THE LAST WILL AND TESTAMENT

Many of you are familiar with a will. A will provides the mechanism for distribution of any property you own at death, based upon your intent. If you do not have a will at your death, the state will determine who gets your property! The most important aspect of a will is to transfer everything you own to the people that you want to receive the items. The best thing to do when writing your Last Will and Testament is to make a list of all items that are important to you and identify the people you want to receive the items. Then, be sure to include a clause to cover items that you may forget to give someone or items you may receive after you write the will. Finally, remember to include a clause stipulating how taxes will be paid. If you forget this clause, the government will charge each beneficiary for the taxes due, on a pro-rata share.
Remember, your Last Will and Testament is the first and most important document in your estate.
 

THE LIVING WILL

Some people may think, if you have a Living Will, then you have a will. WRONG! A Living Will is known as a “Healthcare Directive.” A Living Will states your wishes on medical treatment if you cannot make decisions for yourself. Not only does it protect you if you want to DENY all available medical treatment, but it also protects you if you want to make sure you RECEIVE all possible medical treatment. In the absence of a Living Will, the doctors who treat you will try to determine what your best options are, with possible consent required from a family member. The Living Will removes this responsibility from the doctors and any surviving family members and states what you want and who you want to make decisions on your behalf.
There are three conditions upon which most Living Wills become effective. (1) If you are diagnosed to be close to death from a terminal condition or to be permanently comatose, (2) If you cannot communicate your own wishes for your medical care, orally, in writing, or by other gestures, and (3) If the medical personnel attending you are not notified of any written directions for your medical care.
Most Living Wills provide for a “proxy,” which is basically the same thing as a power of attorney except it is limited only to the Living Will. A “proxy” is a person who will make sure that your intentions are carried out. Remember, a Living Will does not operate as a Last Will and Testament, it only assists you in medical decisions; you still need your Last Will and Testament.

THE LIVING TRUST

The Living Trust can be the most complicated of any of your estate documents. Basically, a Living Trust is a document, that is created and takes effect while you are alive, compared to a Testamentary Trust created while you are alive but effective upon your death. The benefits to the Living Trust are that you can avoid Probate Court and all related costs. However, you can change your mind after you write a Living Trust and you can void out the trust before your death. A Living Trust allows you to transfer ownership of your property to your intended beneficiaries while retaining benefits for yourself until your death. Therefore, you DO NOT lose control of your property while you are alive, and upon your death, a successor Trustee will take over to distribute the property to the beneficiaries in accordance with your wishes. While the Living Trust may avoid probate, it doesn’t avoid creditors or taxes, but it does provide for a quick and efficient method of distributing your property, which may discourage creditors. Remember, you do not save any estate taxes with a living trust over a Last Will and Testament, since you maintain “control” of all aspects of the trust until you die. The two key benefits involve avoiding probate court and its related expenses and keeping your estate private since the public does not have access to the trust documents.
 

POWER OF ATTORNEY

The fourth and final document that is needed in an estate plan is a Power of Attorney. A Power of Attorney is necessary in the event you are unable to make sound financial decisions regarding your assets during your lifetime. The Power of Attorney does not become effective until it is executed by the individual you state in the written document. It is important that you plan for the unfortunate situation when you are not able to make sound financial decisions. The Power of Attorney assists in a smooth transaction and can provide you with sound financial decisions that will enable you to have a steady steam of income for the rest of your life. Remember, you can always change the named individual or the terms, as long as you are of sound financial mind.

CONCLUSION

The four documents we have presented in this Tax Tip are important elements of any successful estate planning. While this is just a short introduction to the topics, it is imperative to realize the importance of each document. The Last Will and Testament acts like a road map with the Living Will and Living Trust helping to direct the heirs where to look for the needed information. The Living Will is crucial in conveying your intent regarding any medical wishes you may have, while the Living Trust is the document that will transfer your property to your intended beneficiaries with the benefit of saving time and money at your death. Finally, the Power of Attorney protects you in the event of an unsound mind while you are alive. Don’t hesitate to do something now!

If you would like more information on any of these four documents, please contact Bart at The Center or visit our website at www.taxplanning.com (02-10)

Dr. Bart A. Basi is an expert on closely-held companies, an attorney, a Certified Public Accountant and the President of the Center for Financial, Legal & Tax Planning, Inc. He is a member of the American Bar Association’s Tax Committees on Closely-Held Businesses and Business Planning.

Experiencing declining sales and revenues?

Having difficulty in making loan payments on existing loans?

Finding it harder to make payroll?

Purchasing supplies or inventory becoming harder?

Having trouble finding the money to pay rent or even operating expenses?

The American Recovery and Reinvestment Act permits small businesses to apply for loans to cover one or more qualifying small business loans for up to six months. These loans cover the principle and interest payments of any business debts like credit card obligations, mortgages, lines of credit, and balances due to suppliers, venders and utilities.

American Recovery and Reinvestment Act loans are interest free and payment begins 12 months after securing the loan. The loans are capped at $35,000 and there is only one loan per business.

The ARC loans with be available until September 30, 2010 or as long as funding is available whichever come first.

In order to see if your business qualities visit
http://www.sba.gov/recovery/agencyplans/index.html

In this article we will be focusing on the SBA 7a Loans as they relate to business acquisitions.

Mike Pierson, Vice President and loan officer with Community South Bank, contacted me with the news that Community South Bank has recently reentered the Florida market and they are making loans available from $150,000 to $2,500,000.

Stephen Mariani from Diamond Financial says that they are also a source for the SBA 7a loans and work with some of the countries most aggressive non-bank SBA lenders.

This is great news for buyers and sellers of businesses.

Buyers can leverage themselves into a business with as little as 20% down with the bank loaning up to 80% for up to 10 years with no prepayment penalty. The loans are capped at $2.0 million. This will open the door for the buyer to acquire a larger business than they could if they had to pay all cash or procured seller financing for the business. Most time, the buyer is required to use his or her home for additional collateral over and above the first mortgage already in place. It also extends the loan repayment time when compared with seller financing. Many SBA loans will include working capital for the buyer. We have found that many sellers are reluctant to offer seller financing.

Sellers benefit from the ability to receive more cash at closing. In some cases the SBA will require the owner to hold a small personal financing note at closing. But it does allow the owner to walk away with a larger sum. A caveat being there is more paperwork involved for the seller, but short term pain for long term gain.

All and all it is a good deal for both parties when no other financing is available to complete the transaction.

Gregory Colvin is a mergers and acquisitions specialist with Acquisitions Unlimited Inc. in Tampa Florida and has facilitated the sale of numerous businesses. Greg can be contacted at 813-920-7880. Visit www.Acquisitions-Unlimited.com

Resources:
Mike Pierson-Vice President/ Loan Officer
850-650-2330 Mobile 850-232-3337
mpierson@communitysouthlending.com
http://www.communitysouthlending.com/

Stephen Mariani-President Diamond Financial
919-782-3101
steven@easysba.com
http://diamondfs.com/sbaloans.htm

U.S. Small Business Administration
http://www.sba.gov/services/financialassistance/sbaloantopics/7a/index.html

John Cathcart-Regions Bank
813-855-0214
http://www.regions.com/small_business/fin_sba_loans.rf