Your estate planning professional will guide you to the best strategy for your situation so you can rest easy knowing your loved ones and assets will be taken care of when you pass. In fact, when setting up your Will and Trust, it's vital to understand the roles and differences between the Trustee, Executor, and Guardian.  In fact, these three parties are the foundation, or 'trifecta' of the persons that will be implementing your Estate Plan.
Tag: mark kohler

The Trustee, Executor and Guardian: The Estate Plan Trifecta

June 5, 2018 Asset Protection, Business planning, Estate Planning, Retirement Planning Comments Off on The Trustee, Executor and Guardian: The Estate Plan Trifecta

Many people ask us on a regular basis ‘who’ is going to carry out their wishes when they’re gone.  All of us should have a Will or Trust, but the ‘people’ that are going to implement it can be a big question mark sometimes.  It’s common to be concerned about who will pick it up and ‘run with it’ making sure all of your wishes are carried out.

In fact, when setting up your Will and Trust, it’s vital to understand the roles and differences between the Trustee, Executor, and Guardian.  In fact, these three parties are the foundation, or ‘trifecta’ of the persons that will be implementing your Estate Plan.

The Guardian

First, and most importantly for those with children, is appointing the proper guardian for your minor children. This is the individual or individuals who will raise your children if you were to pass away before they reach the age of 18. Of course, choosing a Guardian is a very heartfelt and difficult decision to make. Realize that the Guardian does not need to have access to, or control, the financial aspects of your estate; that is the Trustee’s role. It’s ok to choose someone ‘good’ at raising children, but maybe ‘not the best’ at handling the financial decisions for your assets.  Now of course in some instances, you may prefer to have the same person raising your children to have control over the finances, and that’s certainly acceptable and common as well.

Ultimately, the Guardian should be the person or persons that would raise your children in a physical and emotional sense in the same way you would. In your estate plan, you will have the option to provide for your children and/or compensate the Guardian for their services, so they are not left with the financial burden of raising your kids. This opens up your choices to more than just those who can afford to take on more children in their home.

The Trustee

The Trustee is the individual that makes all of the financial decisions regarding your assets AND carries out of your wishes within the provisions of your Trust. IF your trust is the Bible setting forth your wishes and guidelines, then the Trustee is the Prophet to make it happen. The Trustee will generally serve in their position longer than the Executor, and depending on the provisions of your Trust, could serve for many years managing the Trust for Beneficiaries.  This individual, if older in age, should have a younger “back up” to serve if and when necessary. If applicable, the Surviving Spouse is generally the 1st Trustee.

This person is ALSO responsible for the financial well-being of the Trust assets and owes a duty to the Trust Beneficiaries to faithfully carry out the provisions of the Trust. You should choose someone who is financially responsible and capable of responsibly handling disputes should they arise among the beneficiaries. While these are similar traits to those you may look for in a Guardian, the Trustee doesn’t necessarily have to have the parental tenderness you may desire in a Guardian.

The Executor or Personal Representative

Finally, this is the individual who essentially handles your estate’s immediate needs upon your passing; such as implementing funeral and burial instructions, collecting personal property, and assisting the Trustee in distributing personal items to the Beneficiaries.  It is important to note that the Trustee is the ultimate decision maker and the Personal Representative/Executor is more of a support, if anything, to the Trustee. We generally like to see clients appoint an Executor that is ‘local’ to you. Thus, someone that can rush over to your house, the local funeral home, organize family events, etc…

This person carries many of the same responsibilities as the Trustee, just in a different capacity. However, this person also has the responsibilities to oversee your funeral and burial, distribute any assets that fall outside the Trust, and to rummage through your personal belongings after you have passed and make sure they are distributed or disposed of properly.

What does my Spouse do?

If you are married, it’s important to note that we typically appoint your surviving spouse as the 1st Trustee, Executor and of course guardian of the children. In a properly designed Will and Trust (Estate Plan), we appoint at least 2 ‘backups’ for these positions above.  For example, your spouse is appointed as the first Guardian, then your Grandma, and then maybe your Sister. I want to make sure we are ‘three’ deep in options for the position to make sure it is filled.  The last thing we want is to have a vacancy and leave it up to a judge or court battle to settle who gets the role.

While these three positions have been referred to as three distinct people, many people appoint one person to perform all three roles. Not something we recommend, but regrettably for some reason clients just don’t have confidence in multiple family members or friends to carry out these roles. But again, there is no rule that requires three separate people serve in these three roles, just as there is no rule that only one person serves in each position. You can ALSO have Guardians, Trustees, and Executors work by committee. For example, it’s also common to have a ‘team of 3’ serve as your Trustee and majority rules in all of the decisions.

Finally, keep in mind that you can always change these folks and appoint different ones (very common after a bad family reunion). Remember, with a Revocable Living Trust, as long as you are of sound mind you can always appoint a new person in any of these roles – it’s your right under the trust. Bottom line, your estate planning professional will guide you to the best strategy for your situation so you can rest easy knowing your loved ones and assets will be taken care of when you pass. If you haven’t set up your Will, Trust or what we like to call your Estate Plan yet, please go here for more information: Learn more about a Will or Trust and get started.

California Supreme Court Makes It Harder to Call Your Worker a “Freelancer”

May 9, 2018 Business planning, Law, Small Business, Tax Planning Comments Off on California Supreme Court Makes It Harder to Call Your Worker a “Freelancer”

It seems like you can’t talk business at all these days without hearing something about the “gig economy.”  For those unfamiliar with the term, the gig economy is a combination of two factors. It’s an environment where many people have a ‘side gig’ to make ends meet, and organizations not wanting to commit to employees, contract with independent workers on a short-term basis.

This situation can actually be a win-win. American workers are able to start a small business on the side, make more money per hour, take better tax write-offs and companies save on employment taxes…a perfect world right?  Well apparently the State of California doesn’t think so.

The most famous examples of gig economy companies, of course, are the ride-sharing companies Uber and Lyft.  But did you know that if you are over age 21 and have a valid driver’s license, you can be your own boss by delivering packages for Amazon through something called Amazon Flex?  And don’t forget about the thousands (maybe millions) of people who make a living selling arts & crafts on Etsy, provide a handyman service or landscaping on the weekend, or sell their skills on websites like Upwork.

According to most estimates, about one in three members of the American workforce (that’s about 55 million people!) work in the gig economy, and that number is expected to grow to roughly 40% of American workers by 2020.

However, then comes California and other State government agencies to the party. One of the biggest issues in the gig economy is the classification of workers.  Essentially, the question is whether an Uber driver (or someone like him/her) should be treated as a W-2 employee (for whom the employer needs to complete additional paperwork, withhold taxes, and deal with things like SUTA, FUTA, FICA, and Workers’ Compensation), or as a 1099 independent contractor (for whom the employer’s responsibilities largely end after cutting them a check).

In Mark Kohler’s article “The difference between sub-contractors and employees”  he explains that “There are facts and circumstances most commonly used to determine the difference between an employee and sub-contractor. It’s a subjective analysis and some facts may indicate that a ‘worker’ is an employee, while other factors indicate that the worker is actually a sub-contractor.”

The bottom line is that in most situations, the more control a company has over how, when and where workers complete their tasks, the more likely those workers are going to be considered employees – regardless of what the parties say in their written agreement.

However, the contours of the law in this area are constantly changing, and judges and legislatures (especially in larger, bluer states) are in most cases making it harder and harder each year to classify workers as independent contractors.  This is almost always politically expedient, given that employee status is typically considered more advantageous than contractor status, and more voters are workers than employers.

A huge recent example of this shift is the unanimous April 30th decision of the California Supreme Court in the case of Dynamex Operations West, Inc. v. Superior Court.  In that case, the court abandoned the typical “control-based” test traditionally used in these types of cases, and instituted a new “ABC Test.”  Under the ABC Test, a worker is properly considered an independent contractor only if the company hiring the worker establishes all of the following:

A) The worker is free from the control and direction of the hiring company in connection with the performance of the work, both under the contract for the performance of the work and in fact;

B) The worker performs work that is outside the usual course of the hiring company’s business; and

C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

All of the above must be met in order for the worker to be considered an independent contractor.

So, let’s think about this in terms of an Uber driver.  Uber can probably make an effective argument that their drivers are free from Uber’s control and direction – so let’s go ahead and assume that Part A of the test is met.  Ok – on to Part B.  What is Uber’s business?  Providing rides to people who need them.  What do Uber drivers do for Uber?  Provide rides to people who need them.  Therefore, is the work performed by Uber drivers “outside the usual course of the hiring company’s business”?  Umm, nope.  This means Uber drivers fail Part B of the ABC Test (they probably fail Part C as well), and are not considered independent contractors in California.  Your move Uber…what’s your plan?  Sorry.

Now, keep in mind that the Dynamex decision only applies in California, and even in California it’s unclear whether the ABC Test applies outside the context of wage law.  However, California is often on the vanguard of these types of changes in the law (not always – sometimes it’s an outlier).  As such, the ABC Test may be coming soon to a state near you!

Also, remember that the ‘sub-contractor’ classification could also be a major problem in other areas.  See this related article “7 Deadly Outcomes of Treating Your Employee as a Sub-Contractor”.

So, what are the takeaways if you have (or are thinking about having) workers who you want to classify as independent contractors?

  1. Find out the law in your state.  It likely won’t be cut and dried (Texas, for example, looks at 20 different factors), but you can get a good sense of which side of the fence you are on by doing some research and speaking with an employment attorney.
  2. Know the consequences of misclassification.  If it’s a close call, then you need to know the risks you would be taking by classifying a worker as an independent contractor instead of as an employee.  This article does an excellent job of exploring the perils of getting this wrong.
  3. Keep the ABC Test in mind.  If you feel like you’re good under your state’s current law, it’s still a good idea to analyze your situation under the ABC Test.  That way, if it becomes the law of the land where you operate, you know where you stand.
  4. Look at your business model.  Would your business be able to survive if you had to classify your workers as employees instead of contractors?  If the answer is no (and especially if the employee/contractor question is a close call), then what steps can you take to change that answer?

The reality is that the practice of trying to call an employee a sub-contractor can be a very dangerous practice and the IRS continues to crack down on small business owners. Now we have States doing the same thing, and all government agencies consistently warn taxpayers that if they are caught paying ‘employees’ as ‘sub-contractors’, they will pay stiff penalties on top of the taxes and interest owing for payroll withholdings that should have taken place.

Who Should be the Beneficiary of Your Life Insurance?

March 13, 2018 Estate Planning, Law, Retirement Planning, Uncategorized Comments Off on Who Should be the Beneficiary of Your Life Insurance?

Life insurance is an integral part of financial and estate planning for many.   In most cases, people purchase life insurance in order to protect their spouse, children, and/or others who are financially dependent on them from becoming indigent in the event they die. However, we often have questions as to how they should list their beneficiary designations on life insurance; should the individual you wish to protect be named directly as a beneficiary, or should you name your trust as the beneficiary of the policy?

In the context of retirement plans, we usually want the spouse to be directly named as a beneficiary, but the same rule does not necessarily apply to life insurance as it depends on your circumstances and goals. In determining how to designate your beneficiaries for life insurance, the fundamental questions are who are the people you trying to protect, and would it provide more protection to have those life insurance proceeds pass according to the rules and conditions set forth in your trust.

The reason for naming a trust as the primary beneficiary is that, upon your death, the life insurance proceeds would be payable to your trust, and subject to the rules of your trust. This can be very beneficial if you want to place conditions and restrictions on the distribution of life insurance proceeds. On the other hand, if you name an individual directly as the beneficiary of your life insurance policy, then upon your death, that individual receives the entire proceeds of the life insurance payout without conditions or restrictions.   In many cases, naming the trust as the beneficiary provides significantly more planning opportunities. For example:

  • Minor Beneficiaries.   If the primary beneficiaries you wish to protect are minors. Life insurance companies will generally not pay life insurance proceeds to minors. Moreover, if a minor is the named beneficiary on the life insurance policy, a guardian would most likely have to be appointed by the court following the death your death to manage the payout.   This not only entails additional delay and legal expense, but you may disagree with who the court would appoint as the guardian, as well as the underlying laws that would govern how this guardian will manage this financial windfall for the minor?   Having a well-designed estate plan gives you this control to actually name the guardians you wish to be appointed, and to specify how you wish this financial windfall to be managed or distributed for the minor’s benefit.
  • Beneficiaries with Special Needs. If the primary beneficiaries have special needs, are disabled and/or receive government benefits, getting a huge windfall from a life insurance policy could jeopardize their eligibility for government benefits. In these situations, it is usually better to have the insurance proceeds paid to a trust that can take into account these special needs so that the insurance proceeds can serve as a resource for individual(s) with special needs, yet preserve their eligibility for government benefits.
  • Financially irresponsible beneficiaries.   One of the primary benefits of using a trust for estate planning is the ability to determine how, when, and on what conditions a distribution can be made to the beneficiary. If the individual(s) you are trying to protect is not financially responsible or is a spendthrift, then, for example, you can restrict distributions to be used only for the health, maintenance, or education for the beneficiary, or condition distributions to the beneficiary only if he/she meet certain goals you wish to see the beneficiary achieve, such as education, career or rehabilitation.
  • Multiple Beneficiaries. Naming a trust as beneficiary is also useful if there are multiple individuals you wish to share the proceeds from life insurance, for example, if you have multiple children. On the other hand, if you only have single beneficiary you wish to protect and you have no issues with leaving them the proceeds outright, then it may be okay to name them as the primary beneficiary. Regardless, you should always consider naming other beneficiaries, for example, your trust, other relatives, or charities as secondary or contingent beneficiaries in case the primary beneficiary predeceases you.

For a summary regarding several other benefits of a Revocable Living Trust, here is a video from the senior partner of our firm, Mark J. Kohler:

Finally, a word on life insurance and asset protection. Every state and the District of Columbia has varying exemptions that protect the death benefit and/or cash value of life insurance. Some states like Florida and Texas have strong blanket protection against creditors for both the death benefit and cash value of life insurance. Other states have limitation on the exemption, for example, limiting the exemption to a specific dollar amount, limiting the exemption to that which is reasonably necessary to support the beneficiary, or limiting the exemption only to certain designated beneficiaries (e.g. spouses and/or children).

If protecting your life insurance from creditors is important, then you need to know the different exemptions that apply in your state and/or consider whether it is advantageous to move to a state that has better exemptions.   Better yet, if asset protection or estate taxes (either federal or state) are an issue, then you may want to consider the additional benefits of a properly structured irrevocable life insurance trust (ILIT). A discussion of ILITs is beyond the scope of this article, but if asset protection for life insurance is a goal, you need to make sure you explore this option BEFORE the need arises in order to avoid fraudulent transfer issues.

For many families, life insurance is a significant, if not largest asset in the family estate. Making sure you understand your purposes and/or options with respect to handling your life insurance will help ensure your loved ones are protected in the event of your passing.

Purchasing Homeowner’s Insurance- Strategies & Pitfalls

December 13, 2017 Asset Protection, Business planning Comments Off on Purchasing Homeowner’s Insurance- Strategies & Pitfalls


People who have read Mark Kohler’s Lawyers are Liars know that our philosophy with respect to asset protection is the “multiple barrier approaches” to put as many barriers as you can between you and someone who would sue you.  For owners of real estate, one of primary asset protection barriers is your homeowner’s insurance policy.

No insurance policy will cover all risks under any circumstance, and so it is important for owners of real estate to request, understand and procure the right policy for their situation.   Unfortunately, getting the right policy tailored your situation may not as easy as just calling your insurance agent and getting whatever they recommend, but requires a careful understanding and analysis of risks that can be protected by insurance, but most importantly making sure your policy actually covers those risks.  Your insurance agent should assist you in deciding on appropriate coverage, but remember that you, not the agent, knows this property the best and so it is your job to communicate the risks and perils on the property to the agent.   Some guidelines that can help maximize coverage include the following:

Tip 1. Make sure you are Dealing with a Licensed Insurance Company or Agent.Both Insurance Companies and Agents are generally licensed by the state and their information can be found online at the insurance department for the state.   Most state insurance departments have resources online to assist you in purchasing the right insurance and make sure that the person or company you are dealing with specializes in that specific area of insurance.

Tip 2. Understand What Type of Risks and Coverage You Need.Every property is different and may entail different risks.   The type of insurance will also depend on whether the property is used as a personal residence, long term versus short term rental, or a condo.    In general, homeowner’s insurance is designed to protect against risks that are outside the control of the owner, such as rain, wind, fire, vandalism, pipe bursting, falling objects, theft caused by breakage of glass, etc.   It generally does not cover risks that are within the control of the owner or occupier, such as flooding caused by drain stoppages, mold, toxic materials, pests, damage or injury resulting from deferred maintenance, intentional criminal acts, etc.  Flood and earthquakes generally require a separate policy. A typical homeowner’s policy will generally classify coverage for (1) Dwellings or other structures, (2) Damage to Personal Property, and (3) Liability coverage.   Knowing what you are specifically looking for in the form of coverage BEFORE you shop for insurance will help ensure that the actual coverage you buy matches your expectation.  An insurance agent will typically gather some specifics about your property and (if your lucky) also have a conversation with you regarding appropriate coverage, and based on that alone will make a recommendation of coverage most likely generated from a computer. The insurance agent will rarely have seen the property nor have any idea of any unique risks existing on the property and so it is your responsibility to discuss any unique risks on the property.

For example, for coverage for “Dwellings,” you want to know, from as reliable a source as possible, the estimated cost to repair or replace the structure with like kind and materials in the location where the property is located.  Construction costs vary depending on the location and the actual costs are often higher than what most people think.  Make sure you understand terms used by your insurance company such as the difference between “Actual Cash Value” versus “Replacement Cost” or “Guaranteed Replacement Cost,” with the understanding that insurance companies may define these differently.  For Personal Property, you want to make sure that important items of personal property are covered, how much they are actually worth, and create an inventory or snapshot of your personal property.

Most people are unaware that homeowner’s policies also provide coverage for personal (not business) liabilities that occur outside of the home.  For Liability Coverage, especially for rentals, you need to be very precise as to what your expectations in terms of what are the most horrible things that could cause significant injuries on the property what the appropriate amount of coverage would be.    Create a list of all the risks and perils that are important for the property (e.g. pools, dogs, trees, neighbors???) so that you can address these with the insurance agent.   Also, understand or ask how the deductible amount or other discounts such as alarms or other safety features will impact the premiums.   Consider what the differences in premiums would be if you increased the coverage especially if you have higher net worth as the premium increase for added coverage may not be as much as you think.   Look online for tips from state insurance departments websites such as insurance.ca.gov, or consumer-oriented websites like www.insuranceconsumers.com   for issues and topics that can help you understand what risks and perils you should be aware.

For condos or other common interest developments, there is often a master HOA policy from the homeowner’s association which generally covers the common walls, areas, and roof.  There may be separate policies for earthquake and flood.  Obtain copies of these policies and consider contacting the insurance agent to inquire about any gaps in coverage. The master HOA policy typically does not cover your interior condo unit and so a separate HO-6 is recommended to cover risks occurring from the “walls in.”  Since condo units often have shared walls, make sure you understand how risks occurring in these shared walls, in particular, water damage will be covered as this type of damage is often tricky to determine who should be responsible in the event of a loss.

For landlords (whether long term or short term), there are different policies depending on the use of the property and so make sure you get the proper policy for your specific use of the property. If you change the use of the property, for example, a personal residence to a long term rental, or into a short term rental, you’ll need to get a different policy to cover the different risks involved with the different use of the property.

Tip 3. Keep Detailed Notes of Your Communications with Insurance Representatives and Confirm, Confirm, Confirm. Although the nature of the relationship between the insurance agent and insured could vary depending on laws of the state and whether they are working for the insurance company or an insurance “broker,” you want to be very clear with your insurance representative as to what coverage is important to you, and any specific requests or expectations of coverage should be made or confirmed in writing to the insurance representative.  Ask and confirm with the agent in writing any specific exclusions from the policy.  In other words, if the agent makes a representation of coverage to you that is important, send a confirmation of that representation in writing (e.g. email, fax, etc.) so that a record exists confirming your expectations.  Better yet, ask the agent for a copy of the policy beforehand.  Most agents won’t volunteer this but any agent that has been doing this for any amount of time should have this handy.   Keep copies of everything, including advertisements and marketing as that information could be relevant in a coverage dispute.   If you’re not sure about the type or amount of coverage you need, ask the insurance agent for their opinion and confirm this opinion in writing.  An insurance agent who makes a representation to you concerning coverage could be bound by that representation even if it doesn’t appear in the policy so it is important to document all communications with the agent to hold them accountable for what they say.

Tip 4. Read Your Policy. I’m not talking about the 1-2 page “Declarations Page” that is only designed to show proof of coverage, but 20-30 page insurance “Binder” or “Policy” that contains the details of the actual coverage and exclusions.  No one really enjoys reading insurance policies and don’t be surprised or embarrassed if you don’t understand what you are reading.  It is a well known fact that insurance companies intentionally make their policy language difficult so as to create ambiguities as to their coverage responsibility.    Nevertheless, don’t let the first time you read the policy to be when you need to file claim.   Get ahead of it beforehand which will give you the perfect opportunity to ask questions and to clarify coverage with the insurance agent before a claim arises (See #2 above).   Be assured that if a claim is ever made, the adjusters and defense attorneys will be combing through the policy language with a fine toothed comb to try and evade responsibility.   If you do ask questions about the policy language, don’t be surprised if the insurance agent initially doesn’t understand what the policy says either as that is quite often the case, but make sure you get an answer to your questions in writing.

Tip 5. Coverage for an LLC.For those of you who own rental property in an LLC, check with your insurance agent as to what they would require to add the LLC as an additional insured.  Some companies will simply add the LLC as an additional insured in addition to the owners.  If your insurance agent tries to sell you a different policy such as a commercial policy, consider getting a second opinion, and again, do not rely merely on the verbal assurances of your agent, but confirm it in writing.   If you have a mortgage, be aware that some lenders may periodically ask for proof of coverage, and so there are possible due on sale implications for adding an LLC as additional insured.

Getting the right insurance coverage should be one of your front line defenses in your overall asset protection strategy.  Doing your homework beforehand, exercising proper due diligence during the process, and making sure there is a paper trail of your dealings with the insurance company will help ensure that there will be coverage in the event of a loss.

8 Core Tax Concepts Every Entrepreneur Needs to Know

October 24, 2017 Business planning, Corporations, Small Business, Tax Planning Comments Off on 8 Core Tax Concepts Every Entrepreneur Needs to Know

Of the many virtues that entrepreneurs have, one such virtue is the desire and ability to get as much information and knowledge as they can by reading books, attending speaking events, researching on the internet, etc. However, ‘taxes’ aren’t one of the topics entrepreneurs seek out, and it’s for a justifiable reason.

Many believe the topic of taxes to be either too boring or overly complicated, and it typically is when presented improperly.  Yet, so many business owners are starving and anxious to learn tax and legal principles. Inspired by those teachers of tax and legal topics that make it truly interesting, I have tried to summarize in this article the top 8 Core Tax Concepts that every entrepreneur needs to know:

  1. The IRS treats different types income VERY differently. This principle is at the CORE of so much of our advising. For example, income you make in your operational business is NOT taxed the same as income you make in your rental real estate “business”. So as you read books, attend speaking events, etc., keep in mind that the principles taught (and the advice if you’re talking to your tax professional) are going to depend in large part on the TYPE of income.
  2. Corporate Income Tax versus Pass-through Entities i.e. LLC’s, S-corps, Sole Props, Partnerships. A pass-through entity is a business entity that does NOT pay income tax at the “entity” level but rather, the income tax liability is passed-through to the owner(s) of the business (hence avoiding the double taxation that is often associated with c-corporations). In other words, the manner in which income generated by an LLC taxed as a sole proprietorship or partnership is very different than a c-corporation. There are a lot of false assumptions that entrepreneurs have about their tax situation and a lot of that comes from internet research – not because the article was bad, but because they simply misapplied it to their situation. For example, if an entrepreneur whose business is taxed as a partnership comes across an article about business taxes is going to become very confused if the articles is referring to corporate income taxation, unless they REALIZE the article is not referring to “pass-through entities” such as theirs. The result would be that if that entrepreneur tried to apply the principles in that article to their business, it would be confusing and likely not helpful.
  3. There are all sorts of taxes – It’s important to keep them straight. If you regularly read books, attend speaking events, listen to podcasts, etc., and you hear taxes, don’t assume it’s ALWAYS about income taxes. For example, technically, self-employment taxes, which is discussed frequently, is different than income tax. And when you’re in the world of small business, real estate, estate planning, etc., trying to get as much “self-learning” as you can, there’s even more types of tax out there which may or may not apply to you. For example, there’s income tax, self-employment tax, estate tax, property tax, gift tax, payroll tax, sales tax, and many more. So always make sure you’re aware of which type of tax that author, or speaker, etc., is referring to.
  4. Generally, a tax-write off is whatever costs and expenses are customary and appropriate in your industry and helpful to your business. Actually, the verbiage in the tax code is “ordinary” and “necessary”, but thanks to the courts, those words have been defined to mean “customary” and “appropriate”. So if you’re a house flipper out genuinely trying to make money in your business and you have costs and expenses along the way, you’ll typically be able to write off any and all expenses that are customary and appropriate for someone in the house flipping business.
  5. Some business “write-off’s” must be amortized over time. With some exception, when you/your business buys equipment or assets, generally that cost IS deductible BUT will have to be spread out or amortized over multiple tax years based on the IRS schedule for that particular asset/equipment.
  6. Basis. One of the core principles of taxation is that your cost to acquire an asset is called your basis, and that’s important because when you decide to sell that asset, the tax consequences of that transaction will be determined “based” (bad pun) on the selling price of the asset/equipment over and above the basis (note: by the time you sell that asset, the basis will have adjusted and so it’s referred to as your “adjusted basis”). That excess amount, if any, is a capital gain and is typically taxed differently than your “ordinary” business income. Selling an asset in your business (or the business itself) can become quite complicated, but so long as you remember this core tax concept, it will help you when discussing transactions with your tax professional(s).
  7. Most tax deductions are “entity-agnostic”. Most of the tax write-off’s that a typical entrepreneur are going to have will be available to them regardless of whether they operate as a sole proprietorship, LLC, or corporation. For example, if you’re trying to claim expenses associated with your business that you incur in the course of traveling, meeting with clients, etc., those costs will generally be deductible regardless of whether you operate your business as a sole proprietor, partnership, s-corporation, or c-corporation.
  8. Don’t let the “tax tail wag the dog”. I’m not suggesting your business is a “dog”, but if your business doesn’t need a certain expense or you wouldn’t buy a certain expense otherwise, it usually doesn’t make sense to incur such an expense simply to claim another tax write-off. For example, it’s exciting when you read a book or attend a speaking event that mentions a certain tax write-off, but if you don’t need that expensive new piece of equipment, particularly if you’re just starting out in your business, that huge expense, notwithstanding the fact that it is deductible, could run your business into the ground.

In sum, keep reading, attending speaking events, listening to podcasts, but if you will keep these core principles in mind you’ll have much better success in implementing some of the strategies you read/learn about. This article is not intended as legal or tax advice. If you’re an entrepreneur or potential entrepreneur and have tax and legal questions, please contact our office.

Creative Planning Options with a Revocable Living Trust

October 17, 2017 Business planning, Estate Planning, Uncategorized Comments Off on Creative Planning Options with a Revocable Living Trust

Estate planning is something most know they should do, but most American adults simply haven’t gotten it done.  In a survey available from AARP,  60% of American adults do not have an estate plan.  The number gets even higher for some minority populations.  In most cases, this is simply due to procrastination that “I just haven’t gotten around to it.”  Many people that I speak to as a lawyer simply don’t understand the consequences of passing away without an estate plan.

One of the primary reasons for a Trust is to avoid probate, which is a court supervised process for the distribution of a decedent’s assets (especially real estate) when a person dies without a trust.  However, the revocable living trust affords many creative planning opportunities that generally cannot be accomplished without a comprehensive estate plan.  Many individuals who have not consulted with a professional estate planner do not know the creative strategies that can be accomplished through a trust.  Examples of some creative planning opportunities include:

Planning for the Disabled

In general, eligibility for certain need based government benefits such as disability or SSI have restrictions based on income and assets.    Many people mistakenly assume that if they have a child or other dependent that is disabled or who otherwise relies on government benefits, that they should disinherit these disabled dependents in order to ensure that the dependents continue to qualify for disability benefits.  Disinheriting a dependent entirely just so they can continue to get disability represents a fundamental misunderstanding of the available options and often times simply indicates bad planning.  A “special needs trust” is a special type of trust that can allow a dependent to potentially receive funds and benefits from the trust without interfering with government benefits.    These types of trusts require very precise terms and conditions so that any benefits from the trust do not disqualify the dependent’s eligibility for the particular government benefit to which the dependent is or may be eligible.

Asset Protection for the Beneficiaries (Your Kids/Heirs)

A trust can provide significant asset protection for children who have difficulties handling money or who are otherwise high risk.  Most states allow trusts to contain “spendthrift” provisions which can restrict the ability of creditors of the beneficiary from reaching the beneficiary’s interest in the trust.  In general, a creditor can only reach assets from a debtor which the debtor himself/herself can reach.  Different states may have different rules and there may be exceptions for certain types of creditors (for example, claims by a spouse for alimony or child support may not be protected by a spendthrift clause).  In addition, the protection of the spendthrift provision general applies only to the beneficiary, not the original creator (i.e. the grantor) of the trust.  However, the spendthrift provision could be an effective planning tool to provide for your beneficiary without risking that the trust could be subject to that beneficiary’s creditors.

Planning for Blended or Non-traditional Families

Lets face it, our conception of the family unit from generations ago is constantly changing and evolving.   Many of us are now raised in blended families, or by individuals who were not our blood parents, or live in various types of family arrangements.  In most cases, the law has not evolved in recognition of these different family arrangements.   A primary purpose of the revocable living trust is to dictate how your loved ones will share in your legacy.  With a Trust, you can help ensure that certain individuals do (or don’t) share in your legacy.    Otherwise, leaving this decision up to the laws of the state could result in people you care for being cut off from your estate.   The most common example is someone who divorces and remarries but has children from the original marriage.  In many states, if that person passes without an estate plan (will or trust), the estate passes to the surviving spouse and the children from the first marriage are cut off.   Proper planning using the revocable living trust will help ensure that the people you wish to benefit will actually receive those benefits.

Planning and Supporting a Legacy

A trust is a very flexible document and can be drafted in different ways to support the ones you love but not allow the assets to be wasted.  Do you want to provide support to a grandchild, but not have it affect their eligibility for financial aide for college?  Do you want to help a child start a business, but not unless he/she first gets a college degree?   Do you want to assist your children to buy their first home, or finance their wedding?  A revocable living trust allows you to set terms and conditions for your generosity to ensure that your gift is used the way you wanted it to be used, and for nothing else.

Of course if you’re one of those people who feel that “I can’t take it with me so I’m going to spend it all now,” then perhaps these planning opportunities are not for you.  But for those who wish to leave a legacy behind for your loved ones (or loved causes) future and want it protected and preserved for this purpose, the revocable living trust can provide infinite possibilities to secure your legacy.

Estate Planning 101: 5 Tips to Avoid Mistakes

July 25, 2017 Estate Planning, Law, Litigation Comments Off on Estate Planning 101: 5 Tips to Avoid Mistakes

As I work with small business owners and investors throughout the year, I want them to see the big picture when it comes to Estate Planning. Many misunderstand what the Estate Plan is all about and think it’s simply an ‘asset protection’ strategy…that couldn’t be further from the truth.

An Estate Plan is about passing on your hard earned wealth to your loved ones, or a project/institution you love.  What a tragedy for a small business owner or investor to spend decades toiling to build wealth, only to have it crumble at the very end of their life because they don’t have an estate plan. YOUR wealth should go to what or who you love, NOT lawyers or to ungrateful and litigious family members fighting over who gets what.

Having said that, estate planning is not just for entrepreneurs or investors – anyone who has assets and/or a family should have an estate plan.  So here are 5 tips for avoiding mistakes when setting up an estate plan:

1. Putting It Off / Procrastination. Nobody likes thinking about dying.  But here’s a motivating factor to not put off your estate plan.  Imagine how you would feel if upon your death your assets went to your worst enemy (or at least someone you don’t like).  Although that’s an extreme thought, the reality is that if you don’t have an estate plan, you lose that control, that ability to decide who gets your assets upon your death.  So before you put off doing an estate plan, imagine your ex-spouse getting everything you own, and hopefully that is all the motivation you need to get your estate plan done.  The first step is to fill out an estate planning questionnaire.  Our questionnaire has all the basic questions you should be asking yourself when setting up an estate plan.  Then I would review those answers and we would schedule a consult to make sure everything is in order.

2. Making Sure the Estate Plan Fits You / Your Situation. It doesn’t make sense to have an elaborate expensive estate plan if that’s not necessary.  It also doesn’t make for a successful business owner or investor to pay $99 for a boilerplate estate plan off the internet.  The key is making sure your estate plan is a good fit for your  You don’t want it bigger and more expensive than it needs to be, but you also want to make sure it is comprehensive and custom-fitting to your circumstances.  Our office can assist with making sure it’s a good fit for your situation.

3. Not Knowing the Difference Between Creating a Trust and Funding a Trust. One of the biggest tragedies is when someone finally gets an estate plan with a revocable living trust but they fail to FUND the trust i.e. put assets into the trust.  Certainly the trust can’t own assets until it is created, but simply creating the trust without funding it is insufficient.  Creating your revocable living trust is a matter of getting the documents drafted and properly executed/signed.  Funding your trust is a matter of actually putting your assets into the trust.  The manner in which this is accomplished depends on the asset.  Some assets require having ownership re-titled into the name of the trust.  Other assets simply require having the trust listed as the beneficiary.  But if you create the trust but don’t fund it, you’re missing arguably the most important step in the process of estate planning.  If you created a trust but are unsure if it’s been funded appropriately, our office can assist with this.

Here is a video by our senior partner here at KKOS lawyers, Mark J Kohler, explaining 4 reasons why you might need a trust. Understanding the role and purpose of a trust can help you fund it and maintain it properly.

 

4. Understanding that Estate Planning is Not Just About Death. If death isn’t reason enough to have an estate plan, what about incapacity?  Imagine the impact on your business and your life if you lost your mental capacity either because of a coma or something less dramatic.  You would no longer be able to make important decisions about your business and your life.  A good estate plan will include documents that address this.  So make sure your estate plan has the appropriate documents for death AND disability/incapacity.

5. Knowing When to Make Changes / Take Ownership of Your Estate Plan. Your estate plan is meant to be a living, breathing thing that should probably be changed as your life circumstances change.  If you plan to setup an estate plan and hope to leave it alone until you die, there’s a good chance either the applicable law will have drastically changed or your intent will be completely different than it was when you first set it up.  So if you put your best friend as a beneficiary of your trust and then you guys become worst enemies, it’s a good idea to update to your trust.  If your trust was written when your kids were little and they’re now adults, it’s probably a good idea to update your trust.  If you put your brother as the successor trustee of your trust with no backup and he died 5 years ago, you need to update your trust.  Basically, if the nature of your relationship with anyone you’ve listed in your estate plan has materially changed, it’s time to update your trust.  Now if someone’s address changes or something minor, you don’t necessarily need an overhaul of your estate plan.  The other part of this tip is making sure you take ownership of your estate plan.  Hopefully you get an attorney to draft it but even so, you should know the basics of your estate plan such as who the trustee(s) is/are and who are the beneficiaries, so that as your life changes and your relationship with these people change, you know if a change needs to be made to your estate plan.  For example, I have talked to many people who obtained an estate plan previously and they don’t know who the beneficiaries are or who the trustee(s) is/are or what the trust owns.  While you don’t need to know the legal jargon you should know these basics about your estate plan.

Hopefully these tips will get you thinking about setting up your estate plan or updating it if you already have one and your situation has changed from when you set it up originally.  Our estate plans come include a one hour consultation so you’re getting sound legal advice tailored to your situation, and not just boilerplate paperwork. Please contact our office at 888-801-0010 to book a consultation with an attorney to start the process. Any retainer will be applied to the cost of setting up the entire estate plan.

Ask Your Attorney if a “Covfefe” Trademark Is Right for You

July 11, 2017 Business planning, Corporations, Law, Litigation Comments Off on Ask Your Attorney if a “Covfefe” Trademark Is Right for You

On May 31st, 2017, at 12:06 a.m. Eastern Time, President Donald Trump unleashed the following tweet: “Despite the constant negative press covfefe.” No one has been able to definitively crack the code (if there is one) as to what “covfefe” actually means. The President took down the tweet six hours later and replaced it with a tweet saying: “Who can figure out the true meaning of ‘covfefe’??? Enjoy!”

Predictably, the word “covfefe” immediately went viral on social media, with several twitter users encouraging their followers to “ask your doctor if Covfefe is right for you” and others thinking it’s what you’re supposed to say when someone sneezes. In the following days and weeks, covfefe has taken on a life of its own and become a bit of a cultural phenomenon. Late night hosts have debated whether President Trump had some sort of minor stroke or simply fell asleep when he typed covfefe, and Hillary Clinton was asked about what she thought it meant in a recent public appearance.

However, it’s not only comedians and 24-hour news channels that are making hay with covfefe. A Google search of “covfefe” reveals dozens of businesses ready to sell you apparel with hundreds of variations on the covfefe theme. To date, my personal favorites are “Make America Covfefe Again” and “What Part of Covfefe Don’t You Understand?”

A check of the U.S. Patent and Trademark Office (“USPTO”) databases shows that in the forty days since the covfefe phenomenon began, 34 trademark applications have been filed using the term. The products and services being tied to covfefe run the gamut from “advice relating to investments” to fragrances, toys, coloring books, and even sandwiches. As you might expect, four different companies have filed applications to use covfefe for beer.

However, easily the most popular application (there are about twenty of them) is to get protection for using covfefe on t-shirts, hats, and other apparel. One applicant for a covfefe apparel trademark even appears to have access to the inner circle of Trump advisors and confidants who know what covfefe really means – after all, its application is for: “COVFEFE – Carry On Vigilantly Fighting Evil For Ever.”

So, the question becomes: which of these applicants will win the coveted “covfefe” trademark for t-shirts? The answer from this trademark attorney is: very possibly none of them! Why? Because the USPTO will generally refuse an application as “ornamental” if what is submitted to the USPTO shows that the use of the mark is only decorative or ornamental. That is, if the use of the mark does not clearly identify the source of the goods and distinguish them from the goods of others – which is required for proper trademark use.

The USPTO’s number one example of “ornamental” use is when a quote is prominently displayed across the front of a t-shirt, such as “The Pen is Mightier than the Sword.” The USPTO’s position is that most purchasers would perceive the quote as a decoration, and would not think that it identifies the manufacturer of the t-shirts (the source of the t-shirts could be Hanes® or Champion®, for example, as shown by the neck-tag).

Other examples of “ornamental use” put out by the USPTO are:

  1. A logo on the front of a hat. When the logo is associated with an organization, like a sports team, which did not manufacture the hat.
  2. Stitching designs on the back pocket of a pair of jeans. Purchasers are accustomed to seeing embellishments on jean pockets and would not think this embroidery design identifies the source of the jeans.
  3. A floral pattern on tableware or silverware. A purchaser would likely see this pattern as merely decorative and would not think it identifies the source of the tableware or silverware.
  4. The phrase “Have a Nice Day” or a smiley face logo. Everyday expressions and symbols that commonly adorn products are normally not perceived as identifying the source of the goods.

While there is no definitive place to affix a mark to goods to avoid an ornamental refusal, the location, size and dominance of a mark have a big impact on how the public perceives it. The USPTO has offered the following examples of proper non-ornamental trademark use:

  1. Discrete wording or design on the pocket or breast portion of a shirt. A purchaser would typically associate the small logo on a shirt pocket or breast area with the manufacturer or the source of the shirt.
  2. A tag on the inside of a hat or garment. A purchaser would associate a logo on the tag with the maker of the garment.
  3. Logo on a tag above the back pocket of a pair of jeans. A purchaser would typically associate this mark with the manufacturer of the jeans.
  4. A small logo stamped on the back of a dinner plate or bottom of a coffee mug. Purchasers are accustomed to seeing a mark used in this location to identify the source of the tableware.

Another way to get around an “ornamental use” refusal from the USPTO is to show that the mark has “acquired distinctiveness.” Long-term use in commerce, advertising and sales figures, dealer and consumer statements, and other evidence can be used to show that consumers directly associate a mark with the source of those goods. While this probably won’t work for the covfefe applicants (since the term has only existed for about six weeks), it could be an option in your situation.

The final option for the covfefe trademark applicants would be to move their applications to the “Supplemental Register.” Registration on the Supplemental Register doesn’t provide all the same legal advantages as registration on the Principal Register, but it does provide protection if and when someone applies for a conflicting mark later. Also, after five years of continual use, you can apply for (and in most cases will be awarded) registration on the Principal Register.

If you feel like you have captured “covfefe-like” lightning in a bottle, and want to talk about how to protect your name and/or logo, please give me a call at 435-596-9366 or shoot me an email at jarom@kkoslawyers.com.

The Realities of Litigation

June 27, 2017 Business planning, Law, Litigation Comments Off on The Realities of Litigation


For most people involved in a dispute, declaring the words “See you in Court!!” can seem like the perfect threat or even feel therapeutic at the least. Some even presume that by stating “I’m going to sue you” is like declaring nuclear war against the other side and the person or company that wronged you will certainly want to ‘settle’ because you have scared them with a lawsuit.

However, people who have actually been participants in litigation soon realize that there is no such thing as “inexpensive litigation,” and many individuals, fueled by the passion of a person scorned, proceed hastily to the courthouse seeking vindication or retribution without having a full understanding of the realities that they are getting themselves into.

Certainly, one of the great hallmarks of our society, and what separates the American system from many others around the world is an independent judiciary. But again, the media frequently oversimplifies what is actually involved in the legal process with its sole focus on sensationalizing the outcome thereby conveying a misleading impression of the actual litigation process.   Here are a few misconceptions I frequently encounter with clients about the litigation process include the following:

  1. Are you ready for the PROCESS? Unless you are in small claims, you generally don’t just file a lawsuit and then get to see Judge Judy the very next day. Media usually focuses on “trials” only, but ignores the months (usually years) of pre-trial procedure needed to get to that point.    Litigation usually begins with a “Complaint” which begins the “pleading” phase where the parties set forth their allegations and responses in defense. Sometimes there could be challenges to the pleadings through the motion process, which add additional expense and delay. Once the pleadings are done, then the parties have the opportunity to require other parties to the lawsuit to answer questions, produce documents, or take testimony of witnesses (the “discovery” phase). It should come as no surprise that parties to litigation are not always so eager to provide information that may hurt their case, and so the discovery process can often take months or years with parties jockeying in court over who should get what.   Assuming the parties have completed discovery, that does not necessarily mean you go to trial.   Trials only occur when there are actual factual or legal issues in dispute which requires a judge or jury to determine, and the reality is that most lawsuits do not go to trial. Although the cost of litigation varies depending on the location and issues involved, what I usually tell clients is the cost to go through these procedures to litigate a normal civil matter from Complaint up to but not including trial, doing a minimal amount of work, can easily run between $50,000 to $100,000. Preparing for and conducting a trial can substantially increase these costs and so unless you’ve retained an attorney on contingency, the expense and delay litigation is definitely an important consideration for most litigants.
  2. Does the Opposing Party have Assets to Satisfy Your Claim?  Usually this is the first question I ask a client contemplating litigation, and many times it is question the client hasn’t considered. It makes no financial sense to pay tens to hundreds of thousands of dollars on a case if the defendant has no money.  Although I’ve had my share of clients walk into the office wishing to sue “on principle” or “just to make a point,” these moral considerations usually get thrown out the window very quickly once we begin to discuss the costs that will be incurred to get them to where they want to be.   So unless the opposing party has significant, identifiable assets that may be exposed in a lawsuit, or there is sufficient insurance to cover the claim, many potential litigants find themselves having no remedy for their claim because the opposing side is essentially “judgment proof.”
  3. Do you realize how unpredictable litigation can be? This should go without saying, but I spoken with plenty of people contemplating a lawsuit express confidence that a judge or jury would find them in the right. In litigation, it is less about who is wrong or right and more about what you can prove. Court decisions are ultimately made by people who come from all types of backgrounds and from all walks of life, and attorneys in high stake cases often employ professional “jury consultants” and perform “mock trials” to gauge how a jury will likely view their case. Despite all the money that is spent on attorneys, consultants, experts and the like, even the best attorneys with the greatest of resources lose cases, and most of us have probably followed cases in which we were surprised by the outcome. From a legal perspective, the reason there are trials is because there are issues of law or fact in which “reasonable people can differ.” If every issue in a case was a “slam dunk,” then there would be no need for a trial.

For these reasons and more, I consider litigation to be the option of last resort. Although the media likes to portray litigation and trials as dramatic and full of suspense (which it certainly can be), they leave out the cost and the time consuming process.

Consider interviewing several litigation firms before embarking on your lawsuit and make sure you weigh all the pros and cons of a long draw out lawsuit. It doesn’t mean litigation shouldn’t be a tool, threat or productive option in your dispute, but just go into the process with your eyes wide open.

What You Should Know about Administering a Family Member’s Estate

May 23, 2017 Estate Planning, Law, Retirement Planning Comments Off on What You Should Know about Administering a Family Member’s Estate

Most of us will, at some point in our lives, be called upon to administer the estate of a departed family member or loved one. While it may seem like an honor to have been entrusted with this responsibility, the reality is often it is a thankless, time consuming job, and even more so if there are disagreements and disputes among the heirs or beneficiaries of the deceased.

Being asked to shoulder the responsibility of administering a decedent’s affairs while still mourning their loss can be challenging. The precise rules and procedures that apply will depend on whether the decedent had a trust that was fully funded, whether probate will be necessary because the either decedent did not have a trust or did not fully transfer all relevant assets into the trust.

It will also depend on which state laws apply as well as the value of the estate. Keep in mind that it is impossible to provide an all-encompassing checklist that applies to each family situation and the procedures may vary greatly depending on if the decedent had a will or a trust. However, here are some general guidelines to keep in mind, some of which may or may not apply depending on the situation:

  1. Seek Professional Advice.   This is something you may only do once in your lifetime and Google is not going to give you all the answers you need.  Also, keep in mind you do not have to go at this alone. Depending on the value of the estate and its complexity, you may want to employ the services of professionals such as attorneys, CPAs, appraisers, etc. to assist in navigating your responsibilities. Typically this would entail an estate attorney, a CPA knowledgeable in estate and income taxes, and a financial advisor, although additional professionals may be needed depending on the situation. Usually, these fees would be paid from the decedent’s estate and so there should be no financial disincentive to seek help if needed. There may be certain actions, decisions, procedures or deadlines that need to be met in a timely manner, which could impact the ability of heirs or creditors to make claims or challenges to the estate. Most people are not aware of these rules and deadlines and so getting the right advice from the start may be good protection for both you and the estate.
  2. Inventory and Secure the Decedent’s Assets & Important Documents. A trustee or administrator of an estate is charged with the duty to assemble, inventory and safeguard the decedent’s assets and important documents. In the immediate aftermath of a death, it could be a chaotic situation with visitors and relatives coming and going and, as the representative of the estate or trust, it is incumbent on you to safeguard the important assets and documents. You will need to determine whether the decedent had a will or trust, and assemble all important documents, contracts, bank accounts, financial accounts, safe deposit boxes, investment accounts, unpaid wages or other income sources, mortgages, insurance policies, retirement accounts, social security or other government benefits, pensions, real estate, businesses, prior tax returns, digital assets (email, social media accounts), etc. of the decedent. It may take some investigation into the files of decedent or interviewing the family members to uncover all potential assets and liabilities, and don’t assume decedent told you everything there was to know. A separate bank account will likely need to be set up for the estate or trust, and never comingle your personal finances with the estate/trust finances. You will need to obtain several certified copies of the death certificate in order to establish control over certain accounts held by third party custodians/banks. Some assets such as real estate may need to be appraised to determine the fair market value for purposes of estate taxes, reporting, or for distribution.
  3. Gather and Assemble a List of Decedent’s Creditors. This does not necessarily mean that you will immediately pay every bill as soon as it arrives. Rather, there could be other expenses that take priority such as funeral expenses or federal and state taxes. As a trustee or administrator of the estate, you could get into trouble by paying expenses that then leaves the estate unable to meet its tax or other priority obligations.   It is important to try and get a broad picture of the Decedent’s overall financial situation, including factoring in potential tax liabilities, in order to establish a game plan for administering the estate or trust and paying creditors. Of course, some debts such as mortgages or car payments need to be timely made to prevent the account from going to default, but have a concerted strategy for handling Decedent’s creditors. If it appears that the estate may not have sufficient assets to cover all liabilities, then professional assistance or assistance from the courts may be needed to determine how to prioritize payments.
  4. Notify Decedent’s Heirs and Beneficiaries. Some states have time requirements on when heirs and beneficiaries should be notified and whether they are entitled to receive a copy of Decedent’s will or trust. Their ability to bring challenges to the trust or estate may depend on when they were first notified and so seek help to determine the requirements in your situation and document your communications with heirs and beneficiaries.
  5. Manage the Assets of the Estate Prudently and Obtain the Consent of Heirs or Beneficiaries for any Major Actions. As the trustee or administrator, you are a fiduciary and must act in the best interests of the beneficiaries or heirs. You generally have a duty to manage and invest the assets as a reasonably prudent investor would and can be held personally responsible for failing to do so. Therefore, seek the advice of legal and/or financial counsel regarding any issues with managing or investing the assets of the estate, and if a decision needs to be made regarding an important asset (such as selling the asset, making significant improvements to real estate, etc.), consider obtaining the written consent of all beneficiaries before authorizing such action.
  6. Distribute the Assets to the Heirs/Beneficiaries. Once all the creditors and taxes have been paid and the estate is in a position to be distributed to the beneficiaries, an accounting may need to be performed and approved by the heirs/beneficiaries, and then the assets of the estate/trust may be distributed and estate or trust closed.

Again, keep in mind these are only general guidelines for administering trusts and estates and there may be specific state or federal requirements and deadlines that will apply to your situation. If you have a particularly large estate that may implicate state or federal estate taxes, there are likely additional requirements and deadlines and so it is recommended that you check with appropriate professionals as soon as possible for large estates.

For smaller estates or assets with lower value that are not held in trust, there may be other options for distributing those assets without the need for probate.   The rules and procedures can be rather complex depending on the state and the situation and so make sure you consult with appropriate professionals to ensure you are complying with your responsibilities as a fiduciary for the estate/trust.