Andrew Ewalt's Law Blog

Hiring New Employees

Things to consider when hiring new employees:

Eligibility for employment. You must verify that each new employee is legally eligible to work in the United States. This will include completing the U.S. Citizenship and Immegration Services (USCIS) Form I-9, Employment Eligibility Verification.  You can get the form from USCIS offices or by calling 1-800-870-3676 or visit the USCIS Web Site at www.uscis.gov.

New hire reporting.  You are required to report any new employee to a designated state new hire registry. Many states accept a copy of Form W-4 with employer informaton added.

Income tax witholding. Ask each new employee to complete the 2007 Form W-4

Name and social security number.  Record each new employee's name and number from his or her social security card.  Any employee without a social security card should apply for one.

Protecting the Family Business or Farmers

Estate taxes can become a very real problem when an estate includes a farm or real estate used in a family business. Since federal estate tax have been repealed for only one year (2010), and Connecticut has recently implemented it own separate estate tax it is smart to plan now. 

For federal estate-tax purposes, land and buildings have to be valued at their “highest and best use.”  Thus, a farm that could be sold to a developer for more than it is worth, as a farm generally must be assessed at the higher fair market value. Unless the farmers family has another source of cash to pay the tax this may mean the farm will have to be sold in order to create the dollars necessary to pay Uncle Sam.

Proper planning now can help the farmer get around this problem.  If you are in this situation please call me now so we can advise you of any steps you should be taking to protect your family business or farm.

Business Sucession Planning

Statistically, only thirty percent of family owned businesses survive from the founding generation to the next generation. Beyond that generation the success is even worse.

The primary reason for the lack of success rests on the fact that most business owners fail to make plans, have the wrong plan or have not updated the plan. 

A comprehensive estate plan should include planning for the succession of the business. Here are some things to consider.

1.  If some children are active in the business and others are not, how do you treat everyone equally?

2.  If they business is to be sold to a third party how can the sale be structured to protect your family and loved ones?

3.  Will there be sufficient liquid cash in the estate to pay any death taxes or will the business have to be liquidated in order to raise the cash needed?

If you are concerned about the succession of your business it is very important to plan accordingly. 

Insurance Checkup

Whether you are married or single, young or old, whether you rent your home or own it, an insurance checkup is an important part of your overall Life and Estate Planning success.

The most important assets are your family's well-being, your health and your ability to earn an income.  Life and disability insurance are critical to your success and need to be reviewed periodically to make certain you have the proper protection in place.

Here are some things to consider:

Insurance experts say the likelihood of becoming disabled, at least temporarily, is greater than the likelihood of death during your working years.  Disability insurance helps replace your income in the event you become disabled and cannot work.

Most people avoid thinking of their untimely death, however, life insurance protection is a must for protecting the financial needs of the family in the even of the death of a spouse or a parent.  Consider the need to pay the rent or mortgage, provide child care and fund child's education.

Be certain you are fully protected. Contact your insurance professional for your checkup.

Planning For A Special Needs Child

Families facing the challenges of raising a special needs individual encounter many hurdles and often feel left to discover the solutions on their own.  Thankfully, we estate-planning attorneys can help solve and even reduce the number of hurdles these families face.  One of the more important considerations parents must consider is being certain to plan for the long-term financial, physical and emotional needs of their special needs child.  This process really consists of 5 separate areas of consideration:

1. Financial Needs Analysis
2. Letter of Intent
3. Selection of Guardians/Conservators
4. Selection of Trustees
5. Preservation of Government Benefits.

Using these strategies and with the assistance of an attorney, CPA and other financial advisors it is possible to develop a planning strategy that will remove most of the uncertainty parents of special needs children face.  No single tool alone is enough to address all of the unique challenges facing families of special needs children.  However, through proper planning these challenges can be overcome. 

Planning Considerations for Same Sex Couples and Civil Unions

For same-sex couples living in Connecticut, civil unions are now an exciting reality (Massachusetts, California and Vermont offer similar alternatives).  If you live in Connecticut (or one of the other 3 states) you and your partner now have new options, decisions and concerns that same-sex couples have never previously had. One of the many issues that should be considered is inheritance and death taxes.  Without a legal union, a couple will need to sign a number of agreements to create even a partial framework of protection in the event of death or incapacity, and certain tax benefits are forever denied same-sex couples, union or not.  With a civil union the surviving spouse generally inherits the estate based upon the terms of a written will or living trust and/or the terms found in the intestatacy statute (the statue which outlines how an estate should be distributed when a person dies without a will).  Other considerations are the implementation of living wills, health care directives and powers of attorney.  Spouses by civil union or marriage are not automatically granted the authority to act on each others behalf. Thus, it is very important to execute the appropriate documentation in order to avoid difficulty if a spouse becomes incapacitated  or is deemed incompetent to act for themselves.  Estate and gift taxes are another concern. Laws exempting married couples from inheritance taxes and gift taxes at the federal level do not yet apply to same-sex couples, because the federal government does not recognize same-sex unions even where state law approves.  However, Connecticut has its own death and gift tax which can affect same-sex couples who have civil unions in Connecticut.  It is very important when considering a civil union to think about  all of the legal pros and cons.  As with married couples once the decisions has been made to move forward with the civil union same-sex couples must protect themselves, their affairs and families by implementing the appropriate planning.

Saving The Family Home: Use A House Trust?

Many of my clients want to be certain that their homes go to their children when they die.  As many homes appreciate in value clients also worry about their children having to pay estate taxes on the increased value of the house.  One option of leaving the home to children  is to use a Qualified Personal Residence Trust also known as a QPRT.

Please consult your attorney before considering any estate planning option because there are many pros and cons to each option. Here are some pros and cons for QPRT's:

Pros:

1.  It removes any appreciated value of a house from a parent's estate which can help reduce estate tax liability.

2.  The parents can continue to live in the house during the term of the trust.

3.  Both residence and vacation homes can qualify.

4.  Often more than one home can be protected.

5.  When the trust term ends the children receive the home.

Cons:

1.  Capital gains tax can be a significant factor on the sale of the home because the cost basis of the house remains the same as it was for the parents.

2.  If the parents die before the trust terminates the home will not be devalued for estate tax purposes.  Thus it is very important the parents survive for the term of the trust.

3.  Children will become their parents landlord when the trust terminates.  As such children could evict their parents  or increase the rent to live in the home.

4.  These trusts are very complicated. In order to set one up you will need a lawyer.

 

Eliminating Mortgage Insurance

Mortgage insurance (sometimes called Private Mortgage Insurance or PMI) is insurance that protects lenders against defaults.  Lenders typically require borrowers to pay mortgage insurance if they are borrowing more than 80% of the home’s purchase price.  These days many borrowers are unable to put 20% or more down when purchasing a home and are thus faced with having to pay PMI.  However, if you are tired of making mortgage payments that include PMI there are ways to eliminate it.

1.        Making payments towards the principle of the loan in order to increase the equity to 80% or more

2.        The power of home price appreciation raising the value of the home.

3.        Combination of 1 and 2. 

There can be many factors involved before a borrower can request that a lender cancel their PMI. Thus it is very important that the borrower consult the lender and their attorney before any steps are taken. 

Though it may seem to take forever before PMI can be canceled, when factoring home appreciation and the build up of equity in their home borrowers may be eligible sooner rather then later.

Referrals

I am often asked by clients to recommend other professional advisers (CPA, Financial Planning, Insurance, Real Estate, Banking and the list goes on and on) .  I treat these requests very seriously because as an attorney and trusted adviser my clients respect my opinion.  I want to be certain that they are matched with someone who will treat and respect my clients in the same manner I do.  I want to be certain that the adviser is someone I know can and will do the very best job.  So when I make a recommendation I do so with a lot of thought involved.  I try to understand my clients concerns, goals, needs, personality and location and then recommend someone who will best match these criteria.  Over the years I have made many professional relationships and feel confident that if asked I can recommend one if not several very qualified candidates. 

Protect Your Business From Lawsuits

You might think that your business is unlikely to be sued.  But it could happen.

There are more then 70,000 civil lawsuits filed each day in the Unites States and most of them target small busniesses and individuals.

One easy way to protect yourself is with an umbrella policy which provides coverage above your primary insurance damage.  Umbrella insurance starts where your underlying general liability insurance limits are exceeded.

Here are some additional tips:

1. Taking the proper legal steps to make your business unattractive to those who may wish to sue. 
2. Prenuptial Agreements before marriage especially if one spouse-to-be has substantially more money than the other.
3. Shifting assets out of your name by using family limited partnerships. 
4. Employers should consider using binding arbitration and alternative dispute resolution agreements with all staff and those they do business with.
5. Warning customers of potential dangerous situations can also make it harder to get sued.