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Don't rush into business planning without help

Maybe it started with a spark of an idea for a new product. Or, maybe you believed you could offer the public a valuable service. In either case, many people in St. Paul decide to form a business of their own. While this is a worthwhile endeavor, it is important to make sure you make legally sound decisions from the get-go, so that problems can be avoided down the road.

For example, it is important to choose the right business entity. Because a sole proprietorship exposes the business owner to liability if the business is served with a lawsuit, potential business owners may want to explore other types of businesses that will shield them from liability. It can also help to execute restriction agreements. These agreements can come in handy if there is more than one business owner. They can address restrictions on stock or membership interests, so that ownership will remain in the hands of the right people should one partner die or get a divorce. Businesses will also want to develop a succession plan in which the business will be transferred to new owners once the business owner decides to retire.

Changes to estate tax laws may thwart the purpose of one's will

People in St. Paul may have gone through the process of drafting a will and have considered the matter done. However, recent changes to estate tax laws may warrant a dusting off of a previously created will. For wills drafted prior to 2018, this could be especially important if the will does not contain a specific amount of money that is to be funneled into a trust for one's children. These wills might simply have broader language stating that their children should inherit per the current amount of the federal estate-tax exemption, and that the rest of the person's estate (usually a bigger amount) should be funneled into a trust for the person's living spouse.

However, recent tax law changes have made this matter potentially problematic. This is because the estate tax exemption has gone up two-fold starting in 2018, from $5.49 million to $11 million. Therefore, the broad language used in the above example could make it so that a person's children inherit more than the person's living spouse, which may go against the person's wishes. This may be especially true for smaller estates.

Minnesota homeowners facing foreclosure may have options

No one in Minnesota can predict the future. For example, when a person buys a home, they do so believing they will be able to make their mortgage payments on time and in full until the house is paid off. However, sometimes unexpected financial events take place that make paying one's mortgage difficult, if not impossible. For example, a person could rack up significant expenses in another area of their life, such as medical expenses. Or, a person could lose their job leaving them without a source of income.

When a person misses mortgage payments, they may find themselves facing the threat of foreclosure. This can be very intimidating, and a person may believe that there is no way out and they will lose their home. However, there may be ways homeowners in such situations can work with their lender to avoid foreclosure.

The world of trusts is wide, with many choices to consider

Many people in Minnesota may have a will, but they may not know much about how a trust works and how it will benefit them. Trusts can be an integral part of a well-rounded estate plan. The following are some types of trusts that Minnesotans may want to consider executing.

One basic type of trust is a revocable living trust. This trust is executed and funded during a person's lifetime. When the person dies, the trust assets are not probated, but, instead, are distributed directly to the trust beneficiaries. Compare this to a testamentary trust, which is part of a person's will and is probated.

Watch out for these estate planning mistakes

St. Paul residents may do a lot of planning for their futures. They plan for vacations. They save money for a rainy day. They plan for retirement. However, how many have taken the step of planning for the inevitable -- death? It's not pretty to think about, but, if there's anything we can all count on in the future, it is that someday we will pass away. We can plan for this eventuality through estate planning. However, it is important to look out for certain estate planning mistakes.

One mistake is to procrastinate. If a person puts off estate planning and dies suddenly without a will or trust, their property will go through probate and the state will decide who is to inherit through intestacy laws. Since it is quite possible that a person might have a different idea about how they want to pass on their assets, it is important to execute an estate plan sooner rather than later.

What requirements must be met to execute a will?

The New Year is here and people across Minnesota are making their New Year's resolutions for 2018. While some may be looking to change a personal habit in their lives or to meet certain items on their "bucket list," in general, most New Year's resolutions deal with the here and now. However, one thing they may not think of, but that could affect not only their future, but the futures of their loved ones is estate planning.

Through estate planning, people can execute documents cementing not only who they want to inherit their property, but also draft crucial documents stating how they want their health and finances to be taken care of should they become incapacitated. This may seem like a tall, confusing order for those who have never taken any steps towards estate planning. So, in 2018, they may want to start with the basics: executing a will.

What are some common business entities in Minnesota?

For some people, it is a spark of inspiration for a new product or service that makes them decide to start a small business. For others, it is the desire to turn a hobby into a lucrative profession. And, for some, the idea of being their own boss fuels the decision to establish their own small business. Whatever the reason, when a person in Minnesota decides to start a business, there are a number of business entities they can choose from.

One option is a general partnership. This is a business that has at least two owners with equal rights and responsibilities in the management of the operation. Each owner is also responsible for any debts of the business. The terms of the enterprise will generally be included in a formal partnership agreement.

Sometimes redundancy is better than gaps in estate planning

If there is anything that is sure in life, it is that one day we will all pass away. Some people in Minnesota may have already given this life certainty thought and have executed a will. However, this is not the only estate planning document that should be in their arsenal. Here are some other documents that could prove helpful to ensuring one's end-of-life wishes are met.

First, there is a living will. This instrument states what types of medical treatment a person would want in certain situations. Not to be confused with that is a power of attorney for health care, which allows another person to make health care decisions for that person should that person become incapacitated.

Some propose raising the threshold of the estate tax exemption

The issue of the estate tax has come to the forefront of American politics lately, as the government looks to revamp U.S. tax laws. Therefore, it is important for people in Saint Paul and across the nation to have a basic understanding of what the estate tax does and who it affects.

Currently, if an individual's wealth amounts to $5.49 million or more, their estate will be taxed by the federal government when they pass away. Since it is set at such a high level, in actuality, few people are subjected to the estate tax. The Tax Policy Center reports that in 2013, while 2.6 million individuals passed away in the United States, merely 11,300 of their estates were subjected to the estate tax. To put it another way, the estate tax affected under 0.2 percent of all those who died in the United States that year.

Getting your business in Saint Paul started on the right foot

Many people in Saint Paul have a moment of brilliance, in which they come up with a great idea for a business. While they may be excited to make their dreams a reality, business planning should be done with care. After all, improper planning could lead to liability issues, unwanted tax consequences and expensive litigation.

There are a lot of aspects of business planning to consider. Potential business owners will want to make sure they understand applicable taxes. They will also want to make plans to protect their hard-earned assets and shield themselves from liability, as much as possible. It can also help to have a plan for passing your business on to others in the future should you decide to exit it.

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Chandler and Brown, Ltd.
332 Minnesota Street
Suite W2610
St. Paul, MN 55101

Phone: 651-964-6087
Fax: 651-228-9237
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