Yes, many people that are in this position use buy-sell agreements. With the agreement called the cross purchase plan, the partners agree upon the value of a share in the business. When this has been determined, they take out insurance policies on one another. The payouts would equal to the agreed-upon value of a share. When one partner dies, the insurance policy proceeds are used to buy the deceased partner’s share from their estate. … [Read more...] about Is there an estate planning strategy for small business partners?
Another widely used asset protection structure is the family limited partnership. As the name would indicate, the people that comprise the partnership must be members of the same family. If you are the driving force behind the establishment of a family limited partnership, you would be the general partner, and family members that you include would be limited partners. As the general partner, you would retain sole decision-making authority. To explain how this structure would work to your … [Read more...] about Are there any other options?
One very commonly used asset protection strategy is the limited liability company or LLC. If you establish one of these entities, generally speaking, your personal property would be protected if your business is sued by creditors or some other type litigant. The asset protection would work in the reverse manner as well. If you are personally sued, your business and all property that is owned by the business would be protected under most circumstances. It should be noted that you cannot … [Read more...] about What’s the solution?
Let’s say that you establish some type of business, and you file taxes as a sole proprietor. There would be no legal separation between you as an individual and your business. As a result, if you are sued for any reason, all of your assets would be available to the litigant seeking redress. This would include property that you are using to operate your business. On the other side of the coin, your personal assets would be in play if your business activities trigger a legal action. … [Read more...] about Why is asset protection important for small businesses?
Yes, there is a Connecticut state estate tax. It is possible to have state estate tax exposure even if you are exempt from the federal tax, because the exclusion is considerably lower. Once again, the numbers are adjusted periodically, but the state level exclusion is about half of the federal exclusion. It is a graduated tax with rates that span from 7.2 percent up to 12 percent. We should point out the fact that there are a small handful of states that impose state-level inheritance … [Read more...] about Is there a state-level estate tax in Connecticut?
This is one of those questions with a yes or no answer. There is a federal gift tax in place that is unified with the estate tax. As a result, the main exclusion is a unified one that encompasses postmortem asset transfers along with lifetime gifts. So, if you were to use up all of your unified exclusion giving tax-free gifts while you are living, your entire estate would be subject to taxation. On the positive side of the coin, there is an annual gift tax exclusion that sits apart from … [Read more...] about Can you give gifts to avoid the estate tax?
Yes, there is an unlimited marital estate tax deduction. If you are married to an American citizen, you can leave any amount of property to your spouse free of the estate tax. Of course, it would be in play when your spouse’s estate is being administered. However, the estate tax exclusion is portable. This means that a surviving spouse would be able to use the exclusion that was allotted to their deceased spouse, so they would have two exclusions to combine. … [Read more...] about Is there any type of transfer that is exempt?
The answer to this question is a resounding no. There is an estate tax credit or exclusion that allows you to transfer a certain amount before the tax would become applicable. We will not share an exact number here because it is updated annually to account for inflation, but it is over $11 million. Clearly, a very small percentage of Americans are going to be transferring more than this amount to the heirs. This being stated, those that are exposed are looking at some significant wealth … [Read more...] about Are all estates subject to the federal estate tax?
Probate ties up assets for months, even years. Beneficiaries and heirs must wait until the end of the probate process to receive their intended assets, making the length of the probate process a common reason to avoid the process when possible. In addition, probate can be costly. Everyone involved may be entitled to a fee, including the Executor, attorney, appraisers and accountant. Finally, if you prefer to keep the details of your estate plan private, avoiding probate is an important goal … [Read more...] about Why do people try to avoid probate?
The amount of time it takes an estate to get through the probate process depends on several factors, including the type of probate required, the size, value and complexity of the estate, and the skill and efficiency of the Executor/Administrator. In the State of Connecticut, it will take a minimum of about four to five months to probate an estate because creditors have at least three months to file claims against the estate. As a general rule, the larger and more valuable the estate, the longer … [Read more...] about How long does the probate process take?