A revocable trust, often referred to as a living trust, is a legal entity created to hold ownership of an individual’s assets during their lifetime and distribute them to beneficiaries upon their death. The key feature of a revocable trust is that the creator (often called the grantor or settlor) retains the ability to modify or revoke the trust during their lifetime. This means they can add or remove assets, change beneficiaries, or even dissolve the trust altogether if they wish.
An irrevocable trust is a type of trust in which the terms cannot be modified or terminated without the permission of the beneficiaries. Once assets are placed into an irrevocable trust, they are no longer considered the property of the grantor and generally cannot be taken back by the grantor. This is in contrast to a revocable trust, where the grantor retains the ability to modify or revoke the trust. It’s important to note that creating an irrevocable trust involves giving up control and ownership of the assets placed into the trust. Additionally, the tax and legal implications of irrevocable trusts can be complex, so it’s advisable to consult with a legal or financial advisor before creating one.
The main difference between an irrevocable trust agreement and a revocable trust agreement lies in the level of control and flexibility they offer to the grantor (the person creating the trust). There are also estate planning and tax implications, and probate avoidance and privacy to take into consideration.
CONTROL AND FLEXIBILITY
A Revocable Trust provides Control and Flexibility, allowing the grantor to retains control over the assets placed into the trust and can modify or revoke the trust at any time during their lifetime. This includes the ability to change beneficiaries, alter the terms of distribution, or dissolve the trust entirely.
In contrast, an irrevocable trust agreement cannot be modified or revoked by the grantor once it’s established (funded), except under limited circumstances and with the consent of the beneficiaries. The grantor relinquishes control over the assets placed into the trust, which are managed according to the terms outlined in the agreement.
ESTATE PLANNING AND TAX IMPLICATIONS
For estate planning and tax implications, a Revocable Trust typically includes the grantor’s assets in the taxable estate. Since the grantor retains control over the assets, they can still be accessed by creditors and are subject to estate taxes upon the grantor’s death.
In contrast, assets transferred into an irrevocable trust are generally removed from the grantor’s taxable estate, potentially reducing estate taxes. Additionally, depending on the terms of the trust and applicable laws, assets in an irrevocable trust may be protected from creditors and lawsuits.
PROBATE AVOIDANCE AND PRIVACY
For Probate Avoidance and Privacy, both types of trusts can help avoid probate, but irrevocable trusts are typically more effective in this regard because assets held in them are not considered part of the probate estate. Both types of trusts can also provide privacy for the beneficiaries, as the details of the trust and its assets are not typically made public through the probate process.
Overall, the choice between a revocable and an irrevocable trust depends on factors such as the grantor’s goals, estate planning needs, tax considerations, and asset protection objectives.
SUBMIT CONTACT DETAILS BELOW TO DISCUSS YOUR TRUST AND ESTATE PLANNING GOALS TODAY!
An E-2 visa is a nonimmigrant visa that allows individuals from certain treaty countries to enter the United States to establish a business. The E-2 visa is specifically designed for treaty investors and their employees who are seeking to develop and direct their investment enterprise in the United States. The E-2 Visa process is a laborious undertaking and a lengthy process. Spiegel & Utrera, P.A.’sFLAT FEE E-2 VISAservice is complete and fee transparent.
Our staff of attorneys have dealt with many aspects of immigration law, including but not limited to:
Business and Investment Visas: E-2, EB-5, L-1, etc. Employment-Based Visas: H-1B, O-1, TN, etc. Family-Based Visas: K-1, CR-1, IR-1, etc. Permanent Residency and Naturalization
We can help you, family members, friends, and business associates with immigration matters.
Submit your contact details to get a free no-obligation consultation.
Individuals who typically seek E-2 visas include business owners or individuals who wish to establish a new business or invest in an existing enterprise in the United States. E-2 visas can also be granted to investors who are interested in investing a significant amount of capital in a U.S. business with the intention of generating profit. Also, qualified employees of investors who are needed to assist in the development and operation of the investment enterprise in the United States. Additionally, spouses and unmarried children under 21 years of age of treaty investors or employees may accompany or follow the primary visa holder to the United States.
Overall, individuals who want to start or expand a business in the United States and are citizens of countries that have treaties of commerce and navigation with the U.S. are prime candidates for E-2 visas. Our Flat Fee E-2 Visa covers the entirety of the lengthy and time-consuming process to get an E-2 Visa decision. Submit your contact details below to speak with an attorney about our FLAT FEE E-2 VISA process.
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When you are ready to move forward with your next real estate investment, you may want to consider having our firm CREATE a new or REVIEW your current Limited Liability Company (LLC) and Operating Agreement to make sure you limit your personal assets from liability in the event of litigation. A properly structured Real Estate LLC with an operating agreement allows the owner to buy, sell, or rent their property without the worry of their personal assets being put into jeopardy. LLCs offer strong benefits aside from just liability protection, such as pass-through taxation, and flexibility in business structure. To further protect all your assets, it may be advised to keep a single investment in it’s own Real Estate LLC entity.
Purchasing real estate under the umbrella of an LLC provides the investor with much needed protection for themselves. The protection alone is pivotal for investors to reduce the amount of risk associated with real estate investing. This is crucial for investors to shield their finances from potential legal actions. For instance, if you or a member fail to make payments on a loan for the property and the debt is in the LLC’s name, you would not have to risk wiping out your personal assets to satisfy the remaining loan and creditors will not be able to seek payment from other members in the LLC.
A Limited Liability Company (LLC) is known as a ‘pass through entity’ because they are exempt from paying corporate taxes. Meaning all proceeds of the company are used to pay debts and are then distributed accordingly to its members to pay individual taxes on. Members can then write off the LLC in their taxes as a profit or loss in their personal income. Additionally, if your LLC is used for managing rental properties, you may be eligible for an additional personal income tax deduction. When deciding on the distribution of the companies proceeds, LLCs offer a flexible business structure to apportion appropriately.
To properly structure an LLC, investors use what is known as an Operating Agreement.
Operating Agreements allow the company to set, for each member, a framework to accommodate for each other and to distribute ownership. Setting up operating agreements is only required depending on the state in which the entity has been formed. These can be referenced when needing to resolve problems or disputes that could occur within the company. Unlike Operating Agreements, Articles of Organization must be filed to legally establish the entity with the state. Together they are the framework for your Real Estate LLC.
While purchasing real estate without the protective vail of a limited liability company is legally possible it is deemed unwise. Investors might find that the strategic choice of real estate management through an LLC is a crucial step into the real estate market. With the major advantage of highly mitigating financial risk, tax advantages and asset protection investors can leverage their LLC to venture through the unprecedented world of real estate investing.
CREATE OR REVIEW YOUR REAL ESTATE LLC AND OPERATING AGREEMENT
A Transfer on Death (TOD) designation for a business is a must if you have more than one member or shareholder. The Transfer on Death is a mechanism that allows the seamless transfer of ownership or control of a business interest to a designated individual upon the death of the current owner. This is a way to plan for the succession of a business without the need for probate.
For example, if a spouse untimely passes away, the Transfer on Death can designate the surviving spouse to receive all of the decease ownership in the business.
The specifics of a Transfer on Death for a business can vary depending on the jurisdiction and the type of business entity. Here are a few common scenarios:
Transfer on Death for Business Interests:
For sole proprietorships or partnerships, the business owner can designate a specific individual or individuals as beneficiaries who will receive the business interest upon the owner’s death.
Transfer on Death for Corporate Stock:
In the case of a corporation, an individual can specify beneficiaries for their shares of stock through a Transfer on Death designation. This allows the designated individuals to inherit the stock outside of probate.
For an LLC, the owner can often designate beneficiaries for their membership interests using a similar TOD designation. It’s crucial to work with legal and financial professionals when setting up a Transfer on Death for a business, as the structure and requirements can vary based on the business type and local laws. Additionally, businesses often have complex ownership structures and contractual agreements that need careful consideration in the estate planning process.
In some cases, a comprehensive business succession plan may involve a combination of tools, such as a Buy-Sell Agreement, a will, or even the establishment of a business trust. These decisions depend on the unique characteristics of the business and the goals of the business owner.
Please submit your contact details below to discuss the Transfer on Death designation for your Corporation or LLC.
Some entrepreneurs opt for an easier business model like a sole proprietorship due to its simplicity. However, as a business finds itself growing, they may find it beneficial to go from a sole proprietorship to an LLC or Corporation.
Deciding which business structure to choose plays a significant role when using the entity for anonymity, asset protection, and tax savings.
LIMITED LIABILITY PROTECTION
One reason a business would choose to convert to an LLC or Corporation would be due to the liability protection they offer. Both LLC and Corporations offer a cloak of protection that separate one’s personal assets with the businesses. In essence, if the business under goes financial or legal troubles, personal assets can’t be targeted. Serving as a sort of veil of protection for the business owners’ personal assets. This sort of protection is critical for a business owners own security.
FINANCIAL STRUCTURE
Now, both LLCs and Corporations offer a better financial structure for your business because of the flexibility they offer over a Sole Proprietorship. Corporations have the option to choose between C-Type or S-Type Corporations depending on the circumstances. While LLCs have a pass-through option for the business, allowing the taxes to flow through to the owners’ personal taxes, simplifying the tax process.
PERPETUAL EXISCTENCE
LLC’s and Corporations also have legal requirements and formalities that need to be upheld on an annual basis, like meetings and maintaining proper reports. Even though this might come off as cumbersome to some, this proves to give clarity on the path to success. Unlike sole proprietorships or partnerships which are bound to the life of the owner, Corporations and LLC’s can be passed on to the next generation of owners perpetually. Allowing for clearer business structures, and the ability to draft legal documents. This allows businesses to plan for a solid and financially successful future.
Converting to either an LLC or Corporation should be considered a strategic move for sole proprietorships. This could bring many benefits to your business by bringing tax benefits, liability protection and an opportunity for growth. However, the decision to convert should be made with careful consideration to the specifics of each other’s situation.
Spiegel & Utrera, P.A. offers free legal advice to help you start the process of converting your sole proprietorship into an LLC or Corporation. Submit a request today for immediate legal assistance.
Please submit your contact details below for a FREE consultation on CONVERTING your sole proprietorship to a Corporation or LLC.
Over the years, just like updates, improvements, and filings for your business are required, an upgrade of your Articles of Incorporation or Certificate of Organization may be required as well. If you used our firm to form your company, you may already have comprehensive incorporation or articles of organization documents. However, as time goes on and changes occur in your business, a second revision or upgrade to the articles or certificate of organization may be required. Go here to request your Articles of Incorporation 2.0 Upgrade.
Articles of incorporation or certificate of organization serve as the foundational documents for your entity. They outline the name of the corporation, structure of your entity, effective date of formation, purpose, registered agent, principal office, duration, authorized shares, board of directors information, incorporator information and other clauses to protect you and your business.
SHOULD YOU UPGRADE YOUR ARTICLES OF INCORPORATION OR CERTIFICATE OF ORGANIZATION?
Upon review of your Articles of Incorporation or Certificate of Organization, it may be that your document is missing restrictions on the transfer of shares, missing indemnification clauses, and missing special voting rights provisions. Amending your documents to include the ladder mentioned, is a significant upgrade to protect your business, members and directors.
Additionally, the entity will want to have it’s company documents upgraded prior to there being a need for another party or investor to review these documents. It’s important to note that while (in some states) articles of incorporation are a publicly accessible document, certain details and information about the corporation can also be found in other documents, such as annual reports, bylaws, and filings with regulatory agencies. When sharing your articles of incorporation, it’s a good practice to provide complete and accurate company documents to ensure accurate representation of your corporation’s structure and purpose. It’s good practice to keep all your company documents in one place and keep them handy and organized in your company book and binder.
Here are just a few items that may trigger an upgrade to your Articles of Incorporation:
Change in Company Name: If your business decides to change its legal name, you will typically need to upgrade the Articles of Incorporation to reflect this change.
Change in Business Purpose: If there is a significant change in the primary purpose or activities of your business, you may need to upgrade the Articles of Incorporation to reflect the new business purpose.
Change in Share Structure: Any changes to the authorized shares, classes of shares, or the rights and privileges associated with those shares may require an upgrade with an amendment to the Articles of Incorporation.
Change in Directors or Officers: If there is a change in the board of directors or officers of your business, you may need to upgrade the Articles of Incorporation to reflect the new individuals in these positions.
Amendments to Governing Documents: If you wish to make other amendments to the governing documents of your corporation, such as changing the bylaws, you may need to upgrade the Articles of Incorporation to reflect these changes.
Conversion or Merger: If your business undergoes a merger, consolidation, or conversion into a different type of entity, you may need to upgrade the Articles of Incorporation to reflect these structural changes.
WHO MAY NEED TO REVIEW YOUR ARTICLES OR CERTIFICATE OF ORGANIZATION
Government Authorities: State and local government agencies, such as the Secretary of State’s office or the relevant state’s corporate regulatory body, will have access to your Articles of Incorporation. These agencies use this document to officially recognize and register your corporation.
Internal Use: Members of the corporation, such as shareholders, directors, and officers, often need to access the Articles of Incorporation to understand the organization’s legal structure, purpose, and governance provisions.
Lenders and Financial Institutions: When seeking loans or financing, banks and lenders may request a copy of your Articles of Incorporation to verify your business’s legal existence and structure.
Investors: Potential investors and venture capitalists may request or review the Articles of Incorporation to understand the company’s structure, share classes, and any special rights associated with shares.
Business Partners: When entering into contracts or agreements with other businesses, your partners or vendors may request a copy of the Articles of Incorporation to ensure that they are dealing with a legitimate legal entity.
Legal Counsel: Your corporate attorney or legal advisors may need access to the Articles of Incorporation when providing legal advice or making amendments to the document.
Regulatory Agencies: Depending on your industry, specific regulatory agencies or bodies overseeing your business may require access to your Articles of Incorporation to ensure compliance with industry-specific regulations.
Shareholders or Members: Shareholders and members may request copies of the Articles of Incorporation when participating in corporate governance decisions or to understand the company’s governing rules and structure.
Courts and Litigation: In the event of legal disputes or litigation, courts may require access to the Articles of Incorporation to understand the corporation’s legal structure and relevant details.
Prospective Buyers: If you are considering selling your business, potential buyers may request or review your Articles of Incorporation to understand the company’s legal and financial standing.
Before you purchase a business, you have to ask your self the following questions:
How do I find out what a business is worth?
How can the sellers client list benefit you?
Can I get a line of credit to help me with the business?
Lets explore some of these questions, and hopefully get you into your business with a great deal of confidence and a very large profit. Spiegel & Utrera can help guide you with the purchase and Start Your Business Today.
How do I find out what the business is worth?
So, what is a business worth? That question is only answerable by you. A business should be work a year’s profit. Can you operate that business and make that income? What are your abilities to either sell the yearly estimated profit or perhaps more? You would actually have to do some investigating to find out how the seller has been operating their business. Does the business come with a client list? Does the purchase include the equipment in the business? The equipment is a good asset, but it has to be usable What is it worth today?
How can the sellers client list benefit you?
If the seller has a client list, this can be valuable. The client list will enable you to reach out to each client ans assure them that their level of service will continue and get better. This client list has many familiar users who can also spread the word about the new owner and help promote your business by word-of-mouth.
How can I get a line of credit toward the business?
Purchasing a business and registering it as yours can potentially open the floor for a business line of credit. With a healthy client list, business model and hard work it should be easy enough to obtain the line of credit for your new business
ARE YOU READY TO START YOUR BUSINESS?
INCORPORATE TODAY AT WWW.AMERILAWYER.COM
Not Ready? Have More Questions?
If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have business related questions, call (800) 734-9900 or ClubAssist@AmeriLawyer.com for assistance. Remember, as a member of the General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.
Spiegel & Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the United States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We will assist you with Incorporation Service, Trademarks, Copyrights, Estate Planning, Legal Counsel, Wills,Trusts, Agreements & Leases, Corporate & Company
How can we create our dream business from a simple hobby?
Should we start an S Corp or LLC? Here are four things to consider when making your hobby your business: what is an S corp or LLC, the difference between an independent contractor and and employee, hiring employees for full-time or part-time, reviewing a Non-compete agreement as it relates to right to work states, and most important; choosing S Corp or LLC .
So many times we become great at a hobby, and a friend or even a new acquaintance will ask you that question heard all too often; “Why don’t you go into business?” “You are so good at this.” It could be anything, mechanic, photographer, baker, personal trainer or hair dresser. Did you know that the majority of businesses today started from that question? A poor boy, who’s life had no meaning other than drawing cartoons for the local paper became one of the most noted business owners in the world; Walt Disney. “If you dream it, you can do it.”- Walter E. Disney.
What Type of Business Should I Form?
S Corporation (S Corp) or a Limited Liability Company (LLC)?
Lets say your hobby is working on cars. You have been fixing cars since you were 16 in your parents’ driveway and now an opportunity is knocking on your door. Your friend has an open garage next to a grocery store that you can lease for a great price. You have some tools, and you know in your heart that you could make this hobby a operational business. Should you open this business as an S Corp or LLC?
First, you need to decide what each type of entity could do for your business. What is an S Corp? What is an LLC? Are there more benefits to one entity than the other?
What is the Difference Between S Corp or LLC?
What’s a Subchapter S Corporation?
At the state level, it’s filed as a “plain vanilla” corporation, but if it meets certain requirements and elects to be treated as a “small business corporation,” at the federal level it can enjoy distinct tax benefits.
The Subchapter S Corporation is an attractive form of doing business because it combines the business and legal characteristics of a corporation with many of the income tax characteristics of a partnership. For flow-through of profits and losses to the owners, the Subchapter S Corporation is treated in a manner similar to a partnership. For other purposes, such as limited liability, distributions, redemptions and reorganizations, the Subchapter S Corporation is treated much like a regular corporation.
What are the tax benefits of a Subchapter S Corporation?
A regular Corporation is subject to federal and Florida Corporate Income Taxes. Therefore, profits are taxed first on the corporate level and then again at the individual level of the shareholders to whom the profits are distributed.
This double taxation could result in a combined taxation rate of 70% or higher! A Sub-Chapter S Corporation is exempt from federal and Florida corporate Income Tax, so that the earnings of the Corporation flow directly to the owners.
What are the requirements of a “small business corporation?” A small business corporation is a domestic corporation that:
Is not an ineligible corporation (such as a bank, insurance company, possessions corporation or domestic international sales corporation);
Does not have more than 100 shareholders (spouses and families are now counted as one shareholder);
Does not have shareholders other than individuals, estates, certain trusts, or certain tax-exempt organizations;
Has no nonresident alien shareholders; and
Does not have more than one class of stock (i.e., has only common stock, not both common and preferred).
What is a Limited Liability Company?
The Limited Liability Company (“LLC”) is a hybrid entity that is very flexible and, depending on how many owners (known as “Members”) and what such Members elect to do, may be taxed as a partnership or corporation, if it has multiple Members, or as a sole proprietorship, if it has only one member, while providing limited liability protection for all of its Members.
For federal tax purposes, an LLC, like a partnership or sole proprietorship, is a pass-through entity; thus, its income and losses are taxed only at the member level. However, all members of an LLC, like the shareholders of an S corporation, have limited liability for the debts and claims against the LLC. No member will be burdened with the personal liability
Decisions; Decisions!
You have decided that this is going to be your own business. With out question, you are going to be the business’s sole proprietor. You’re not really sure if you will be able to create the business with the limited resources you are currently holding. To incorporate your business as an S Corp would be an ideal choice. Limiting your own personal liability is your first priority. By Creating your corporation, you have taken the responsibility of your business off of you and your family. “Your Car Shop” is its own entity now.
Now that “Your Car Shop” is alive, you have access to all the benefits that a business provides. This means that investors who might not have otherwise been interested are now acknowledging your business. You are now eligible for that line of credit that will help your business get off the ground and working. Tax breaks are another one of the many benefits that your new company will be privy to. If something happens to you or you wish to retire the business you are able to transfer the business to whom ever, or even sell the business without having the business expenses being forced upon you or your family.
When you’re ready to form an S Corp or LLC; we can help! Simply visit www.AmeriLawyer.com to get started.
What types of workers should I hire?
Hiring an employee or an independent contractor.
A big aspect of running a business is knowing that your super powers end at “human.” For this reason, it is likely that you will need to hire employees to help run your business. What kind of employee are you looking for? If you know that winter is coming and “Your Car Shop” specializes in snow tires, you may want to hire some additional employees for the winter season.
Lets define an employee and an independent contractor. If you direct the manner in the means of the work; they are employees. You, the business owner, instruct the employee as to the time they come in, how they conduct their everyday work, and when they can take a break or a day off. The independent contractor can be given a time to come in to work. However, the business owner does not give specific instructions as to how they preform the work or complete their work. The independent contractor does not have tax withheld from their pay, nor do they receive company benefits included with their employment.
It is in good advice that the business owner first has a written agreement with and places each employee or the independent contractor on payroll and shows that they are accounted for. If the employee gets hurt on the job, reports their injury and they are not listed on your payroll, you may be flagged for investigation. This may mean that you would need to seek legal representation, and possibly lose a lot more that just a business.
We can help you create your employment or independent contractor agreement on our website www.amerilawyer.com
How does a non-compete agreement work?
Can I Be Sued for Creating My Own Business?
It is safe to say, that many people find friends or associates because they have a common interest. You are aware that your company, “Your Car Shop,” is the same nature of business as your friend”s garage called, “The Car Shop Down Block.” You once worked as an independent contractor for the owner of “The Car Shop Down the Block.” When you started working in his garage you signed an agreement that assured him that you would not open another business like his for one year after you terminate your employment with him. Its not like you knew an opportunity was going to open up this quickly. As a matter of fact, you probably quit so that you could pursue the new business.
Can your friend sue you for opening “Your Car Shop” a couple months after terminating your employment? The nature of a non-compete agreement is so restrictive that often times they are not enforceable. It would be suggestible to seek legal advice on your specific case. In general, all agreements that restrain a trade or work are illegal. Please keep in mind that there may be some states that allow exceptions. To create the exception, the business owner would have to request a judge to determine the details of the contract. The judge then rules on a reasonable duration of the contract, and the type of restricted activity.
Plan Your Work and Work Your Plan
“Your Car Shop” is on its way to great things. It takes a lot of hard work and dedication to start your own corporation. There are so many avenues that you can travel with your business. In order to keep it on track, you have to stay focused and market your business correctly. Market your business well and don’t forget to, “Plan your work, and work your plan.”
Listen to Our Radio Show
You can also listen to our radio show episode for complete conversation on “Hobbies Becoming a Business” by viewing the video below. Please visit our YouTube Channel for 20 additional episodes of valuable insight on “How to Start, Expand, Buy or Sell Your Business”.
Not Ready? Have More Questions?
If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have business related questions, call (800) 734-9900 or ClubAssist@AmeriLawyer.com for assistance. Remember, as a member of the General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.
Our staff of attorneys have dealt with many aspects of immigration law, including but not limited to:
