Foresight Legal Online

What is a power of attorney? And do I need one?  A Power of Attorney for Financial Affairs gives your designated agent(s) the authority to make legally binding financial decisions and transactions on your behalf, usually when you cannot manage your own affairs due to incapacity.  If you own any financial assets in your own name alone, without a joint tenant or an authorized signer, then yes, you need to designate a power of attorney.  Without one, no one is legally authorized to access those accounts to make management or withdrawal decisions on your behalf in the event you become incapacitated.

Another reason to designate a Power of Attorney?  IRAs and 401k’s.  These are considered individually owned assets and you cannot access your spouse’s IRA or 401k (to make management or withdrawal decisions) without being authorized to do so under a Power of Attorney. Similarly, your spouse cannot access your IRA or 401k in the event you were to become incapacitated without a Power of Attorney in effect.

There are risks to designating a Power of Attorney, so you need to pick carefully.  An experienced Estate Law attorney can help you make the right decision and walk you through the process.  The knowledgeable attorneys at Foresight Legal Group will make sure that the person you designate to have access to your financial accounts and records is the best person for the job.

Contact the Foresight Legal Group for more information on Power of Attorneys and to see if designating one is right for you.

Hopefully you were inspired by our post last week, which encouraged you to start your own business!  You’ve probably been hard at work all week, perfecting your idea so that when you reached out to your small business attorney he was able to help you write your amazing business plan!  The very plan that inspired every bank to give you that small business loan you needed to get your idea into action.  Now that you have a business plan and funding, you need to decide which type of legal structure is best for your business.

If you haven’t reached out to an experienced small business or start up attorney, now is the time.  Making the decision about whether to form an LLC, S-Corp, or C-Corp is a very important one involving monetary commitments, tax deductions, and potential personal liability.  The first issue you will have to address is whether you want your company to pay taxes on profits before they are distributed to owners or you want the profits to flow straight through to the owners’ individual tax returns.  This is an important decision that an experienced small business attorney can help you answer, based on what is best for your business.

While making the decision about whether to form an LLC, S-Corp, or C-Corp isn’t an easy one, with the help of a knowledgeable start up attorney it doesn’t have to be a hard one.  And most importantly, by understanding the pros and cons of each legal structure (including the tax consequences of your decision), you will comfortable knowing that your small business and your hard-earned money is protected.

For more information about the LLC’s, S-Corps, and C-Corps, click here.  Or you can send an instant message to the knowledgeable small business lawyers at Foresight Legal Group here.  Foresight Legal Group — we make the law affordable.

Sometimes clients tell me they’ve either loaned money to their children or their children have loaned money to them. As an attorney, I lean toward having these commitments reduced to writing so everyone is clear and there are no surprises. Of course, the decision to put the agreement in writing is ultimately left up to the clients, but there are several issues to consider with any family loan.

First, regardless of whether its written down, family members should still be charged interest. If you charge below the rate, or make an interest-free loan, the IRS may impute the difference as interest earned and consider it taxable income. In some cases, the IRS could characterize the entire loan as a gift, subject to gift tax.

An acceptable interest rate for the IRS is the “Applicable Federal Rate” or AFR. You can check out those rates by following this link. The imputed interest rules don’t apply to loans of less than $10,000.  You can read much more about related-party transactions and the below-market interest rules in IRS Publication 550 at the IRS website.

Second, the promissory note should include all of the following elements:

• The loan amount.
• A definite payment date or dates.
• A stated rate of interest.
• Collateral or security.

Third, you might consider taking the awkward moments out of a family loan by having a third party administer it. For a $99 fee, Virgin Money formalizes the agreement you and takes care of the paperwork. For $199 plus $9 per payment, they’ll also electronically collect payments from the borrower’s bank account and credit yours. For $14.95, LoanBack will generate a promissory note and pay schedule, but won’t help you collect.

Fourth, from an estate planning standpoint, it is much better to put these agreements in writing to provide a paper trail for the executor or trustee to piece together who owes what and to whom.

Hope this helps.

Foresight has released a series of YouTube ads targeted to generate interest in living trusts and the firm. Check out Foresight’s YouTube Channel. We hope you like it.

I’ve got to tell you about this wonderful and FREE personal finance tool called Mint.

Mint is so cool. It’s like a dashboard to track all of your bank accounts, credit cards – in short, your entire financial life – in one place.

But, that’s just the beginning, Mint also allows you to categorize your expenses and even compare your spending to others (this information is gathered anonymously, thus preserving privacy). It also alerts you if your balance is running low and suggest ways to save money. Check out it’s full list of features.

Mint is also endorsed by PC Magazine, PC World and Businessweek. Some of Mint’s awards include Best Free Online Finance Software.

I usually don’t get excited about personal finance software, but when it makes my life easier, I’m a big fan.