June 1

Simply put, a contract is any written or spoken agreement between two or more parties designed to produce a legally enforceable outcome. If you own a business, you should use a written contract for anyone you are doing business with, such as vendors, employees and consultants.

While a contract sounds simple, that’s not the case. Drafting a contract on your own is a sure fire way to guarantee legal problems in the future. Not convinced? Consider the following:

  1. The Laws In Every State Are Different

    The rules governing contracts vary from state to state. If you draw up a contract that does not comply with the laws of the state where you are doing business, you may find that the contract will not be enforced as you expected.

  2. Essential Elements Can Easily Be Omitted

    Every contract must have an “offer,” an “acceptance” and some form of “consideration.” That’s just the tip of the iceberg. There should also be clauses for selecting the state laws that govern enforcement of the contract and for indemnifying a party for certain acts of the other party. The clauses drafted into the contract are key components that need to be determined with the advice of an attorney.

  3. Termination

    Every contract should include a plan for terminating the relationship. For example, will it be terminated by agreement of the parties or does it terminate automatically? Should renewal terms be included in the contract? What happens if it terminates due to breach of the contract terms? Will compensation be due? Those are just a few of the many questions you will need to discuss with your attorney when drawing up a contract.

  4. Breach of Contract

    If a breach of the contract should occur, you may want to include terms that allow the breaching party to “cure” the breach before taking legal action. If the breach is such that it becomes necessary to take legal action, it will likely be expensive to litigate. Thus, it may be important to talk to your attorney about perhaps including a mediation or arbitration clause.

  5. Protecting Your Assets

    If your company deals with proprietary information or is developing a new product, it is important to include non-compete and confidentiality clauses. If these clauses are not present, an employee or contractor could use your hard work to assist another company to develop a similar product or start a competing business.

These are just a few of the considerations involved when drawing up a contract. While it may initially seem cheaper to go it alone, legal disputes are costly and can easily exceed any upfront costs you will pay by seeking the advice of an attorney licensed in your state.

For more information on writing a business contract contact us today for a free consultation!

May 4

If you’ve been putting off creating a will, you’re not alone. While many people find it uncomfortable to think about creating a will, doing so is necessary to ensure your wishes are carried out and loved ones are cared for after you’re gone.

Before visiting an attorney to draw up a will, here are a few things you should consider.

1. What are your estate planning goals?

Estate planning is the procedure by which you arrange for the disposal of your assets after death. It can eliminate uncertainties, streamline the probate process and ensure your assets go to the heirs of your choosing.

Estate planning may include the use of a will or a will with a trust. If you don’t own a business or real estate outside of your home state or have minor children, then a will may suffice. An estate planning attorney can help you figure out what you need.

2. List Your Assets

Before meeting with an estate planning attorney, list your assets and debts.

Do you own a home and is there a mortgage on the home?
Whose name(s) are on the deed to the home?
Do you have retirement accounts or brokerage accounts?
Are there beneficiaries on the accounts or are the accounts held jointly with your spouse?

Be sure to gather all relevant paperwork from bank and brokerage accounts, life insurance policies, real estate, cars, stocks, jewelry, paintings and anything else of value.

3. Choose someone to carry out your wishes

You will need to name an executor of your will. Your executor is the person who will carry out your wishes and see that your assets are disposed of in the manner you have requested. If you’re married, your executor is often your spouse. But be ready to name an alternative person in case your first choice is unable to serve.

It’s very important to talk to the person you want to be your executor about taking on the responsibility beforehand. If you have minor children, decide if your executor will also be their guardian or if you need to name someone else. Don’t forget to consider how pets will be cared for and if you want to set aside money for their care.

4. Specific Bequests

If you have items like a wedding ring or other keepsakes you want to go to specific people, make a list to include in your will. This holds true for charitable gifts and any college funds you might want to set up for loved ones.

5. Don’t Go It Alone

You may think writing a will is easy and can be done using an online company or computer software. But if a mistake is made, your estate may be tied up in probate court and can end up costing more than was saved by not seeing an attorney. Attorneys know the specific laws of your state and the right questions to ask to make sure your goals are achieved.

For more information on writing a will contact us today!

April 22

Wills, trusts, powers of attorney and advanced healthcare directives—all are components of what is known as estate planning.

While estate planning may not be something you want to think about, having a solid estate plan in place ensures that your loved ones will be taken care of after you are gone. It also helps to minimize probate costs and estate taxes.

Because every person’s estate planning needs will be different, it’s important to seek the advice of a lawyer. An attorney can let you know if a will is all you will need or if a multi-pronged approach is necessary.

If you’re ready to embark on estate planning, here are five important considerations.

1. What Is Your Ultimate Goal?

Your estate planning goals will vary depending on whether you are married, have children and own a home and/or a business. A more elaborate estate plan will also be necessary if you have extensive assets. If you have minor children, a business or estate tax concerns, a trust may be the best bet; in other cases a will may suffice.

2. Assign & Review Beneficiaries

Make sure you have assigned beneficiaries for all financial assets including Life Insurance and Tax-deferred Retirement Accounts. You can also designate your bank or stock accounts as transfer or payable on death. Exercise additional care if a trust is the designated beneficiary of a retirement plan to allow the beneficiary to continue deferring tax recognition. Review your beneficiaries any time you change jobs or experience life-changing events such as a divorce or death in the family.

3. Identify Special Bequests of Non-monetary Assets

Be sure to assign beneficiaries for things such as your car and/or jewelry.

4. Appoint a Person to Carry Out Your Wishes

Carefully select the person you would like to serve as executor of your will or your trustee. If you have minor children, you may need to appoint a guardian. Then draw up an advanced healthcare directive and financial power of attorney. Both are key in the event you become incapacitated.

5. Address Potential Tax Issues

If estate taxes are a concern, implement annual gifting to your beneficiaries. If the goal is to make charitable contributions, consider using taxable assets such as IRAs.

For more information on estate planning contact us today!

February 5

What are my obligations under the Affordable Care Act (ACA)?

The requirements under the Affordable Care Act (ACA), commonly referred to as Obamacare, went into effect on January 1, 2014.  ACA requires all U.S. citizens (and certain non U.S. citizens) meet the requirement to carry “minimum essential coverage” for health care unless they had a “qualifying exemption”.

When filing your 2014 taxes you will report for each month, whether you and your dependents carried qualifying health care coverage or had a qualifying exemption.  If neither requirement was met, you will be assessed and must pay a shared responsibility payment for each month the requirement was not met.

What is “minimum essential coverage”?

A health care plan or arrangement specifically identified under the law as providing minimum essential coverage, including:

  • Government sponsored programs like Medicare Part A, Medicare Advantage, most Medicaid, TRICARE and CHIP programs, and comprehensive health care coverage for veterans;
  • Employer-sponsored group health plans (including self-insured programs);
  • Qualified insurance obtained through the Healthcare marketplace or through individual plans purchased from an insurance company;
  • Grandfathered health plans (plans in existence prior to ACA’s enactment that have not changed since its enactment); and
  • Other plans or programs that the Department of Health and Human Services has recognized as minimum essential coverage.

For more information on whether your plan qualifies, go to http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Minimum-Essential-Coverage.

What is a “qualifying exemption”?

Some individuals may qualify for an exemption because of:

If you believe that you or your dependents qualify for an exemption, you should apply as soon as possible.  Even if you failed to apply for an exemption if you believe that you may qualify you should inform your tax professional.

How will I report compliance with ACA on my 2014 tax return?

You will report for each month in 2014 that you and every dependent on your return carried qualifying coverage or had a qualifying exemption.  If you obtained coverage during a month, the law considers you to have coverage for the entire month.

  • Qualifying Coverage for the Entire Year: If you and your dependents had qualifying coverage every month in 2014, you simply check the box on Form 1040, 1040A or 1040EZ indicating full-year coverage.
  • Coverage Obtained Through the Healthcare Marketplace:  If your coverage was obtained through the Healthcare Marketplace and you received a subsidy, you will receive Form 1095-A reporting the subsidy amount.  This subsidy must be reported on your tax return or the processing of your return may be delayed. If you received a subsidy, your actual household income on the 2014 return will be compared to the projected household income you entered when applying for healthcare coverage.  If actual household income was less than projected income, you are eligible for an additional subsidy.  If actual income was more, you are required to repay the excess subsidy you received.
  • Qualifying Exemption: If you had a qualifying exemption every month in the year, you must claim this exemption on Form 8965 and file it with your tax return.
  • No Coverage or Part-Year Coverage: If you had no coverage or coverage for just part of the year, you must calculate your shared responsibility payment on Form 8965 and file it with the tax return.  The shared responsibility payment reduces any refund you are due on the return.  If no refund is due, the shared responsibility payment will be added to the tax you owe on the return.

How is the shared responsibility payment calculated?

For 2014, the shared responsibility payment is calculated as:

  • The greater of:

Percentage of Income:  1% of your household income that is above the tax return filing threshold for your
filing status;  or

Flat Dollar Amounts: Your family’s flat dollar amount, which is $95 per adult and $47.50 per child under the
age of 18, limited to a family maximum of $285.

  • Maximum Cap: the maximum amount owed is capped at the national average cost of a bronze level health plan available through the Marketplace. In 2014, this was $204 per month per individual or $1,020 per month for a family of five.

For example, a married couple with three children under the age of 18 with a   household income of $160,000, and no coverage or qualifying exemption for the entire year would pay $1,397 because the Percentage of Income is greater than the Flat Dollar Amount but is less than the Maximum Cap.

The Percentage of Income and Flat Dollar Amounts increase each year.  In 2015, the percentage is 2% and flat dollar amounts are $325 per adult and $162.50 per child.  In 2016, the percentage of income is 2.5% and the flat dollar amounts are $695 per adult and $347.50 per child.  After 2016, these figures will be increased for inflation.

For questions regarding the Affordable Care Act and how it affects you and your business please contact Terri Brunsdon, CPA, Esq., at 330-374-1166.

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