Federal and New York State Corporate Transparency Act; Act Now!
The Corporate Transparency Act (“CTA”) is effective January 1, 2024. FinCEN now requires that all LLCs, corporations, limited partnerships, or other similar businesses file information about the company’s beneficial owners. Unless an exception applies (such as for non-profits or large organizations as defined in the Act), existing companies must file no later than December 31, 2024.
In addition, New York State has also passed a similar corporate transparency act, which takes effect on December 21, 2024.
Registration
The portal to register your company’s beneficial ownership information is currently live and may be accessed using this link ➡️ https://boiefiling.fincen.gov/
At this time, we are directly reaching out to companies whom we have personally represented at initial creation.
If you require assistance with filing your FinCEN report, please contact us by February 15, 2024. If we do not hear from you by this date, we will assume that you do not require our assistance to comply with the requirements.
The penalties for failure to timely file a complete report are steep, starting at $500 per day that the filing is late, plus criminal penalties.
Learn More
If you would like to learn more about the CTA, please refer to our prior newsletters below:
Updated Estate and Gift Tax Values for 2024
Effective January 1, 2024, the applicable values for estate and gift tax purposes increased in accordance with inflation.
Federal Lifetime Estate and Gift Tax Exemption
The federal lifetime estate and gift tax exemption is now $13.61 million. Married couples may combine this amount for a total of $27.22 million. For estates where the values owned separately by each spouse are unbalanced, or skewed more heavily toward one spouse, it is recommended that married couples intentionally prepare their estate plans with appropriate tax opportunities.
New York State Estate Tax Exemption
The New York State exemption has increased to $6.94 million. Unlike the Federal estate tax laws, New York State does not allow spouses to combine their exemptions. In addition, New York State has a three-year lookback for gifts made by a decedent. This will result in any gifts being added to a decedent’s taxable estate if he or she dies less than three years after making the gift.
Federal Annual Gift Tax Exclusion
The Federal annual gift tax exclusion has increased to $18,000 per donee, for a total of $36,000. As was allowed in the past, spouses who decide to split gifts may double the annual gift to a donee. Any excess gift will reduce the donor’s lifetime exemption.
Changes on the Horizon in 2026 to Rollback Federal Exemption
These rates are at historic highs. However, the Federal exemption will sunset on December 31, 2025, to a level of $5 million, indexed for inflation, which is expected to be approximately $7 million.
Contact Us for Assistance
If your estate is nearing any of these values within the next two years and would like help with estate tax planning, we encourage you to contact our office please contact our office at 212-328-9568 or via email at assistant@abelajlaw.com.
January 2024 Bulletin: FinCEN Access to Private Information
Corporate Transparency Act Authorizes Access to Government and Financial Institutions
The United States Department of the Treasury along with the Financial Crimes Network (FinCEN) implemented the Corporate Transparency Act in an effort to track illicit finances that funds drug trades, fraud, terrorism, and other crimes that enhance corporate transparency. The procedures for compliance and access to information are governed by three separate FinCEN rules: the Reporting Rule, the Access Rule and the future Customer Due Diligence Rule.
The purpose of the Access Rule is to protect the information submitted to FinCEN by a Reporting Company.
Reporting of Beneficial Owner Information Now Active
The “Reporting Rule” is effective January 1, 2024, and requires certain corporations, LLCs, partnerships and similar entities must report the name, address and ownership interest of their beneficial owners. The Beneficial Ownership Information (BOI) will be managed by FinCEN and access to this information will follow certain guidelines.
Who and When: Filing of Initial Beneficial Ownership Information Deadlines
The FinCEN technology portal for a Reporting Company to report BOI is currently active as of January 1, 2024. The portal will collect, process and store the BOI for use by the government and other interested parties, as described below.
Entities created prior to January 1, 2024 must file their BOI information via the FinCEN portal by January 1, 2025. Entities formed after January 1, 2024 must file their initial BOI within ninety days of formation.
Who Can Access the Portal and BOI Information?
In a news release on December 21, 2023, FinCEN discussed the “Access Rule,” which governs the protection of BOI information submitted to FinCEN. This rule outlines who has access to the BOI portal and how other individuals may obtain BOI information. The Access rule is currently set to be effective on February 20, 2024, at which time eligible institutions will be allowed access to the portal. Only authorized recipients will have access to BOI and the information may only be used for authorized purposes.
Direct Access to Beneficial Owner Information on FinCEN Portal
The following authorized domestic government agencies and financial institutions have direct access to search and view FinCEN’s BOI information using the portal:
- Federal agencies working in national security, intelligence, or law enforcement activity;
- State, local and tribal agencies;
- Foreign law enforcement agencies, judges, prosecutors and other authorities that meet other specified criteria;
- Financial institutions with customer due diligence requirements;
- Regulators supervising institutions;
- Treasury Department Officers and employees.
Foreign requesters do not have direct access to the FinCEN portal. Instead, they must make a request for information directly to FinCEN.
Type of Access Allowed Based on Category of Requester
The Corporate Transaction Act (CTA) lists requirements for each of the categories and are subject to security and confidentiality of the BOI. A summary of key requesters is included below.
Domestic Agencies: Direct Access, Reporting Company Consent Not Required
Domestic agencies requesting access to the Reporting System must establish and maintain a secure system for accessing and maintaining information received from FinCEN and must comply with specific security protections prior to obtaining access.
State, local and tribal agencies and tribunals, as well as law enforcement, will have access to BOI upon certifying that they have court authorization to receive BOI from FinCEN, without providing supporting documentation.
Financial Institutions: Direct Access, Reporting Company Consent Required
Financial institutions may satisfy the security standard by using the same security and information handling procedures that they use to comply with existing regulations (i.e., the Gramm-Leach Bliley Act or they must develop and implement administrative, technical, and physical safeguards reasonably designed to protect the information and provide written consent from the Reporting Company that the Financial Institution may conduct the search.
Financial institutions are authorized to use the information obtained for purposes beyond CTA. This includes compliance with Anti-Money Laundering, Office of Foreign Assets Control or other know-your-client (KYC) processes.
If a foreign government contacts a domestic financial institution requesting BOI information, the domestic financial institution must notify FinCEN within three days of receiving the request.
Foreign Requesters: No Direct Access
Foreign entities will not have direct access to the portal. They must request the information directly through FinCEN. If an international treaty, agreement or convention applies to the foreign entity, it must comply with all applicable rules.
Foreign requesters of BOI that are not governed by a treaty or convention must establish standards and procedures to protect the security and confidentiality of BOI, maintain the BOI in a secure system, and restrict access to the information, among other requirements.
Authorization to Redisclose BOI Information and Illegal Sharing
Recipients of BOI information are authorized to redisclose the information received for internal purposes, such as among officers within the same agency, to parties in a civil or criminal court proceeding, or foreign authorities consistent with an international treaty or convention under which the BOI was received.
FinCEN also can authorize the disclosure of BOI to an authorized recipient under a circumstance where there is an authorized purpose for the redisclosure.
Significant Penalties for Illegally Disclosing BOI
Violations of these rules and knowing disclosure of BOI and knowingly used in an unauthorized manner has both civil and criminal penalties attached to it. Civil penalties are in the amount of $500.00 daily if the violation continues. Criminal penalties are a fine in the amount of $250,000.00 and imprisonment for up to five years.
Institutions that violate this can be suspended or disbarred from the BOI IT system.
Compliance and Next Steps
These rules might continue to evolve as the CTA rolls out in the coming year. FinCEN will publish forms on its website for comments. Later this year, FinCEN will provide guidance on the Customer Due Diligence Rules governing ongoing compliance reporting
changes to beneficial owners.
Contact Us for Assistance
If you have any questions on the CTA or how it may apply to your small business, please contact our office at 212-328-9568 or via email at assistant@abelajlaw.com.
If we do not hear from you by February 15, 2024, we will assume that you do need our assistance with the CTA.
December 2023 Bulletin: New Law
Corporate Transparency Act Creates Trap for Unwary
Starting January 1, 2024, small corporations, LLCs, and similar entities are required to report beneficial ownership information to the Treasury’s Financial Crime Enforcement Network (FinCEN). The penalty for failure to file is up to two years in prison and $10,000. The deciding factor appears to be if the entity was created by filing a document with the secretary of state or similar office. If so and no exception applies, the FinCEN filing is mandatory.
Exceptions and Trusts
The current exceptions are not-for-profit organizations and trusts which were not created by filing a document with the secretary of state. However, if your trust owns an interest in an LLC, corporation, family limited partnership or other reportable entity, then the entity must reflect the beneficial owner as the trust.
Beneficial Ownership
Determining who is a beneficial owner can be difficult. A beneficial owner is any individual who directly or indirectly exercises substantial control over the company or who owns or controls 25 percent or more of the company. Substantial control is broadly defined to include senior officers, those who have the ability to appoint or remove senior officers or a majority of the board of directors, those who have substantial influence over important decisions, and (the catch-all) those who have any other form of substantial control over the company.
Reporting Requirements
A reporting company must provide (1) its legal name and any trade name or DBA, (2) its address, (3) the jurisdiction in which it was formed or first registered, and (4) its Taxpayer Identification Number (TIN).
For each of the company’s beneficial owners, the company will need to provide the individual’s (1) legal name, (2) birthdate, (3) address, and (4) an identifying number from a driver’s license, passport, or other approved document for each individual, and an image of the document that the number is from. That’s right. They want a copy of your driver’s license or passport.
Filing Deadlines
Companies created or registered before January 1, 2024, must file by January 1, 2025. Companies created or registered after December 31, 2023, must file within 90 calendar days of formation. FinCEN will accept reports electronically beginning January 1, 2024. Final forms are still in the making.
Ongoing Reporting
This is not just a one-time reporting requirement. A company will have 30 days to report any changes to reported information—i.e., any changes in beneficial ownership. For updates, the 30 days start from when the relevant change occurs. For corrections, the 30 days start after becoming aware of—or having reason to know of—an inaccuracy in a prior report. There are no safe harbors for filing an incorrect report.
The government expects over 32 million initial reports to be filed at an estimated cost of about 22 billion dollars; and then 2 billion dollars in additional cost each year for updated reports. In my opinion, the government’s cost estimate is ridiculously optimistic because the rules are complex.
Contact Us for Assistance
If you would like help in determining if a filing is required and then filing the required report in 2024, please contact our office at 212-328-9568 or via email at assistant@abelajlaw.com.
When You Should Consider Modifying Your Estate Plan
Estate plans can help individuals determine how their assets and property are divided after death. Many people believe planning for their estate is a one-time task, but that is not always the case. Life changes and other events may require modifying your estate plan. Find out when you may need to update these legal documents. If you have questions about estate planning in New York, please consider scheduling a consultation with the experienced New York estate planning attorneys at the Jennifer V. Abelaj Law Firm by calling 212-328-9568.
Why It Is Important to Update an Estate Plan
The American Bar Association states that estate planning is the process of determining how a person’s assets and liabilities will be transferred after death. Individuals may want to regularly review and update their estate plan to ensure that their assets and wishes are appropriately reflected in the documents. Failing to modify an estate plan could mean that assets are distributed to unintended beneficiaries. An estate plan holder should make any changes as soon as they arise or when they have a change of plans. With that, it may prevent any confusion or discrepancies in the distribution of their assets.
Updating an Estate Plan
When reviewing an estate plan, the individual will want to ensure that:
- Their intentions are still the same regarding assets and property.
- The plans include the proper beneficiaries.
- The document reflects significant life changes.
In some instances, there may be a need to update an estate plan. A few common reasons include the following:
Marriage, Divorce, and Partnerships
Family dynamics are constantly evolving. For that reason, many individuals want to ensure that their estate plan is up-to-date and reflects specific life changes. Anyone who has entered a new marriage will want to include the new spouse in the estate plan. Sometimes, that may include updating bank accounts, retirement accounts, and insurance policies to add the spouse as a beneficiary. On the other hand, if the estate plan includes a divorced beneficiary, it may be time to remove the ex-spouse from any estate plans and legal documents. Along with dividing up assets, estate plans also outline the power of attorney. If a person has named the ex-spouse as this individual, it could be time to make changes to the plan.
Additionally, for anyone who is not legally married but has a partner, it may be the right time for modifying your estate plan to include them, especially if the individual is in a common-law marriage or domestic partnership. Sometimes, the partner may not be entitled to assets under state laws. For that reason, the person’s wishes should be evident in the estate plan to ensure the partner is a beneficiary after death.
Children
Another reason for updating an estate plan includes listing children as beneficiaries. If the children are young, many estate plans will designate someone to be a guardian until they reach adulthood. For those individuals who have remarried a spouse with a child from a previous relationship, it may be time also to add those children into the estate plans. In some cases, state laws will only recognize stepchildren as heirs if the estate plan specifically names them in the document.
People will want to update their estate plans with every life change. Unfortunately, some family members have disinherited their children and will want to make changes to the estate plan. As a result, the estate plan should be reviewed and updated to reflect those changes in the person’s wishes. Reach out to the Jennifer V. Abelaj Law Firm to learn more about planning for your estate.
New Home State and Tax Changes
Along with the above situations, those who have moved to another state will want to ensure their estate plans comply with state laws. Even for those who have not moved, tax laws are constantly changing, and estate plans should stay current with new rules. Often, the individuals may want to establish a trust or will to ensure beneficiaries are not left with tax issues and can avoid probate. Otherwise, the Internal Revenue Service states that a gift tax is imposed when property is given to another person without receiving fair market value in return.
Beneficiary Changes
If a person wants to change or remove beneficiaries from the estate plan, that individual needs to make changes to all aspects of the plan, including updating assets, accounts, and powers of attorney. Failure to update all relevant documents can lead to confusion and discrepancies in the distribution of assets after the person’s passing. Additionally, if any named beneficiaries experience changes in their care needs, those plans will need to be revised, especially for those with special needs.
What Are Other Reasons to Modify an Estate Plan?
There may be unique reasons that may prompt an individual to update their estate plan. For example, if an individual has a trust and wishes to assign a new trustee, they will want to review and revise their revocable living trust to ensure that their trustee list is accurate and up to date.
Significant life changes are not the only reason to update an estate plan. Those with a living will may want to periodically review it to ensure everything is outlined and make any necessary updates. Also, if an individual owns a business or plans to open one, a business succession plan can determine who owns and runs the company after they are gone. Many individuals should consider reviewing their estate plan regularly, ideally every three to five years, to ensure that everything is updated.
Consult With a New York Estate Planning Attorney Today
Modifying your estate plan ensures that changes to your assets and wishes are properly reflected and that the plan complies with local laws. People may want to update their estate plans when there are changes in their personal life, beneficiaries, or tax laws. Regularly reviewing an estate plan with an attorney may also ensure the plan is up to date. If you want to learn more about estate planning in New York, please consider scheduling a consultation with the Jennifer V. Abelaj Law Firm by calling 212-328-9568.
Do I Have To Trademark My Business Name?
Managing your own business can pose significant challenges for even the smallest entrepreneur. As a small business owner, you are likely aware of the numerous demands on your time and finances, including various legal issues that occasionally arise. Ignoring these issues can cost you more time and money in the long run, making it important to consider addressing them earlier in the establishment of your business. One important question you may face is whether to trademark your business name or logo. Ultimately, you may ask: Do I have to trademark my business name? Learn why you should apply to protect your intellectual property and ensure your legal and financial rights remain protected. Learn more by scheduling an appointment with the Jennifer V. Abelaj Law Firm by calling 212-328-9568.
What Happens If You Don’t Trademark Your Business Name?
The United States Patent and Trademark Office issues trademarks. When a company does not trademark its name, it will not have these specific legal protections under the law. Someone else could use their logo, brand name, or other identifying marks without as much legal recourse. As a result, the dilution of a brand can also confuse consumers in the market. A customer may believe they are purchasing a product or service from one company, but it is a competing brand selling a similar item.
Without a legally enforceable trademark, the process to defend and protect the company’s intellectual property from infringement may be more complex and challenging. Additionally, the infringed business is not always successful in its legal claims.
Should I Copyright or Trademark My Business Name?
When forming an LLC or corporation, the USPTO will only grant an applicant the proposed business name if it is not already used by another business. If the business name is approved but remains unregistered, it will receive common law trademark protection, preventing other companies from registering under the same name in the state. However, unregistered businesses, such as sole proprietorships and partnerships, can still use that business name.
Do I have to trademark my business name? While registering your business name can offer some protection against others using a specific business mark in an operating area, more is needed for any business with an online and/or nationwide presence. In those instances, it is advisable to consider trademarking a business name to protect against unauthorized use throughout the United States. The USPTO grants trademarks that will hold precedence over business names and state-level marks. Trademarking a business name gives the holder a significant brand reputation and presence. Many companies may want to consider trademark registration to safeguard their identity and reputation. Trademark registration offers several advantages, including:
- Nationwide protection
- Legal presumption of ownership
- The ability to sue for infringement
- The ability to use the ® symbol
Should I Trademark My Business Name Before Forming My LLC?
When starting a business, protecting both personal liability and brand reputation are often two common priorities. According to the Internal Revenue Service, a limited liability company (LLC) is an effective way to protect personal liability. On the other hand, trademark registration safeguards brand identity. However, which should come first, an LLC formation or a trademark registration?
While there is no definitive answer, it is generally recommended to form an LLC first because the trademark needs an owner, typically the entity that will use the intellectual property within the course of business. If the plan is to operate the business using the trademark under the LLC, the LLC should be the trademark owner. Therefore, the LLC needs to exist before the trademark application is filed. Filing for the trademark first could result in the individual filing the application and owning the trademark, which may not match the intended trademark owner, i.e., the LLC. The trademark would then need to be assigned to the LLC later, which can only be done during specific phases or used by the individual before assignment to the LLC. Failure to do so may lead to cancellation or invalidation of the trademark. Forming an LLC or business entity before filing a trademark application could be advisable to avoid these issues. Schedule an appointment with the experienced intellectual property Jennifer V. Abelaj Law Firm to learn more about which option is right for you.
Do I Need to Trademark My Logo and Business Name?
It is often recommended to trademark both the name and the logo of a company since they protect different aspects of the brand. While the name protects the literal part of the brand, the logo protects the graphic representation of that name. However, if a company has a limited budget and can only afford to file for one, there are specific considerations to remember.
If the logo is just an image or icon without a name, some companies may want to protect the name as it is usually more important than the logo. If the logo contains both the icon and the name, it is called a combined mark, and if the company can only file for one, it should be the combination of the image and the name. However, if the name registration is problematic, companies may opt for the logo to make their brand distinctive from others. In this case, the logo would be used as a trademark to make the brand stand out, while the name might not be registered. If the name and logo are perfectly registrable, the name may be more important than the logo.
Reach Out to a New York Intellectual Property Attorney
Do I have to trademark my business name? Trademarking your business name and logo is vital in protecting your brand and ensuring its long-term success. While deciding whether to trademark your name or logo may depend on your specific circumstances, you will want to understand the basics of each and make an informed decision. As a small business owner, you will want to address legal issues as they arise to avoid potential complications down the line. You can focus on growing your business and achieving your goals by taking the necessary steps to protect your brand. If you would like to learn more about trademarks and how they can fit into your estate plans, please consider scheduling an appointment with the Jennifer V. Abelaj Law Firm by calling 212-328-9568.
The Importance Of Nonprofit Employee Handbooks
If you are starting up a nonprofit organization, you may be considering preparing a nonprofit employee handbook that communicates expectations for future workers. However, you may wonder if you really need a nonprofit employee handbook. Why an employee handbook is important and what to include in the employee handbook will vary by organization. If you are ready to discuss your organization’s unique needs and hear recommendations based on your situation, consider contacting a knowledgeable nonprofit lawyer from the Jennifer V. Abelaj Law Firm by calling 212-328-9568 to schedule a confidential consultation.
What Is a Nonprofit?
A nonprofit is an organization that exists for a social mission, not to earn a profit like a typical business. Most nonprofits are 501(c)(3) organizations, which refers to the portion of the United States Internal Revenue Code that provides for tax exemption for nonprofits that undertake specific social causes, according to the Internal Revenue Service (IRS). These causes can include research of a medical condition or protection of animals or children.
What Is a Nonprofit Employee Handbook?
Like employee handbooks for other companies, a nonprofit employee handbook communicates the expectations and policies of the workplace. The most significant difference is that the employees work for a nonprofit organization. Therefore, a greater need for confidentiality regarding the organization’s practices and donors may exist. An effective nonprofit employee handbook outlines the terms and conditions of employment and gives all workers a set of rules and a framework to follow.
Why Are Nonprofit Employee Handbooks Important?
Employee handbooks can help to protect a nonprofit organization from frivolous claims by helping the nonprofit set clear expectations for its employees. Employee handbooks list the established rules of the workplace to avoid confusion or ambiguity. Having a handbook for nonprofit employees also ensures that everyone is operating under the same set of rules and procedures. Additionally, employee handbooks may be necessary to obtain directors and officers liability (D&O) and employment practices liability insurances.
What To Include in a Nonprofit Employee Handbook
Each nonprofit organization and workplace is different. Therefore, policies that are appropriate for one organization may not be appropriate for another. Different policies may need to be in place to account for the employee makeup of an organization or its mission. An experienced nonprofit lawyer from the Jennifer V. Abelaj Law Firm may be able to help determine your organization’s needs. Depending on the circumstances, a lawyer may recommend including some of the following policies and provisions.
At-Will Employment Statement
Many employee handbooks begin with a statement that the existence of an employee handbook does not create an employment contract. This is because many states, including New York, have found that such publications can create an impression that employees can only be dismissed for cause, according to the Nonprofit Risk Management Center. An at-will statement clarifies that the employment relationship is at will and can, therefore, be severed at any time by either the employee or the employer.
General Work Policies
General work policies may include information about the daily minutiae of working at the organization. These policies may be related to:
- Work hours
- Tardy and absence policies
- Policies for requesting time off
- Dress code
- Overtime policy
- Policies against workplace harassment and discrimination
- Discipline policy
Confidentiality Agreement
Given the potential sensitivity of the information an organization may collect and store, a confidentiality agreement may be included in the employee handbook. This portion of the handbook can require employees to sign a statement agreeing that they will not disclose confidential information to anyone outside the organization or, in some cases, outside their department.
Benefits
A nonprofit employee handbook may also include the benefits provided to employees along with eligibility information. Depending on the organization, benefits may include:
- Medical insurance
- Dental and vision insurance
- Disability insurance
- Life insurance
- Flex time
- Retirement benefits
- Paid time off (PTO), sick time, and vacation time
- Annuity plans
- Referral incentives
Communication Policy
Many people use their personal devices for work purposes. A nonprofit may choose to allow this but protect the business by requiring employees to agree to use their devices in a safe manner. This can include virus protection and protection from hacking. Alternatively, an organization may provide devices to the employees, which would come with those protections installed, to use solely for work purposes.
Formal Performance Review Policy
An employee handbook may also describe the current roles for employees in the business and their job descriptions. Additionally, it can contain the procedure that will be used to formally review employees’ performance. This performance review may determine whether the employee remains employed with the company, is referred for remedial action, or receives a pay raise or promotion.
A formal performance review may include a standardized form and framework to review all employees in a consistent process. Depending on the organization, the review may consist of analyzing the following information:
- The employee’s attendance
- How the employee is helping to achieve the nonprofit’s mission
- The employee’s ability to work well with others
- The quality of the employee’s work
- The employee’s ability to meet deadlines and goals
- The employee’s communication skills
- How much in donations the employee has brought into the organization, if applicable
Personnel Records
A nonprofit employer may be in possession of sensitive information about its employees, including their identifying information and protected health information. An employee handbook may include clear policies about how the organization protects this information. Generally, health information must be kept secured separately from other personnel records. Additionally, sensitive documents, such as wage garnishment or other court orders, generally should not be included in an employee’s personnel record.
Documents that a nonprofit organization may be keeping as part of its personnel records may include:
- Applications, resumes, and cover letters
- Signed forms stating that the employee received the employee handbook
- Payment information
- Training and achievement records
- Records of time off requests and vacation leave
Contact a Nonprofit Lawyer for Help Today
If your nonprofit organization has or will have employees, knowing how to create a unique handbook is important. You will need to determine your organization’s unique needs and prepare a handbook that meets your nonprofit’s objectives. For answers to your questions about the importance of nonprofit employee handbooks, consider calling a knowledgeable nonprofit lawyer from the Jennifer V. Abelaj Law Firm at 212-328-9568 to schedule a confidential consultation today.
4 Critical Estate Planning Tasks To Do Before Going On Vacation
Taking a break from life’s fast-paced and often stressful cadence to go on vacation can be a wonderful experience. Before packing your bags and boarding a plane, however, you may want to complete a few estate planning tasks to create a plan in the event that something were to happen on the trip. For help developing estate planning goals for your unique needs, consider contacting a New York estate planning lawyer at the Jennifer V. Abelaj Law Firm by calling (646) 885-1330 to schedule a consultation.
What Is an Estate Plan?
An estate plan is a set of instructions that are put in place to specify what will happen to a person’s assets upon his or her death. The estate includes everything that a person owns or owes (e.g., debts) at the time of his or her death. Typically, estate plans also include documents that indicate who has the authority to make healthcare or property decisions if the individual is incapacitated.
Additionally, as part of a complete estate plan, people can designate beneficiaries of assets they own. For example, they could name a daughter as the payable-on-death beneficiary of a checking account. Other assets, such as retirement and investment accounts, allow the owners to name beneficiaries so that some assets are automatically distributed when the account holder passes away.
4 Estate Planning Tasks To Do Before Going on Vacation
Going on a vacation can be an exciting (but sometimes stressful) endeavor with so much to take care of before leaving. While on vacation, people hope to only have fun and entertaining experiences, but the reality is that injury or illness can unexpectedly arise, even when someone is on a trip. Without proper estate planning, a person’s loved ones may be confused about what to do and may not be able to give the support needed.
Before people depart on vacation, therefore, taking care of a few estate planning tasks can be beneficial for themselves and their loved ones. Four important items to complete before leaving are:
- Updating (or writing) a will
- Signing or updating a power of attorney for property
- Signing or updating a power of attorney for healthcare
- Updating beneficiaries on important accounts or policies, such as checking and retirement accounts
Update (or Write) a Will
A Last Will and Testament (will) is a document that gives instructions about distributing certain assets when the testator, the person who writes the will, dies. In the will, the testator chooses an executor or administrator who oversees carrying out the document’s instructions. Additionally, the will names beneficiaries or heirs who will receive the testator’s property. In some cases, the will creates a trust called a testamentary trust that holds assets on behalf of named beneficiaries, generally the person’s children.
Before going on vacation, updating or writing a will may help to ensure that loved ones receive the inheritance you want them to have after you die. If someone does not have a will or if the will is inadequate, according to the New York State Senate, New York intestate laws regarding succession will determine who inherits the person’s property. Therefore, having a well-written will in place can prevent certain loved ones from being left out of the process. If you are ready to address estate planning goals, a seasoned estate planning attorney from the Jennifer V. Abelaj Law Firm may be able to help.
Sign (or Update) a Power of Attorney for Property
According to the state of New York, the law allows individuals to create a power of attorney for property so that the individual (the principal) can give someone else (the agent) authority to make decisions about the principal’s property under certain circumstances. The principal chooses when a power of attorney for property becomes effective, either on a specific date or when something specific happens, such as the principal’s incapacitation. A power of attorney for property may be essential when a person goes on vacation because it ensures that someone can take care of the principal’s finances if he or she were to suffer a debilitating injury on the trip.
In the power of attorney form, the principal can describe the scope of the agent’s authority regarding the principal’s assets. For example, the principal might limit the types of transactions the agent can make (e.g., paying expenses or making transfers) and for what purpose. Having a power of attorney named before going on vacation can also be helpful by designating someone who can take care of certain financial matters for the principal while he or she is gone, not just in case of incapacitation.
Sign (or Update) a Power of Attorney for Healthcare
Like a power of attorney for property, a durable power of attorney for healthcare allows a principal to name an agent to make medical decisions on his or her behalf under certain circumstances. In a healthcare power of attorney, the principal defines the scope of decisions the agent can make. Additionally, the principal indicates any desired lifesaving measures, such as life support, to take if he or she becomes incapacitated.
Thinking about the potential scenarios may be uncomfortable, but putting a plan in place can help a person’s loved ones if the unexpected does happen. In the absence of proper instructions, the default New York laws dictate who can make a decision and when, and this person may not be the person the principal would have chosen.
Update Beneficiaries on Important Accounts or Policies
The last estate planning task to take care of before going on vacation is updating the beneficiaries on essential policies and accounts, such as payable-on-death instruments. Payable-on-death instruments that may need updating include:
- Checking and savings accounts
- Investment accounts
- Retirement accounts
- Certificates of deposit
Other accounts may also allow the holder to name a beneficiary to take possession of the asset upon the his or her death. Payable-on-death instruments are beneficial because they allow the owner to transfer these assets to a loved one outside the probate process. In times of stress and uncertainty, such as when a loved one dies, having a streamlined process in place can make a big difference.
Contact an Experienced Estate Planning Attorney for Help Today
A vacation is a time to create new memories and unburden yourself of the stressors of daily life. By taking care of estate planning matters before departing, individuals can provide clarity and continuity for their loved ones should something happen to them while they are gone. For help with your estate planning goals, consider calling (646) 885-1330 to schedule a consultation with an experienced estate planning attorney at the Jennifer V. Abelaj Law Firm
When You Should Consider Modifying Your Estate Plan
Estate plans can help individuals determine how their assets and property are divided after death. Many people believe planning for their estate is a one-time task, but that is not always the case. Life changes and other events may require modifying your estate plan. Find out when you may need to update these legal documents. If you have questions about estate planning in New York, please consider scheduling a consultation with the experienced New York estate planning attorneys at the Jennifer V. Abelaj Law Firm by calling 212-328-9568.
Why It Is Important to Update an Estate Plan
The American Bar Association states that estate planning is the process of determining how a person’s assets and liabilities will be transferred after death. Individuals may want to regularly review and update their estate plan to ensure that their assets and wishes are appropriately reflected in the documents. Failing to modify an estate plan could mean that assets are distributed to unintended beneficiaries. An estate plan holder should make any changes as soon as they arise or when they have a change of plans. With that, it may prevent any confusion or discrepancies in the distribution of their assets.
Updating an Estate Plan
When reviewing an estate plan, the individual will want to ensure that:
- Their intentions are still the same regarding assets and property.
- The plans include the proper beneficiaries.
- The document reflects significant life changes.
In some instances, there may be a need to update an estate plan. A few common reasons include the following:
Marriage, Divorce, and Partnerships
Family dynamics are constantly evolving. For that reason, many individuals want to ensure that their estate plan is up-to-date and reflects specific life changes. Anyone who has entered a new marriage will want to include the new spouse in the estate plan. Sometimes, that may include updating bank accounts, retirement accounts, and insurance policies to add the spouse as a beneficiary. On the other hand, if the estate plan includes a divorced beneficiary, it may be time to remove the ex-spouse from any estate plans and legal documents. Along with dividing up assets, estate plans also outline the power of attorney. If a person has named the ex-spouse as this individual, it could be time to make changes to the plan.
Additionally, for anyone who is not legally married but has a partner, it may be the right time for modifying your estate plan to include them, especially if the individual is in a common-law marriage or domestic partnership. Sometimes, the partner may not be entitled to assets under state laws. For that reason, the person’s wishes should be evident in the estate plan to ensure the partner is a beneficiary after death.
Children
Another reason for updating an estate plan includes listing children as beneficiaries. If the children are young, many estate plans will designate someone to be a guardian until they reach adulthood. For those individuals who have remarried a spouse with a child from a previous relationship, it may be time also to add those children into the estate plans. In some cases, state laws will only recognize stepchildren as heirs if the estate plan specifically names them in the document.
People will want to update their estate plans with every life change. Unfortunately, some family members have disinherited their children and will want to make changes to the estate plan. As a result, the estate plan should be reviewed and updated to reflect those changes in the person’s wishes. Reach out to the Jennifer V. Abelaj Law Firm to learn more about planning for your estate.
New Home State and Tax Changes
Along with the above situations, those who have moved to another state will want to ensure their estate plans comply with state laws. Even for those who have not moved, tax laws are constantly changing, and estate plans should stay current with new rules. Often, the individuals may want to establish a trust or will to ensure beneficiaries are not left with tax issues and can avoid probate. Otherwise, the Internal Revenue Service states that a gift tax is imposed when property is given to another person without receiving fair market value in return.
Beneficiary Changes
If a person wants to change or remove beneficiaries from the estate plan, that individual needs to make changes to all aspects of the plan, including updating assets, accounts, and powers of attorney. Failure to update all relevant documents can lead to confusion and discrepancies in the distribution of assets after the person’s passing. Additionally, if any named beneficiaries experience changes in their care needs, those plans will need to be revised, especially for those with special needs.
What Are Other Reasons to Modify an Estate Plan?
There may be unique reasons that may prompt an individual to update their estate plan. For example, if an individual has a trust and wishes to assign a new trustee, they will want to review and revise their revocable living trust to ensure that their trustee list is accurate and up to date.
Significant life changes are not the only reason to update an estate plan. Those with a living will may want to periodically review it to ensure everything is outlined and make any necessary updates. Also, if an individual owns a business or plans to open one, a business succession plan can determine who owns and runs the company after they are gone. Many individuals should consider reviewing their estate plan regularly, ideally every three to five years, to ensure that everything is updated.
Consult With a New York Estate Planning Attorney Today
Modifying your estate plan ensures that changes to your assets and wishes are properly reflected and that the plan complies with local laws. People may want to update their estate plans when there are changes in their personal life, beneficiaries, or tax laws. Regularly reviewing an estate plan with an attorney may also ensure the plan is up to date. If you want to learn more about estate planning in New York, please consider scheduling a consultation with the Jennifer V. Abelaj Law Firm by calling 212-328-9568.
Nonprofit Bylaws – What to Include & Common Mistakes
Nonprofit organizations exist to meet the needs of the public and address critical issues in our society. While every nonprofit has its own unique mission, all nonprofits need a comprehensive set of bylaws to guide how their organization is governed. Not only do nonprofit bylaws serve to meet legal and regulatory requirements, but they also promote accountability and transparency in the organization, thereby establishing trust with donors and the public. If you need assistance with creating nonprofit bylaws or have any questions relating to your nonprofit, contact the Jennifer V. Abelaj Law Firm at 212-328-9568 to learn how an experienced attorney can help you.
What Are Nonprofit Bylaws?
Nonprofit bylaws are the main governing document for a nonprofit corporation. They are created when the organization is established to guide the decisions and actions of the board of directors. They can also help the organization avoid issues and resolve conflicts by clearly defining rules related to authority and governance. Furthermore, bylaws are a means for holding board members accountable for their actions. Board members that fail to follow a nonprofit’s bylaws are in breach of their duty to the organization and may be held liable for their actions.
In addition to being used internally, nonprofit bylaws are used by third parties to the organization, such as investors, landlords, and financial institutions. By reviewing a nonprofit’s bylaws, third parties can assess how responsibly the organization is being managed and whether or not they are willing to do business with them.
Nonprofit Bylaws –State and Federal Requirements
Nonprofit organizations are governed by state law. A nonprofit organization’s bylaws should be created as a supplement to the rules defined under its state’s corporation code. When a nonprofit’s bylaws do not address a specific issue, it is assumed that the nonprofit follows the applicable rules of the state.
Federal law does not require specific provisions or language to be included in nonprofit bylaws. A nonprofit organization applying for 501(c)(3) tax-exempt status is required to submit its bylaws for review to the IRS, however, as part of the application process.
A skilled nonprofit attorney can assist you in creating your nonprofit bylaws in compliance with all applicable state laws. They can also help you address specific provisions in your bylaws to improve your chances of being granted 501(c)(3) tax-exempt status by the IRS. Contact The Jennifer V. Abelaj Law Firm to discuss your needs with an experienced nonprofit attorney today.
What Do Nonprofit Bylaws Include?
The specific details of a nonprofit’s bylaws are determined by the organization’s unique mission and purpose. In general, however, nonprofit bylaws include:
- Name of the organization
- Location of the organization’s principal office
- Mission and purpose of the organization
- Details about the board of directors, including the number of members, their roles, and compensation
- Rules and procedures relating to electing board members as well as their term lengths and limits
- Details about board meetings, including frequency and procedures
- Quorum requirements, including the number of votes needed to make a decision
- Policies related to maintaining corporate records
- Policies relating to conflicts of interest among board members
- Limitations on the activities of the nonprofit
- Rules and procedures for amending bylaws
Updating Nonprofit Bylaws
Nonprofit bylaws should be updated if the organization goes through any major change, such as merging with another organization or making changes to the management structure. The rules related to amending bylaws, as defined in the existing bylaws, must be followed before any changes can be made. Nonprofit bylaws should also be reviewed at least once per year by the board of directors to ensure they are up-to-date, and all procedures are being followed correctly.
As outlined in the Compliance Guide for 501(c)(3) organizations, bylaw amendments must be reported to the IRS. Some states also require that bylaw amendments are reported.
Common Mistakes Related to Nonprofit Bylaws
Common mistakes with bylaws that nonprofit organizations make are related to:
Operational Policies and Procedures
Bylaws exist to provide an overview of how an organization is governed. Specific details related to day-to-day operations can change frequently and, therefore, should be included in a policy manual written for management purposes.
Provisions for Making Amendments
Many nonprofits make the mistake of including stringent rules around making amendments to existing bylaws, such as requiring an unattainable number of votes to make a change. The needs and realities of a nonprofit organization can change over time. If it is difficult for the board of directors to make changes to the organization’s governance rules and management structure in line with the current needs of the organization, the bylaws will likely become outdated and the organization may develop a culture that is resistant to change.
Reviewing Bylaws
Many nonprofits fail to review their bylaws regularly. By reviewing its bylaws at least annually, a nonprofit and its board members can protect themselves from making mistakes and being held liable for their actions. All board members should review their organization’s bylaws at least once a year to ensure their decisions and actions are aligned with all of its provisions. New board members should be provided with the organization’s bylaws as soon as they are appointed to their position and should be required to familiarize themselves with all of its provisions.
Learn How an Experienced Attorney Can Assist with Your Nonprofit Bylaws
Nonprofit bylaws are an essential component of an organization’s success. Creating provisions that serve to enhance the effectiveness of your organization requires an in-depth understanding of nonprofit organization governance. State-specific nonprofit bylaw requirements, as well as federal requirements relating to 501(c)(3) organizations, must also be considered. At Jennifer V. Abelaj Law Firm, we are committed to assisting nonprofit organizations with all of their legal needs so they can focus on achieving their mission and purpose. Contact our experienced legal team today for a free consultation to learn more.