Tax Law

Do you have a will already? If not then get one so your family can avoid litigation!

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Many people think that estate planning is only for the elderly or the wealthy, but have you thought about what would happen if you unexpectedly died?   Do you really want to leave you wife and kids to figure out how to manage your affairs while they are grieving?  If you have a will, then your family has options on how to proceed and it makes the legal process less trying on them.  It is even a bigger issue when you are in a blended family.  Imagine your minor children living with your ex-spouse becoming a one-half owner of your house with your current spouse.  This in it self creates drama for all those involved when it could be avoided with a simple document expressing your desires.

Many people believe that having a will makes their family go through the costly process of probate, however, in Texas the process is not costly and its a lot easier than letting Texas laws decide who gets your stuff.

How does the probate process work?  After you pass away, your executor, who you named in your will, will collect and distribute the assets to your beneficiaries during a process known as probate. This will include settling any debts you have with creditors.  The process is inexpensive, simple and non intrusive into your loved ones lives.

What happens if you don’t have a will?

  1. If you are married and all your kids are from your spouse? Your spouse gets your community property and your spouse splits your separate property with your kids.
  2. If you are remarried and have kids from another marriage?  Your new wife and your kids share all your property.  In this scenario it is common for your wife and kids to become joint owners of your home.
  3. If you are single with kids? Your stuff goes equally to your kids and if one is not living then their share goes to their children (your grandchildren from that kid).
  4. If you are single without kids?  Your stuff is divided between your parents, if one of them is deceased then that parent’s share goes to your siblings.

So you can see how the laws in Texas might not be how you want your things to be distributed and having a will leaves the decision solely up to you!  We can always find a distant relative to be your heir, but do you really want someone else deciding?  So get a will today!  My office can help, just call 817-336-2400 and ask for Patricia Cole.

 

Estate Planning advise from Warren Buffett!

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Marvin Blum (pictured on the far left) generated quite a bit of media coverage this past weekend when he posed a question to Warren Buffett at the Berkshire Hathaway annual meeting, where an estimated 35,000 shareholders gather each year in Omaha. Marvin’s question and a summary of Warren Buffett’s comments are below.

“I’m an estate planning lawyer, and it’s interesting as we wrap up today to ponder that the baby boomer generation is about to pass along the greatest transfer of wealth in history. I can design plans that eliminate estate tax and pass down great amounts of wealth to the next generation, but many of my clients come to me and say they want a plan like Warren Buffett’s, leaving their kids enough so they can do anything, but not so much that they can do nothing. Now they ask me, and I am asking you, ‘How much is that, and how do you keep from ruining your kids?'”

The following is a brief summary of Mr. Buffett’s insightful response:

• I think that more of our kids are ruined by the behavior of their parents than by the amount of the inheritance.
• I rewrite my will every five or six years.
• When your children are old enough (mid-thirties or thereabouts), you should explain your estate plan to them – It’s crazy for them to read the will for the first time after you’re dead.
• If your child is named as executor, your child should understand how to carry out his or her obligations that are embodied in the will before I sign that will, and we should talk it over.
• Rather than creating a dynasty of sorts, if you’re very wealthy, the money can have far more utility to society than to create a situation where your kids don’t have to do anything in life except call a trust officer once a year and tell him how much money they want.
• If you’re going to leave each of your children different mixes of assets, you want to make sure your definition of equality is understood by the children.

Marvin’s question drew immediate attention in the news media with coverage in The Wall Street Journal, The New York Times, The Washington Post, Bloomberg Business Week, The World-Herald, and commentary from these sources was syndicated and reprinted globally by many other outlets.

Article was provided by the Blum Firm, P.C.

Texas Business Franchise Tax

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Small business owners in the State of Texas are being inundated with costs which could put them out of business. One of those new costs, is the ever changing Texas’ Franchise Tax. The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas.

The revised franchise tax applies to partnerships (general, limited and limited liability), corporations, LLCs, business trusts, professional associations, business associations, joint ventures, incorporated political committees and other legal entities.

Who has to pay the Franchise Tax? Most business who make more than the $1,030,000 (the no-tax-due threshold) for January 2012 through January 2014 tax years. On January 1, 2014, the no-tax-due threshold is scheduled to be $600,000. Keep in mind that the no-tax-due threshold is calculated taking the lowest of three calculations:

  • total revenue minus cost of goods sold;
  • total revenue minus compensation; or
  • total revenue times 70 percent.

On January 12, 2012, the Texas Supreme Court dismissed the Nestle case, In Re Nestle USA, Inc., Switchplace, LLC, and NSBMA, LP, challenging the revised franchise tax, the so-called “Margin Tax,” on constitutional grounds. On February 10, 2012, the Texas Supreme Court rejected a second challenge by Nestle Case to the Texas franchise tax http://www.supreme.courts.state.tx.us/historical/2012/feb/021012.htm.

So for now, small business owners will just have to suffer through trying to calculate and pay this complicated business tax.

10 things to do if you won the powerball

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Last night’s Powerball jackpot was over $325 million. If you won the jackpot or any other lottery jackpot, you might be thinking that you won’t ever have to worry about money again–right?

Wrong!

With good money management you–and your heirs–could live handsomely for many, many years. But from the moment that you claim that prize, you will be descended upon by vultures who want a hefty helping of those winnings. And if you didn’t have smart money habits up until now, you could easily turn out to be your own worst enemy by quickly squandering the fortune.

Forbes has written a wonderful article about the 10 things you should think about if you win!  http://www.forbes.com/sites/deborahljacobs/2012/02/11/10-things-to-do-when-you-win-the-powerball/