Business Archives - Morris Hall, PLLC

Deadline for Annual Reports is Rapidly Approaching

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The deadline for annual reports in Arizona is fast approaching.  Most states or jurisdictions require specific business types to produce said annual report within a specific time period.  Arizona statute requires an annual report be filed for limited liability partnerships and limited liability limited partnerships.  This report is due each year between January 1 and April 30.  Failure to file an annual report can cause the Secretary of State to revoke the Statement of Qualification for the entity.

Please note that Arizona does not require an annual report be filed for general partnerships, limited partnerships or limited liability companies.  If you have a business that requires an annual report to be filed and you have not yet filed it, make sure to get it done prior to the 30th to avoid any negative consequences.  If you would like more information, contact our office today at 888.222.1328.

MHAbout Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

How can I protect my assets and reduce estate taxes?

By | Estate Planning | No Comments

An excellent device, if properly arranged, is a Family Limited Liability Limited Partnership (FLLLP). Converting asset ownership from your individual name to an FLLLP protects your assets from lawsuits and creditors and reduces the value of your estate for estate tax purposes. The FLLLP protects the partners from partnership liability and protects the assets of the partnership from the liabilities of the other partners. Also, when you properly convert your assets to ownership in an FLLLP, the value of the assets is discounted for estate tax purposes, greatly reducing your potential estate taxes. The laws in this area are very complex and are state law specific.  It is essential that you consult with an attorney who keeps abreast of these developments.

For more information and to see how an FLLLP could assist you, please contact our offices at 888.222.1328.

Estate Planning, Attorney, Lawyer, Arrowhead, Prescott, FlagstaffContributed by MH Phoenix, Flagstaff, and Prescott Estate Planning Attorney David T. Eastman.

About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

My Assets Are Protected Inside My Trust, Right?

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There is a belief out there in the world that states that if you have a trust and you put your assets inside a trust, those assets are now protected from creditors. Sorry to be the bearer of bad news, but that is false. A revocable living trust will not protect assets from creditors, legal judgments, or bankruptcy. If they could, I would not have time to write this blog because I'd have a mile-long line of customers wanting to set up a trust! But don't get me wrong, it is still critical for most individuals and/or families to set up a revocable living trust. And there are legitimate ways to protect assets from creditors -- it just won't happen inside a living trust.

A revocable living trust helps to define how you want your assets to be handled should you become incapacitated and how you want those assets distributed when you pass away. However, the trust is an extension of you and is thus subject to lawsuits. Because of the purpose of the trust and the control you are able to exercise over the assets, a creditor can try to access them.

So how can you legitimately protect assets? One way is to create a Limited Liability Company (LLC) with a specific business purpose, such as managing rental properties. By removing the rental properties from your name or from the name of your trust, and by creating a very strong and well-drafted operating agreement for the LLC, assets transferred into the LLC can receive protection from "outside" creditors that come after your personal assets. (The assets outside of the LLC can also be protected from creditors "inside" the LLC, but that will be a blog post for another time.)

Another way to protect your personal assets is to buy an umbrella insurance policy. I recommend you speak with a qualified insurance agent to determine the exact amount that is right for you, but this can be the first line of defense if someone were to ever come after you legally.

Finally, there are trusts out there that do protect assets but they are distinct from the trusts that most people are familiar with. They are trusts for specific purposes, such as holding life insurance, and they contain restrictions over how much control you can have over the assets inside the trust. (And again, that could be another blog post entirely.)

But for our purposes today, please know that this fact alone does not mean you shouldn't get a trust. A trust is still the best way to avoid probate and for your assets to pass to whom you want, when you want, and how you want. Plus, even though public policy does not allow a trust to protect you, if your trust is drafted by Morris Hall, PLLC, the trust can provide asset protection to a surviving spouse and to your beneficiaries. Please call us today to set up a free consultation to discuss how this can work for you.

MH_iphone_splashAbout Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

 

Are LLC Owners Being Taxed Unknowingly?

By | Business Planning, Estate Planning | No Comments

A recent article in the Arizona Republic by Robert Anglen shed some light on obscure taxes that can affect owners of LLCs.  LLCs are often created for asset protection purposes as part of an advanced estate planning portfolio.  Investors or small business owners can acquire property in the name of their LLC.  When properly established, this can shield the asset in question or potentially shield other assets from liability occurring within the LLC.

However, there are potential problems.  For example, using an LLC can trigger a city sales tax.  A small business owner purchases a building through an LLC for asset protection.  He then leases the building to himself.  He never actually pays rent, never generates any additional profits from the ownership of the building, nevertheless a sales tax is charged to the owner of the LLC.  When the tax is not paid, penalties and interest charges can significantly increase the amount owed.

The Arizona State Legislature attempted to address the issue but the solution they crafted did not include LLCs.  While future amendments and clarifications to the law could eliminate the loophole, it certainly illustrates the need for small business owners to know and understand how different planning tools are used and how they may or may not be taxed.  The article by Robert Anglen is quite good and is available at azcentral.com or you can use this link http://www.azcentral.com/business/call12foraction/articles/20121205call-12-obscure-tax-hits-owners-llcs.html.

Attorney, Lawyer, Phoenix, Arrowhead, Estate PlanningContributed by MH Cave Creek Estate Planning Attorney West Hunsaker

About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Protecting your Assets in the Litigious Society we Live in

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Considering that America is the most litigious society in the world, and there are over 18 million lawsuits filed in our court systems every year, it is no wonder that many of my clients are coming in these days wondering how they can protect their assets from some of these unjustified lawsuits.

What can you do to protect your hard earned assets from being taken away in these frivolous lawsuits?  One of the easiest and best things you can do is to create what many consider to be the ultimate protection entity, the Limited Liability Company, or LLC.

An LLC is a form of business, not unlike a corporation or partnership.  But unlike a corporation or partnership it offers many more advantages.  All owners of an LLC are protected from liability caused by the LLC’s activities, as long as the member is not personally liable. In a partnership or sole proprietorship, the general partners and sole proprietor are always liable for the business liabilities.  In a corporation there are filing dues and administrative procedures that must be carried out on an annual basis to keep the corporation in good standing.  In an LLC there are no annual filing dues and the administrative procedures are much more flexible.

The LLC is formed when an attorney prepares the necessary documents and files the LLC with the state.  Upon the LLC being filed, your existing assets are transferred into the LLC in return for a membership interest in the LLC.  The assets in the LLC are now owned by the LLC, instead of by you.  With your membership interest in the LLC and you listed as the manager, you control the assets in the LLC.

The key document that is vital in any LLC is called an operating agreement.  The operating agreement is what gives the LLC all of the asset protection that one is looking for when transferring assets into the LLC.  If the operating agreement is not properly drafted then the statutes of the state you live in is what you are going to rely on to give you the asset protection you are seeking from the LLC.  The statutes only give bare bones protection.  They do not give all of the protections that a good operating agreement can give, which will shield the assets from frivolous lawsuits.

If a creditor is successful in the lawsuit and the operating agreement is set up properly then the most a creditor can receive out of the LLC is something called a charging order.  A charging order is nothing more then a letter from the judge telling the creditor they have the right to take any distributions that a debtor member would otherwise be allowed to take from the LLC. If the operating agreement is drafted properly the charging order is a hallow victory in that the creditor will not be allowed to interfere or manage the assets in the LLC.  Because the creditor will not be allowed to manage the assets in the LLC they cannot force the manager of the LLC to make distributions to its members, thus the creditor receives nothing.

A properly drafted and operated LLC is a formidable deterrent to frivolous lawsuits.  An LLC should never be created to defeat an existing creditor, therefore the sooner you create your LLC, the more peace of mind and protection you and your family will have should you become subject to one of these unjustified lawsuits.

To understand more and to see if an LLC is a good fit for you, call 888.222.1328 to schedule a free consultation with an estate planning attorney.

Estate Planning, Attorney, Lawyer, Arrowhead, Prescott, FlagstaffContributed by Phoenix and Arrowhead Estate Planning Attorney & Partner David T. Eastman

Morris Hall Can Protect You in Today’s Litigious Society:
We live in a litigious society, where over 1 million lawsuits are filed every year in America alone.  Financial predators are looking for ways to take funds from others and often use litigation as their means to do so.  At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you.  We do this through proper and current estate planning techniques.  With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more.  A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family.  Without a living trust, this information will be made public.  For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe.  In New Mexico we serve the areas of Albuquerque, Santa Fe, Las Cruces, Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more.  Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

Arizona and New Mexico Asset Protection through an LLC

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Do you have a second home?  Do you operate a business?  Do you currently have an interest in a S-Corporation?  If you answered “yes” to any of those questions, then you should consider utilizing a Limited Liability Company (or LLC) to provide structure and asset protection for you and your assets.

An LLC is a business entity created under State law.  Both Arizona and New Mexico allow for the formation of LLCs.  By selecting the LLC as your business entity, you are able to take advantage of some of the benefits of both being a partnership and a corporation.  The owner of the LLC (called a “Member”) is afforded the corporate protection of being limited in the liability that he or she may incur, while the partnership benefits include the ability to “pass-through” taxable income to the owner’s tax return (there are several options in selecting the appropriate tax treatment, and will require an individual consultation to determine the best fit).

Each State’s statutory scheme provides for the base-line protections afforded to LLCs.  These are the default rules (i.e. if you do nothing else, you get at least these base-line protections).  However, the key to maximizing the protections that your LLC can provide to you is to have a properly drafted Operating Agreement.

The operating agreement provides additional details on what your LLC allows or does not allow.  When done right, the LLC’s assets are insulated from the outside world and conversely, your personal assets can be insulated from the creditors arising from inside the LLC (e.g. have a rental property inside an LLC, and the tenant slips and falls, sues and wins – that award cannot automatically reach your personal assets).

The attorneys at MH are well versed in the creation of LLCs and how these entities fit within your overall estate plan.  Allow us to review your situation to help determine whether an LLC makes sense for you.  Even if you already have an LLC in place, let us review your documents to determine if you are maximizing your protections.

Why Choose Morris Hall:
You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with MH.  Contact us today at 888.222.1328 to schedule an appointment!

Contributed by MH attorney James P. Plitz

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

No Retirement For Small Business Owners

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Did you realize that one third of all small business owners have not created a retirement plan, such as a 401(k), SEP IRA, Roth IRA or deferred annuity? In fact, many small business owners have not even stopped to consider retirement, either because they are too busy in their endeavors, or because they love their business and haven't considered life after work.

There seem to be a number of mentalities that are causing small business owners to put retirement planning on a back burner. One of the top reasons is that any money earned from the business is already allocated and needed to keep the business running and pay the owner's living expenses. It is especially difficult in our upside-down economy to find extra funds to put toward the future. Many of us are simply trying to get through today.

A second reason for the failure to plan is that many of these business owners are trusting that proceeds from their business will provide for their needs over the full course of their life. While this is a worthy hope, it is not a certainty. We have seen many businesses fail over these past few years. There are no guarantees. What if your business goes under? What if you are injured or incapacitated and can no longer run the business? There are so many factors that could affect your business, making it vital to have a back-up plan where your retirement is concerned.

Some owners have simply avoided setting up a retirement plan because the process seems daunting. These things can easily be overwhelming, but there are a number of excellent advisors that can help direct you in this matter. There are also a myriad number of online resources that can give you excellent guidance at no cost - just make sure that the sources you use are reputable.

The final biggest reason small business owners fail to plan for retirement is simply that they haven't considered it. Many plan to continue running their business until the end of their life. While this is admirable, you may feel differently in 30+ years. In fact, by then, you may be really looking forward to the break. However, if you failed to plan for retirement, you won't have the choice.

Make certain that you plan appropriately for your retirement. Sit down and discover how much money you need to support yourself, and any dependents, and start saving so that you will have enough to cover your needs. It is never too late to start, but don't delay the process any longer. Start planning today so you can have a better tomorrow!

Morris Hall Can Protect You in Today's Litigious Society:

We live in a litigious society, where over 1 million lawsuits are filed every year in America alone. Financial predators are looking for ways to take funds from others and often use litigation as their means to do so. At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you. We do this through proper and current estate planning techniques. With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more. A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family. Without a living trust, this information will be made public. For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe. In New Mexico we serve the areas of Albuquerque, Santa Fe, Las Cruces, Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more. Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!

 

 

 

 

 

Contributed by MH attorney and senior partner, Dan R. Morris

 

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation. 

What Is Your Exit Plan? If You're In Arizona and New Mexico, You Need One!

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I recently read an article in Tucson's Arizona Daily Star about the need for an exit plan. As an Arizona estate planning attorney, I am very familiar with the need for all business owners to plan for the time when they can't, or don't want to, run their businesses.

Mimi, the owner of my favorite Tucson corner café, needs to plan for who will run the café if she were to become seriously injured. Who would Mimi's husband depend on to keep the business profitable while Mimi is recovering?

John, my auto mechanic in Sonoita, should have a plan so that Carl, his business partner, can buy out John's interest in the business when John passes. Will Carl have enough cash to pay for the business? Will Carl have enough cash to hire someone to replace John in the shop?

John and Mimi should do what Tom, my dry cleaner did with his business. Well before Tom wanted to retire, Tom created a buy/sell agreement with his key employees. The agreement provided that if and when Tom wanted to sell his business, he would sell the business at a fair price and terms, determined at the time of the sale by a formula in the buy/sell agreement and by the fair market value of the business at the time of sale. Tom and his key employees ran the business for as long as Tom wanted to be involved, with Tom teaching his key employees how to keep the business successful after Tom left.

When Tom decided it was time to retire, he didn't hesitate to sell his business to his key employees. Since they had already agreed on the terms of the sale, the transfer of the business went as smoothly as the hum of Tom's new sportscar.

So, what is your exit plan? For your business? For your life? If you don't have one, are you going to wait until you are seriously ill, or worse? Better yet, come and see us, the experts at Morris Hall, to talk about your exit plan. But do it now, before it's too late!

About Morris Hall:

At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, powers of attorney, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation. 
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