The Gray Area

Should you set up a trust for your Pet?

Aug 13, 2012 7:19 AM by Jeff Baughman

While many pet owners will tell you that their pet is a member of the family they may not have considered planning for the care of their pet in the course of their other estate planning and often a standard will is insufficient for pets. Sadly if no arrangements have been made for the care of your pet local law will govern what happens to them, which could include being euthanized if no one claims them.

Florida law treats pets as personal property. You cannot leave money directly to your pet. You may leave money to a caretaker but you cannot require actions of the caretaker after they receive the money. Florida has a pet trust statute (Fla. Stat. § 736.0408) that will allow you to designate a third-party to use trust funds for the benefit of pets in the event of your death, disability or incapacitation.

Things to consider when drafting a pet;

 

  • toys
  • grooming
  • medical care (preferred veterinarian)
  • health conditions
  • disposition of remains (burial, cremation, memorial, etc.) upon death
  • standard of living and care
  • food and diet
  • daily routine

 

 The pet trust should also specify the name of the trustee and alternate, the name of the pet’s caregiver and alternate caregiver (if different than the trustee), information identifying the pet, the assets that will be used to fund the trust, circumstances under which the pet should be put to sleep and direction for distribution of remaining trust assets, if any, upon the death of the pet. As with most things the more specific you are the better because your pets cannot speak for themselves. If you do not have enough assets to take care of your pet without your continued income, you may consider a life insurance policy that funds the trust or is owned by a trust so that money will be available to take care of your pets in the case of your disability or death.

Buy/Sell Triggers Lunch and Learn Seminar

Aug 9, 2012 7:17 AM by Jeff Baughman

Next in our education series is Insurance for the Small Business

Join us for an online seminar, grab a sandwich, and listen at your desk for some tips that may help save the day.

Lets discuss what triggers should be in your Buy/Sell agreements. Most understand death, but there are many more of which you should be aware.

All you have to do is call in on the conference line to listen. If you would like to view the presentation, just login online as well.

Presentation is scheduled for 30 minutes, and questions will be welcome.

When: Wednesday, September 26, 2012 from 11:30 a.m. EST to 12:00 p.m. EST

 

Insurance for the Small Business Lunch and Learn Seminar

Aug 9, 2012 7:02 AM by Jeff Baughman

Next in our education series is Insurance for the Small Business

Join us for an online seminar, grab a sandwich, and listen at your desk for some tips that may help save the day.

Lets discuss coverages, amounts, and common exclusions. Make sure there arent any gaps in what you think you have and what you really have.

All you have to do is call in on the conference line to listen. If you would like to view the presentation, just login online as well.

Presentation is scheduled for 30 minutes, and questions will be welcome.

When: Wednesday, August 22, 2012 from 11:30 a.m. EST to 12:00 p.m. EST

Divorce Benefits?: Beware Your Ex-Spouse Can Claim Your Social Security Benefits

Aug 3, 2012 6:53 AM by Jeff Baughman

If you are divorced your ex-spouse can still receive social security benefits based on your record even if you have remarried. If your ex-spouse meets the following requirements they can collect benefits on your record:

  • Marriage must have lasted at least ten years
  • Ex-spouse is unmarried
  • Ex-spouse is 62 or older
  • The benefit your ex-spouse is entitled to receive on their work record is less than the benefits they would receive on your work record
    and;
  • You are entitled to Social Security retirement or disability benefits.

The system can benefit both ex-wives and ex-husbands and the requirements above are the same for ex-wives and ex-husbands. If you have one ex-spouse or more than one ex-spouse these benefits apply to each ex-spouse who meets the requirements. If your ex-spouse has remarried they generally cannot collect benefits on your record unless the later marriage ends (death, divorce, annulment).

The amount of benefits payable to your divorced spouse has no effect on the amount of benefits you or your current spouse may receive. You can remarry and your new spouse can also receive your Social Security income. Learn more from the Social Security Administration.

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Small Business Health Care Tax Credit

Jul 27, 2012 8:05 AM by Jeff Baughman

The Affordable Care Act was enacted on March 23, 2010. One of the important provisions of the act for business owners is the Small Business Health Care Tax Credit. This new credit helps small businesses afford the cost of covering their employees and is specifically targeted for businesses with low- and moderate-income workers.

The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

For Tax years 2010 through 2013 the maximum credit for small business employers is 35 percent. An enhanced version of the credit will be available in 2014 but there are few details available. As of right now the enhanced credit in 2014 is expected to increase the maximum rate to 50 percent.

Here is an example from the IRS on how the credit works:

If you pay $50,000 a year toward workers’ health care premiums – and if you qualify for a 15 percent credit, you save … $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $12,000 a year.

​To be eligible for the credit you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees and those employees must have average wages of less than $50,000 a year. You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit.

Click here for Form 8941 and here for the IRS information page on the Small Business Health Care Tax Credit.

Credit Bidding in a Florida judicial sale explained a bit

Jul 23, 2012 7:21 AM by Jeff Baughman

Credit bidding is a right secured creditors have to secure their collateral in a situation like a foreclosure sale where the creditor doesn’t actually bid cash money like the rest of the bidders, but instead bids part or all of the judgment.

A credit bid is a chance for some or all of your secured claim or judgment against a person or entity, to be exchanged for the debtors assets, if and when their assets become available for sale at an auction.

For example if the total balance of all amounts due was $575,000 and the property value was $500,000 and it sells at auction for $100,000 the property is sold in exchange for “giving up” only $100,000 of your debt. The other $475,000 has not been paid. This preserves the ability to pursue the collection of the remaining $475,000 of your debt from insurers, guarantors, or other parties to the transaction.

The right to credit bid, as found in Section 363 of the Bankruptcy Code, gives under-secured creditors the ability to control their collateral when it is worth less than the face amount of their claims. For example, if some real estate worth $500,000 and collateral for a bank loan of $750,000 were proposed to be sold, a debtor would find it difficult to sell the property over the objection of its mortgagee in a bankruptcy sale for its value. This is because the secured lender would have the ability to bid the full amount of its claim of $750,000 without offering any cash. Credit bidding is seen as one of the chief rights of secured creditors in bankruptcy.

See where a debtor was thrown in jail for interfering with a sale.

Insurance for the Small Business Owner Lunch and Learn Seminar

Jul 23, 2012 7:21 AM by Jeff Baughman

Next in our education series is Insurance for the Small Business Owner

Join us for an online seminar, grab a sandwich, and listen at your desk for some tips that may help save the day.

We will discuss different insurances that you should have, coverage amounts, and what questions you should pose to your agent.

All you have to do is call in on the conference line to listen. If you would like to view the presentation, just login online as well.

Presentation is scheduled for 30 minutes, and questions will be welcome.

When: July 25, 2012 from 11:30 a.m. EST to 12:00 p.m. EST

To join us, Register Here.

America Invents Act Impact on Patents for Small Business

Jul 14, 2012 8:25 AM by Jeff Baughman

On September 16, 2011 President Obama signed into law the Leahy-Smith America Invents Act (H.R. 1249), which was the first major patent re­form in nearly 60 years. On average it takes over three years to get a patent approved in the U.S. The America Invents Act implements a first-inventor-to-file standard for patent approval, creates a post-grant review system to weed out bad patents, and helps the Patent and Trademark Office (PTO) address the backlog of patent applications.

The change in law also introduces new benefits to small inventors but does have some potential negative impacts as well. The creation of the “ Micro entity” is a major benefit to small businesses or inventors seeking patents. The Leahy-Smith America Invents Act, Section 123, defines a micro entity in detail. Previously, a 50% reduction for certain fees was available for applicants qualifying for small entity status. Under the America Invents Act, micro entities would be eligible for a 75% reduction in fees.

Another big change under the act is the change from the first- to- invent system to the first- to- file system. The first-to-file system increases the pressure to file the application as soon as possible. For most small applicants, spending time to raise funds or obtain a licensee now runs the risk of losing priority to an earlier-filed application. On the positive side small inventors may be more flexible and have to deal with less bureaucracy, which would allow some small inventors to file more quickly than large companies.

Small companies with an interest in filing patents may want to give themselves an edge by becoming more familiar with the patent process and staying aware of patent filing deadlines. Additionally small inventors can file a provisional application to get an earlier priority date, while buying time to get additional funding or license the invention.

Below is a link to some Frequently Asked Questions

We often assist companies and businesses in creating holding companies for intellectual property and patents. To register the patent, we recommend a Spartan trusted referral source, Maxey Law Offices.

 

More advantages to S-Corporation Taxation

Jul 6, 2012 6:53 AM by Jeff Baughman

Next to sole proprietorship, S-corporations (a/k/a those entities electing to be taxed under sub chapter S are the most common). These entities elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes rather than double taxation as found in a C-corporation.

While you can only have one class of S-corp stock, a corporation is not treated as having more than one class of stock solely because there are differences in voting rights among the shares of common stock. The corporation may have differences in voting rights among the shares of common stock, without losing its S status. This permits different ownership control without losing the advantages of pass-through taxation.

However, all issued stock must be identical in terms of the shareholders’ interest in the profits and assets of the corporation. Thus, an S corporation “may have voting and nonvoting common stock, a class of stock that may vote only on certain issues, irrevocable proxy agreements, or groups of shares that differ with respect to rights to elect members of the board of directors.” See Treasury Regulation 1.1361-1.

Having voting and non- voting stock offers companies flexibility and advantages in situations like that of a silent partner where stock can be issued without voting rights. Family businesses can also benefit from non- voting stock. For instance voting stock may be given to those family members who are most qualified to run the business, with non-voting stock given to other family members. This difference in voting rights can be even more advantageous for entrepreneurs or start up companies seeking capital or investors, but want to maintain control over the business decisions.

These benefits are not restricted to just corporations, limited liability companies (LLCs) that properly elect s-corp taxation can also benefit from this voting/non-voting interest too. It is essential the election be filed and be timely as well as an operating agreement that spells out the rights and obligations of the members.

If you are not sure what your taxation or current corporate structure is, give us a call and we can see where you are at.

Domestic Partner Registry is now in Tampa, Clearwater, Gulfport, and St. Petersburg

Jun 29, 2012 4:31 AM by Jeff Baughman

There are several cities in the Tampa Bay area that have recently created domestic partnership registries that will provide benefits to same sex and unmarried opposite sex couples. Domestic partnership registries allow both opposite and same sex couples the right to visit each other in healthcare facilities, make medical decisions for a partner who is incapacitated, make funeral arrangements for a partner who dies, be notified as a family member in an emergency situation involving a partner and participate in the education of the child of a domestic partner.

The requirements for the registry vary in each city but the general provisions are that you are:

  • 18 years of age or older
  • Not part of a civil union or marriage in Florida or any where else
  • Not related to your partner
  • Living with your partner in the same house or apartment
  • Agreeing to take care of each other financially

Applicants will be required to fill out a domestic registry form (available on the city website links below), pay a fee, provide valid identification and both partners must be present.

There are currently four cities with domestic registries in the Tampa Bay area:

  • Clearwater– Domestic Registry will begin August 6, 2012 at Clearwater City Hall, Clerks office Monday- Friday 8 a.m. – 5 p.m. There is a $30 fee.Click here for more info.
  • Gulfport– Domestic Registry will begin June 25, 2012. Applicants can either send in a notarized application and the $25 fee or they can appear at city hall. Click here for more info.
  • St.Petersburg– The ordinance for domestic partnership registry passed on June 15, 2012 and the Office of the City Clerk has 90 days to establish the registry. Forms will be available on the city’s website. Click here for more info.
  • Tampa– The Domestic Partnership Registry ordinance was adopted on April 5, 2012. The ordinance goes into effect on July 5, 2012. Registration will begin on June 25, 2012 at 9:00 a.m. to 4:00 p.m. for the first two weeks. Then beginning on July 9, 2012, registration will be from 10:00 a.m. to 3:00 p.m. Registration is at the Office of the City Clerk and there is a $30 fee. Click here for more info.