Three Ways of Distributing Your Children's Inheritance That You Need to Consider

Three Ways to Distributing Your Children's Inheritance That You Need to Consider

When it comes to deciding how and when your children will eventually receive their inheritance, there are three options that are commonly chosen: outright, in stages, or in a lifetime trust. All three choices have their pros and cons so there is no right or wrong choice. As you will see, what it usually comes down to is the age, experience, and family/financial situations of your beneficiaries. 

1. Inheritance is immediately distributed outright

This is the most simple way to go because the inheritance is simply distributed directly to the beneficiaries once all of the decedent's bills and taxes have been paid.

While this may be a good choice for some, there are some drawbacks. Namely, this may not be the best choice for beneficiaries that are young or poor at managing money (it will be gone in no time), for those that are in a bad marriage (the inheritance could be lost in a divorce), for those that are in a profession that is high-risk (the inheritance could be lost in a lawsuit), or for those that are already wealthy (the inheritance will only increase their estate tax bill).

2.  Inheritance is given out in stages

This option holds a beneficiary's inheritance in a trust fund and pays the beneficiary one or more lump sums in stages - in other words when the beneficiary reaches a certain age or achieves a specific goal; then they'll receive an outright distribution of their inheritance.

For example, you could pay a beneficiary 50% of their inheritance when they reach the age of 25 and then the balance at 30, or 50% when they earn a college degree and then the balance when they complete graduate school or reach the age of 35.

Meanwhile, the property held back in the beneficiary's trust fund could be used by the Trustee to pay for the beneficiary's college or graduate education, medical bills, a car, housing, and ny other day to day needs. 

However, once the beneficiary receives a lump sum distribution, the same drawbacks as leaving an entire inheritance outright will apply. This option also requires a responsible trustee to manage the trust fund, which often entitles the trustee to compensation for his or her services in managing the trust (unless a trusted friend or family member is willing to do it for free).

3.  Inheritance is left in a lifetime trust

This option holds a beneficiary's inheritance in a trust fund for the beneficiary's entire lifetime. Similar to Option 2, while property is held in the trust, the Trustee can take out trust funds at anytime to pay for a beneficiary's day to day needs. 

With a lifetime trust, often times the Trustee is a third party while the beneficiary is younger (to protect the beneficiary from bad decisions and outside influences). Then, when the beneficiary is at an age where he or she will be responsible enough to take full control, the beneficiary is made the Trustee of his or her own trust.

This option has many benefits.  Any assets held in the trust are shielded from a beneficiary's creditors for their entire lifetime. This protects the assets from claims made by a beneficiary's spouse in a divorce, from any bankruptcy proceeding, and from claims made against the beneficiary in a lawsuit. This option would also ensure that any assets remaining at the beneficiaries' death would pass free of probate, state inheritance taxes, and federal estate taxes. 

However, like Option 2, this option does require ongoing trust management by a trustee - although once the beneficiary is named the trustee this is not much of an issue.

Call J. Cutler Law Today

At J. Cutler Law, we offer free consultations for you and your family regarding the right estate plan for you. We can help you outline all of your estate planning options based on your needs and advise on the best course of action. Call us today for a free consultation at (801) 618-4469 or contact us online.

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Complete Your Estate Plan in 3 Easy Steps!

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Interested in creating your will or trust but you don't know where to start? Or perhaps you've been putting off estate planning because it seems like a burdensome task?

Well that's where we come in. At J. Cutler Law we can help you complete your entire estate plan in these three easy steps:

1. Fill out a brief questionnaire by clicking here

2. Receive a phone call to confirm your wishes regarding your estate plan

3. Get your documents signed at our office or sign them at your nearest notary public

To Sue or Not to Sue

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It seems like people are suing (or getting sued) for all sorts of things these days. You’ve probably seen some crazy lawsuits make headlines and it might make you wonder how someone would even think to sue for such a thing. And what’s even crazier is that if you’re hearing about it, it’s probably because the person not only sued, but won.

While it’s true these things happen, it’s probably not a good idea to use these examples to conclude that filing a lawsuit is a good idea anytime you feel you’ve been on the wrong end of a deal. The reason these things make headlines is because they’re rare. Yes, filing a lawsuit may be the best course of action in your given situation but it is a long and costly process so you will want to have a good idea of what you’re in for before you take that route.

The first thing you’ll want to do is talk through the situation with an unbiased party. If you’re considering filing a lawsuit then chances are good you’ve found yourself in a really frustrating situation so having an objective opinion will help you separate the frustration from the facts.

A judge is not likely to respond to emotional arguments when considering a lawsuit so having a good grasp of the legal elements will be crucial. Consulting with an experienced and trustworthy attorney before filing a lawsuit will help you to know what those legal elements are and whether or not you have a good case.

Each lawsuit is different but the process for deciding whether to pursue one is the same. An attorney will first ascertain the cause of action, which is basically a list of the legally required elements that pertain to your given situation. Once you know these elements then it is usually pretty easy to figure out whether or not you have a good case.

If, for example, the dispute has arisen over a transaction then the first step is to figure out the terms of the contract. If you had a written contract then this is more straightforward (but often not as easy as you’d think). If the contract was oral then it can be a little trickier. Once the terms of the contract are established then you can determine whether or not a breach of that contract occurred and what damages resulted from the breach.

With all of the necessary legal elements laid out you will then be able to determine if filing a lawsuit is the right move. Even if you have a good case, however, it might still be advantageous to move toward arbitration or pursue a settlement. Don’t let the big dollar amounts you see in the news blind you to the reality of your own situation.

Call J. Cutler Law Today

At J. Cutler Law, we offer free consultations for you and your business. We can help you outline all the legally required elements pertinent to your situation and advise on the best course of action. Call us today for a free consultation at (801) 618-4469 or contact us online.

Power of Attorney: What You Need to Know

Although most attorneys would like to believe they have special powers, what we’re actually talking about when referring to powers of attorney is written legal permission to act in someone else’s behalf. The two most important powers of attorney granted are durable powers of attorney for medical and financial matters. These documents are important to have in place in the event that you are incapacitated sufficiently that you are unable to make important and necessary healthcare or financial decisions.

In the most general sense, a power of attorney allows you to give legal decision-making powers to another person/party. Durable powers of attorney differ from other powers of attorney in that they remain in effect even if you are incapacitated. Regardless of your age, health, or financial circumstances, it is wise to make such arrangements. Disaster can strike and the unexpected happens all the time and, in that unfortunate event, none of us would like our health or assets out of our control.

Financial Power of Attorney

A financial power of attorney should be approached in the same way. Your finances are more than just money. In many cases, the decisions that are made by an agent when a person is incapacitated have a major impact on family members and friends. Things like your children’s inheritance and your spouse’s retirement could be in the hands of someone else so you need to make sure those hands are trusted and aware of your wishes. As with medical power of attorney, this legal documentation is often combined with a written declaration of your wishes in a will or trust. These are personal decisions to be made with a lot of care. Consulting with a good attorney is vital because it will ensure that your decisions are given the legally binding backing they need to endure even if tragedy strikes.

Health Care Directive

When working with an attorney to prepare your medical power of attorney, also known as a health care directive, there are some important things to keep in mind. First, most obviously and most importantly, you should choose someone you can trust. Second, you should take the time to communicate with that person about your wishes regarding important healthcare decisions. In many cases, a medical power of attorney is combined with a health care declaration or living will in a single document so that your wishes are not only communicated but legally documented. In any case, you shouldn’t wait until “later” to lay out a plan.

Call J. Cutler Law Today

At J. Cutler Law, we offer free consultations for you and your business. We can aide you in preparing power of attorney documents and advising on the decision making process. Call us today for a free consultation at (801) 618-4469 or contact us online.

Protecting Your Brand 101

Branding has always been important element of successful business but the increased opportunity for exposure brought about by modern technology has made it even more essential for your business than ever before. As a business owner, the bulk of your efforts will be focused on building a strong brand but there may come a time when you have to protect your brand too. In such cases, it will be important to know the basics about Fair Use, Trademark, and Copyright law.

The easiest place to start is by distinguishing between Trademark and Copyright. Both protect intellectual property but copyrights are better suited for creative works such as music, software, or books whereas trademarks are for works typically used to represent a business (e.g. logos). The process required to obtain trademarks or copyrights varies, depending on what you are seeking to protect, so you’ll want to familiarize yourself with the steps required for anything applicable to your company. Once you’ve properly obtained copyrights or trademarks then it is your exclusive privilege to use that work. But, of course, there are exceptions.

Fair Use is a principle that allows for the unauthorized use of trademarked or copyrighted material if the use is for things like scholarship, criticism, parody, or journalism. These are collectively known as “transformative” purposes. It isn’t always clear whether Fair Use applies so if you’re unsure whether your use of copyrighted material (or if someone else’s use of your copyrighted material) is covered it is a good idea to consult with an experienced attorney. Courts consider a variety of factors and a quality attorney will be able to explore these factors with you before you dive into a lawsuit, which can be time-consuming and expensive.

Call J. Cutler Law Today

At J. Cutler Law, we offer free consultations for you and your business. We can aide you in securing patents, copyrights, and trademarks. If you feel someone has infringed on your copyright(s) or you have been accused of copyright infringement then we can advise on the best course of action in your specific situation. Call us today for a free consultation at (801) 618-4469 or contact us online.

The Reason Why You Should Have A Will - Even If You Don't Have Many Assets

The Reason Why You Should Have A Will - Even If You Don't Have Many Assets

"If you don’t have a will, the state has one for you. Regardless of how old you are or how much wealth you have, would you rather have government officials dictate where your property goes or would you rather decide that for yourself?”

Should I Hire an Employee or Independent Contractor?

If you run a growing business then you’ve probably already found the need to get help carrying the workload, or soon will. Almost anyone will tell you that you should avoid giving away equity in the company (unless there is a really good reason) so the best options will be to hire employees or hire independent contractors.

Although you can pay an employee or independent contractor to do the same type of work there are key legal differences between the two. It’s important that you understand the distinctions and choose the option that will be most beneficial to your business.

Employees

Perhaps the biggest benefit of hiring an employee is that the employee-employer relationship affords both of you much more security than you’ll get when hiring an independent contractor. Employees are covered under various state and federal laws whereas a contractor is not. If you hire an employee than you have much more control over where and how work is performed because your relationship with an employee is much more exclusive and binding. That comes with pros and cons of course.

Hiring an employee requires jumping through more hoops because the hiring practice usually involves an application and interview and, once hired, more information is required because you will be responsible for reporting payments during the tax year on a W2.

Other considerations also come into play, such as workers compensation, benefits (pension, insurance, etc.), paid vacations, regular paychecks, and meeting minimum wage requirements. While that might seem like a lot to take on, it can often be worth the work because these employee benefits make it much more likely that you retain employees for longer terms and the nature of your legal relationship means that there is room for their responsibilities to evolve as time goes on.

Independent Contractors

Independent contractors have a much less stringent relationship with those for whom they do work. If you hire an independent contractor then the agreement made is specific to the job they are performing and will set a specific payment amount. You cannot expect a contractor to do anything not specified in the signed independent contractor agreement.

The big benefit to independent contractors is that you don’t have to worry about their taxes (issuing a 1099 is required for payments exceeding $600, but that’s it), clearing minimum wage requirements, providing benefits and so on. In many ways this arrangement is simpler: you agree to pay someone to perform certain work and your legal relationship does not extend beyond that agreement.

One drawback to independent contractors is that they will be under no obligation to continue performing services after the terms of a specific agreement are complete. So if you are looking for help on a responsibility that is a crucial and continuous part of your business then it can be risky to delegate that to an independent contractor.

Call J. Cutler Law Today

At J. Cutler Law, we offer free consultations for you and your business. We draft employee and independent contractor agreements and can advise on the best course of action in your specific situation. Call us today for a free consultation at (801) 618-4469 or contact us online.