What Steps Should I Take When I Want To Form An LLC?
Video Summary
What steps do I take when I want to form an LLC? Well, the first thing we need to talk about is, Why are we forming an LLC? Presumably, the purpose of doing this is to try and protect your personal assets from the business liability so that if your business gets sued that they can’t take any of your personal assets.
Now an LLC is different than a – it’s sort of a hybrid between a partnership agreement and a corporation and it does afford the parties limited liability; however, it is a little more complicated than a corporation since you don’t necessarily have officers and directors and they have particular duties.
In an LLC you have managing members or a managing member and that’s all designated under an operating agreement. The operating agreement designates what each party is supposed to do and also it shows who is the ownership interest in an LLC.
Now any number of people that I see come in and say, “Oh, I have an LLC,” and I say, “Well that’s just terrific, can I see your operating agreement?” and their eyes glaze over, roll in the back of their head and they don’t know what I’m talking about. So I say, “Well, who owns that?” “Well, I do,” or they tell me who it is. “Well, where is that,” because that’s what the operating agreement does. It lets you know who owns it. It’s sort of analogous to a corporation whenever you don’t issue any stock.
Well who owns it, you know, if you don’t have any shareholders, well, nobody owns it. So with an LLC it’s fairly complicated. For that reason I suggest that whenever you’re talking about setting up an LLC let’s talk about why you want to set it up and the advantages of an LLC versus a corporation.
So if you have a going concern a corporation is probably much easier to handle and to be in – affords you more liability protection than an LLC, particularly if you are a single member LLC. If you’re the only one interested there’s been several cases that says well, they can get your personal assets or go through the – get the LLC assets for your personal debts.
So before you jump into an LLC or go on-line and set it up I suggest that you might want to think about setting up an appointment and let’s talk about setting up an entity that will accomplish what you want because, if you simply set up a corporation, don’t issue any stocks, well, you may not have afforded yourself any protection from your creditors’ claims, and if the corporation gets sued then you may be personally liable for the assets. So if you have some questions about setting up an LLC or corporation, give me a call at (727) 847-2288.
- Published in LLC's and Corporations, Videos
Do You Understand Your Trust?
Video Summary
Do you understand your trust? I would suggest that probably you understood your trust whenever you signed it, but if you’re quizzed about your trust three or four weeks or certainly a year later, you probably don’t understand it because it’s about 16 pages or longer, and that’s a lot of stuff in it that the lawyer knows about, but you don’t necessarily understand, other than what you remember about the trust, and so I would suggest that you probably don’t understand your trust, but I do suggest that you maybe read it, review it and maybe contact a lawyer to have him review it with you to make sure that it accomplishes everything you would like to have done, particularly as far as whenever you pass away that it goes to who you want it to go to in the manner you want it to go to, and if you have a spouse involved, that the spouse either has flexibility as far as changing the trust after your death or, if you don’t want them to have any flexibility, many times trusts, as well as wills, but particularly with trusts, if they’ve been drafted for eight or ten years and they haven’t been revised, there’s provisions on how they set up an irrevocable trust at your death for tax purposes, and that has some real problems whenever you have an irrevocable trust, particularly for a spouse, which was not giving the spouse any flexibility.
Also, there’s a lot of confusion as to the ability to amend trusts, change joint trusts after one of the joint settlers or grantors of a joint trust passes away. So I urge you to dust off your trust document, look it over, and if you’d like, give me a call and we can sit down and go through your trust. And first I’ll ask you what you’re trying to accomplish; and, two, then we’ll review it to see if it does what you want it to do, and we’ll point out any irregularities or problems with it as far as what it accomplishes.
So if you’d like for me to review your trust, give me a call at 727-847-2288. Thank you.
What Is A Balloon Mortgage?
Video Summary
What is a balloon mortgage? That certainly is a strange word to use, but it is a legally-defined term, and it means a mortgage brand or is a payment that is twice the amount of the regular payments that are paid.
Best way to illustrate this is let’s say that you have a $100,000.00 mortgage, and you set the payments out so that it would be paid out over a period of 30 years. So let’s say the payments are $500.00 a month, and we won’t go into the interest rate, but you pay $500.00 a month for five years, and then the note says it becomes due and payable in five years.
Well, you haven’t paid off the $100,000.00 in the five-year period so after five years you’ll still be owed probably $60 or $70 or $80,000.00 on the $100,000.00, and that’s called the balloon payment.
So that’s the illustration or an example of a balloon payment, which is whenever you have regular periodic payments, and then you have a very large payment that becomes due and payable. Most of your commercial mortgages these days also set up a balloon payment. They spread your mortgage payments out over a 15- or 20-year period, but they say the loan becomes due and payable after three or five years, and certainly if you have investors involved, that can be the case with residential property whenever you have owner financing.
If you use a balloon mortgage on a residential property, and it’s a second mortgage, then the statutes provide that you must have certain bold-faced language at the top of the mortgage and also above the signature page indicating this is a balloon mortgage and setting forth the amount of the balloon payment, and that’s so it’s basic consumer protection type situation so someone can’t say, “Well, oh, I thought I’d have this thing paid off in five years.” Well, if there’s a principal balance above where you sign it, well, you’ve got to sort of be blind in one eye and can’t see out of the other if you can see that the principal balance is not going to be paid off when the loan becomes due and payable since they set forth a balloon payment. There are some penalties if this language is not on the second mortgage on a residential transaction.
So that’s a balloon mortgage. If you have any questions about it, well, give me a call at 727-847-2288. Thank you.
- Published in Real Estate, Videos
What Steps Can I Take To Avoid Probate?
Video Summary
What steps can I take to avoid probate? Well, the quick answers for a lot of lawyers to offer to this is to set up a trust. However, I have a little brochure that I pass out that’s called Simplified Estate Planning without the Necessity of a Trust in Order to Avoid Probate.
So you first have to look at the nature of your assets. For example, if you have a life insurance policy it needs a beneficiary so that doesn’t go through probate ‘cause it’s controlled by the terms of the life insurance policy.
That’s the same that’s true about individual Retirement Accounts or IRAs. You have a designated beneficiary so you don’t have a probate proceeding as far as IRAs, and that can also be said for annuities because the annuity contract will designate who’s to receive the death benefit or the benefits after the initial annuitant passes away.
When we turn to bank accounts, I suggest that you keep the bank accounts in your individual names and designate a payable on death for whomever you would like to receive it upon your death.
So the other designation is In Trust For or ITF account. If you put someone on account as a co-owner, so if you’re by yourself and you put your son or daughter on the account with you, they become a half owner of the account and it could be subject to the claims of their creditors if they get in financial problems or domestic problems, being considered an asset in a divorce proceeding. So I suggest that you simply designate a POD account or an ITF account for the benefit of that child or whoever you’d like to receive it and that will avoid probate.
One of the big sticking points is what do I do about real estate, particularly your home. Well, what I have been doing is to prepare what they call a Life Estate Deed, whereby you convey your property to your child or children or whomever you would like to have it upon your death. However you reserve all rights on the property during your lifetime. You’ve reserved the right to sell the property and retain the assets. Sometimes this is called a Ladybird Deed, and this again avoids probate.
And if you want your assets to be spread out over a period of time, let’s say you need a Special Needs Trust or a Spendthrift Trust for a child or a loved one that you want to care for, then certainly a trust is another way of doing it, although there may be a trust administration involved.
So those are some of the examples of how to avoid probate, is how you title your assets. So if you’re interested in doing that give me a call at 727-847-2288. Thank you.