of the “activities of daily living” or “instrumental activities of daily living.” Continue reading »
I recently discussed the importance of using a power of attorney to protect yourself, your business, and your loved ones. Without a power of attorney, no one – not your spouse, parent, or adult child – has an automatic right to your medical records or can make medical or financial decisions. Your business partner has no automatic right to make business decisions on your behalf.
Yes, small businesses need estate plans. Business estate plans determine what happens if the owner can no longer operate the business due to death or disability. A plan must be in place to address either potentially devastating situation.
Cryptocurrency is a hot topic for business owners and individuals alike. But have you considered the importance of updating your estate plan to include your cryptocurrency? If not, read 
Most small business owners today are aware of the importance of forming a legal entity before beginning their business operations. However, more individuals and families are turning to rental properties as an investment strategy, and they do not necessarily think of themselves as small business owners. But that is exactly what they are. It is critical to ensure that if you or your family own rental or other investment properties, you protect your personal assets from liability by setting up a legal entity to be the owner of the properties.
