February 21

U.S. Supreme Court decisions have given same-sex married couples the same rights and privileges as opposite-sex married couples. If you’re married or on your way to the altar, you’ll want to sort through the financial implications and potential opportunities you have.

  1. Evaluate your employee benefits
    Once you’re married, you may want to coordinate workplace benefits with your spouse. Start by contacting your employer’s human resource department in order to evaluate the benefits that are available to you. For example, you may want to enroll your spouse in your health and dental plans, or cancel your own coverage if you opt for coverage under your spouse’s plan. If your employer offers voluntary group life insurance coverage for your spouse, you may now want to consider purchasing it. You may also be able to help cover your spouse’s health insurance expenses through contributions to a flexible spending account or health savings account.Normally you can make benefit changes only during your employer’s annual open enrollment period, but under IRS guidelines there’s an exception for certain qualifying events, including marriage. However, you have a limited window (30 days) to make eligible coverage changes. If you don’t make these changes within this period, you’ll need to wait until the next open enrollment season.Your company’s human resource department can provide guidance about other information you’ll need to update. For example, you may need to report name and address changes, and update contact information and beneficiary designations for your life insurance, retirement plan, and other benefit plans.
  2. Take a look at your income taxes
    Since tax year 2013 (after the Supreme Court’s Windsor decision), all same-sex married couples have been required to choose either “married filing jointly” or “married filing separately” when filing their federal income tax returns. But until the Obergefell decision in June 2015, states that did not recognize the marriages of same-sex couples did not allow them to file their state income tax returns jointly. As of tax year 2015, all married couples must file both their federal and state income tax returns as married (jointly or separately).If you were legally married before the Windsor decision and thus had to file your taxes as single, you might consider amending your tax returns to see if doing so would be advantageous. You generally have three years from the date you filed your federal tax return or two years after the date you paid the tax due (whichever is later) to amend your return. This means you may be able to amend 2012 returns until as late as October 17, 2016, depending on when you filed your 2012 return. If you lived in a state that did not recognize your marriage until Obergefell, you may also be able to amend state income tax returns for prior years if the time period for doing so has not expired–check your state’s laws.If you and your spouse both work, keep in mind that you may need to adjust your income tax withholding to account for circumstances that may affect your overall tax liability. For example, now that you’re married, you may be eligible for new tax deductions or credits, or you may end up in a higher tax bracket based on your combined income. You can make any necessary adjustments by completing updated tax forms, such as a new Form W-4.

    Talk to a tax professional for help with your particular situation. For more information about withholding and other tax issues, visit irs.gov.

  3. Consider your life and disability insurance needs
    Take a new look at your insurance needs to make sure that you have the right types and amounts of coverage. Once you’re married, you may find that you and your spouse are financially dependent on each other. Having adequate life and disability insurance can help ensure that your family’s financial needs will be taken care of if something should happen to you.
  4. Revisit your retirement plans
    Marriage will affect your retirement goals and income needs, so it’s a good idea to have an honest discussion about your finances and expectations for the future. Do you and your spouse share the same retirement vision? Do you have a target retirement date in mind? How much have you saved? You may have been planning separately, but now you may need to make joint decisions about retirement.You may need to re-evaluate your retirement savings options. Are either of you covered by a defined benefit pension plan? If so, make sure you understand any additional benefits and payment options available to married taxpayers. If you’re covered by an employer-sponsored defined contribution plan such as a 401(k) or 403(b) plan, does it make sense to direct more of your money to one plan, based on your retirement goals, investing options, and the availability of an employer match?You may also need to make adjustments if you’re contributing to an IRA, because different rules and limits apply to married couples. For example, if you’ve been contributing to a Roth IRA, you’ll need to determine whether you’re still eligible to make contributions. This will depend on the combined income of you and your spouse. Or if you’re filing a joint tax return, you may now have the opportunity to contribute to a spousal IRA, even if one spouse isn’t working. Similarly, if you’ve been contributing to a traditional IRA, your ability to deduct those contributions may be limited, depending on your combined income and whether either of you is covered by an employer retirement plan.

    You’ll also want to review beneficiary designations for all of your retirement plans to make sure they reflect your marital status. Keep in mind that your spouse will generally be eligible for survivor benefits from a defined benefit plan or defined contribution plan and must consent in writing if you plan to name someone else as beneficiary.

  5. Learn more about Social Security
    Social Security is an important source of income for most individuals. When you’re single, you’re only eligible for certain benefits based on your own Social Security record, but after you marry you may also be eligible for Social Security benefits based on your spouse’s earnings record. These include survivor benefits and spousal retirement and disability benefits.If you’re still deciding when to marry, keep in mind that these eligibility requirements include a length of marriage requirement. For example, you generally need to be legally married for at least nine months for your spouse to qualify for survivor benefits (unless an exception applies) and twelve months for your spouse to qualify for spousal retirement and disability benefits.The Social Security Administration (SSA) has announced that it will treat same-sex married couples the same as opposite-sex married couples when determining eligibility for benefits. This means that all couples (even those who were living in former nonrecognition states) may apply for Social Security spousal and survivor benefits. If you were previously denied benefits, you should contact the SSA as soon as possible for further guidance.

    For more information, visit the Social Security Administration’s website, ssa.gov. If you have questions about how marriage may affect your claim call (800) 772-1213, or contact your local Social Security office.

  6. Rethink your estate plan
    Consider reviewing your estate planning goals, strategies, and documents with an estate planning attorney to determine whether changes are needed.Using the unlimited marital deduction, married couples can leave an unlimited amount of assets to the surviving spouse, if the spouse is a U.S. citizen. This means the surviving spouse may inherit assets without owing federal estate taxes. Spouses may also make gifts or transfer property to each other without paying federal gift or income taxes, and generally pass any unused estate tax exemption to the surviving spouse. If you previously purchased life insurance to cover estate taxes, you should determine if it is still needed.

To protect your spouse and other loved ones, make sure your documents are up-to-date, including your will and durable power of attorney. And to help make sure your wishes are followed in the event of a medical emergency or incapacity, you may want to have health-care directives in place that will allow your spouse to make medical decisions on your behalf.

July 18

So you’ve decided to open your own business. Making the decision is the first step. Now you need to figure out how to form your business.

You’ll have to address everything from your business name to how your operation will be set up, i.e., sole proprietorship, limited liability company or corporation. Your choice will have differing legal and tax ramifications.

That’s why it’s important to contact a qualified business and tax attorney who can explain the legal and tax differences for each business type.

  1. Naming Your Business
    When choosing a business name, the first step is to go to the Secretary of State business records in the state where the business will operate to find out if the name is available. Next, do some research with the federal patent and trademark office to confirm the name is not registered. Finally, search a domain name registry to see if the URL name you want to use for your website is available.
  2. Forming Your Business
    There are several options for forming your business. For the purposes of this blog, we will only discuss the following:
    • Sole Proprietorship: If you form your business by simply registering a tradename or fictitious name then you are operating as a sole proprietorship. This means that your business is not legally separated from you. Thus, your company’s creditors can make claims against your personal assets.

      The income and expenses from your business must be included on your personal tax return using a Schedule C and you’ll have to pay income tax and self-employment tax on all your annual business earnings.

    • Limited Liability Company or LLC: An LLC is a legal entity separate from its owner. The owners of an LLC are called members. Unlike sole proprietors, creditors of the business, in most cases, can’t make claims against a member’s personal assets.

      If the LLC has one member, it is taxed the same as a sole proprietorship. If there are two or more members, it will be taxed as a partnership and an annual partnership tax return must be filed. Members of an LLC can choose to have the business taxed as a corporation or S Corporation. Like sole proprietors, the members of an LLC that is taxed as a partnership are considered to be self-employed; therefore they don’t get W-2 wages.

    • Corporation: Like the LLC, a corporation is a legal entity separate from its owners. Its owners are called shareholders. The creditors of the corporation, in most cases, cannot make claims against the shareholder’s personal assets.

      A corporation, no matter its size, must follow the corporate recordkeeping formalities set forth in the statute of the state where incorporated. These include holding annual shareholder meetings, electing a board of directors and corporate officers, keeping detailed records of meetings and providing annual financial reports to shareholders.

      A corporation files its own tax return and pays the taxes imposed on its income. The shareholders can be employees and receive W-2 wages or they can be paid dividends.

    • S Corporation: The S Corporation is an election that is filed with the Internal Revenue Service. The S Corp election is only available to small businesses. The election can be made by an LLC or a corporation. There are both advantages and disadvantages to making this election.

How you choose to organize your business will vary based on individual needs, goals and tax implications. It’s possible to begin your business as an LLC and later legally reorganize the business into a corporation and/or elect a different type of tax treatment. Your attorney can assist you in deciding what works best for you.

Note: The above is not intended to be legal or tax advice. You should always contact an attorney and tax professional before making decisions that affect your business,

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!