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Important IRS Update: Significant Interest Penalty Increase for Tax Underpayments

The Internal Revenue Service (IRS) has recently announced a critical change that could significantly impact taxpayers who underpay their taxes. This update is particularly relevant as we approach the next tax filing season. Previously, the IRS charged a 3% interest penalty on estimated tax underpayments. However, this rate has now been increased to a substantial

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Will Inflation Hurt Stock Returns? Not Necessarily

Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks. A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns. Since 1993, one-year returns on

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Maximize Your Charitable Impact with These Four Strategies

As the year draws to a close, it’s a perfect opportunity to rethink how you give to charity. This is important for managing how much tax you pay and how much help reaches those in need. Here are four effective strategies: Need Guidance? Reach Out to Us! These strategies are just a starting point. There

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For Hoteliers: Hotel Business Protection Using Captive Insurance

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Category: Business Planning Hotel Owners

For hotel business owners, there are big benefits to setting up a captive insurance company. This can be a valuable way to protect your company and save money at the same time, since captive insurance companies are known for tax flexibility. A captive insurance company is an affiliate of a business that is created to reinsure particular risks of that business. The captive can be formed in the U.S. or in a foreign jurisdiction. Policies can contain all of the basic terms that are included in commercial insurance contracts and premiums are determined by independent actuaries.

For Hoteliers Hotel Business Protection Using Captive Insurance
(Photo Credit: gamasutra.com)

The goal of a captive is to help pick up the risk that has already been held by a business that “self-insured”. This means that the business has some kind of specific need for which it is too expensive or impossible to get typical insurance. In this case, the captive serves a very important role of improving the risk protection capability for the business. Some examples include earthquake coverage, food-borne illness concerns, or cyber theft.

Surplus that is not used to pay out claims can be distributed out to shareholders as dividends. Control over this captive also gives the client investment control over the assets with the captive in certain situations. Captive insurance companies benefit from special tax treatment under the Internal Revenue Code. As a result of all these benefits, business owners for thousands of companies have been able to accumulate a great deal of pre-tax wealth through captive insurance companies. Hotel owners take note: you should consider how a captive insurance company suits your needs and helps you insure specialized risk. To get started, contact us at 732-521-9455 or email us at info@lawesq.net

For the Furry Ones in Your Life: Estate Planning With Pets in Mind

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Category: Estate Planning Estate Planning for Attorney Estate Planning For Business Owners Estate Planning for Children

Although many people have heard about the traditional aspects of estate planning, like a will, it’s all too often forgotten that you may have others you need to include in your plans. The majority of houses across the country have pets inside, and it’s worth considering what you’d like to happen to your animals if something happens to you. Pets are treated as personal property, so it’s crucial that you do a little research about where you’d like them to go.

For the Furry Ones in Your Life Estate Planning With Pets in Mind
(Photo Credit: the-hunting-dog.com)

A pet trust, for example, can outline the type of care your animals will receive after you pass away. With a funded pet trust, you can rest assured that your animals will be taken care of no matter what. This trend is expanding in use across the estate planning industry. A first step in your pet plan is to write a description of all animals, including any distinguishing characteristics. This helps to avoid copycat pets or mistakes receiving care that you intended for your own animals. Microchip numbers, too, should be included for identity verification.

You can work with an estate planning professional to determine the cost of care for your animal. Factor in vet care, routine medications, any special supplements, pet insurance, and food, multiplied by the life expectancy of your pet. Talking this over with any family members can be helpful for establishing those who may want to care for your animals, too. Have questions about pet trusts or other planning tools? Send us an email at info@lawesq.net or contact us via phone at 732-521-9455.

Estate Planning and Reproductive Technology

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Category: Estate Planning Estate Planning for Attorney Estate Planning For Business Owners Estate Planning for Children

Unfortunately, estate planning law hasn’t really stayed on pace with reproductive technology and rights, generating quandaries about inheritance rights. It would make sense that children conceived after the death of an individual (or statements denying inheritance rights about these individuals) should be included in estate planning documents.

forbes.com
(Photo credit: forbes.com)

A trust might be a more appropriate vehicle for managing inheritance rights in this way when compared with a will. A comprehensive estate plan, too, can also be valuable with regard to genetic material. Much the law with regard to inheritance rights and genetic material is very specific to each state, which is why it’s recommended to work with a professional if you’re concerned about children conceived posthumously. In many states, the law has not provided a framework for the disposition of embryos or gametes at the death of the donor.

While not every estate plan will include such instructions and details, it’s critical that those in this situation think about whether those individuals conceived later will have any inheritance rights. Planning in advance for this and documenting your wishes is a vital step in ensuring that your wishes are carried out after you have passed away. Advance planning can be complex, but the process is made easier when working with an experienced estate planning lawyer. To learn more about complex estate planning needs involving reproductive issues, contact us at 732-521-9455 or email us at info@lawesq.net

Risky Business? Manage that Risk: Captive Insurance Companies

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Category: Business Law Business Planning Business Succession Planning Captive Insurance Companies

A captive insurance company is a company created by a business owner to help insure risks of affiliated businesses. When set up appropriately, a captive allows a business to manage risks while allowing the affiliated company to reap benefits, too.

Risky Business Manage that Risk Captive Insurance Companies
(Photo Credit: business2community.com)

A Captive will receive premiums that are then invested as opposed to premiums sent to a traditional unrelated insurer, which are essentially “lost”. Over time, those premiums accumulate. In the event of a risk loss, the premiums are available to be paid for those self-insured losses, thus protecting the business’s bottom line. This crucial benefit is the biggest advantage for business owners.

A Captive can issue casualty or property insurance to protect against a broad array of risks. Where the business owner has the most potential to capitalize on this opportunity is through risk protection for those risks that are typically too expensive to coverage or uninsurable, period. With possible major tax increases coming in the future, the Captive Insurance company remains situated as one of the most effective solutions for business owners. Captive Insurance benefits go beyond tax advantages by providing business owners with opportunities in wealth transfer, estate planning, and asset protection, too.

At Shah and Associates, we work with you individually to determine how a Captive can best suit your business needs. With vast experience in the field, we have helped our clients use Captives to minimize taxes, protect assets, manage risks, and improve cash flow. We understand the peace of mind and confidence that comes from a comprehensive approach to risk management, and that’s why we remain committed to the business community.

The Business Owner’s Parachute: Get Your Exit Plan Ready

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Category: Business Law Business Planning Business Succession Planning

While “now” is always the time you should start getting your exit plan ready for your business, there are some guidelines about specific year marks that you should use to think about what will happen next. Here is the best advice for exit plans.

theretiredaffiliate.com
(Photo Credit: theretiredaffiliate.com)

Starting ten years in advance is the best way to maximize opportunities. This is because at this marker, you can start really considering whether the business is intended as a family legacy. If a family member will be taking over the business, the ten year period is a great planning point for incorporating those family members into training and education. Ultimately, this will make the transition period much smoother. Saving taxes is another primary concern at this stage. If a business owner has recently converted the company from C Corp to S Corp filing status, you should wait a minimum of ten years before selling the company.

Five years out is a good place to review because you are a little closer to the finish line here. Cash flow, tax deduction, and tax leverage should all be explored with your planning specialist at this time. Changes regarding cash flow can allow for a strategy in which cash flow to the owner is a focus rather than company growth.

Finally, even one year out provides planning opportunities. For example, we have implemented strategies which could save the Seller the entire [9% – 13%] tax some states collect upon the sale of a business. If the company will be sold, the owner should identify a business broker or investment banker to actually put the business on the market. This gives enough time for a due diligence review, drafting the sales agreement, and delays related to regulatory issues. No matter what stage you’re at, you need to put some planning tactics in place for your exit plan. Contact us today at 732-521-9455 or email info@lawesq.net to get started with your personalized plan.