Eryn B. Rogers Attorney at Law, PC

Why You Should Consider Putting Your LLC into a Trust

Admin — Wed, 01 May 2024 18:12:59 +0000

Why You Should Consider Putting Your LLC into a Trust
The limited liability company (LLC) is a popular business structure that offers liability protection and avoidance of double taxation. Trusts are popular asset transfer vehicles that allow you to avoid probate and keep assets out of the hands of creditors. By placing LLC membership interests in a trust, business owners can combine the two types of legal entities and enjoy the best of both worlds.
Transferring an LLC to a trust requires a bit of paperwork, and in multimember LLCs, may also require the consent of other members. But a well-planned transfer can help reduce risks, keep your business affairs out of government hands, and fit into your broader estate planning goals.
Benefits of Placing LLC Interests in a Trust
Whether you own a single-member LLC or are co-owner of a multimember LLC, your LLC ownership interests are considered personal property. Indeed, your business interests are probably one of your most valuable assets. As such, you will want to ensure that you are safeguarding your LLC now and have a plan for what will happen to the business when you are not around or can no longer manage your affairs.
The following are some of the key benefits of placing LLC interests in a trust:
Probate avoidance. Probate is the legal process of settling an estate when somebody passes away. Overseen by the court (i.e., the government), probate ensures that your debts are paid off and your assets—including business interests—are allocated to the beneficiaries you specify in your will. Assets that are placed in a trust generally avoid probate, which can take weeks or months to complete. During the probate process, there may be nobody managing your business interests, which can result in operational problems.
Privacy. Not only can probate be lengthy and cause your business to languish—a probated estate is a matter of public record. That means anyone who knows where to look (e.g., creditors, disinherited heirs, and scammers) can learn details about your estate. Trusts, on the other hand, bypass probate, and the assets they contain pass to your beneficiaries more quickly, efficiently, and privately.
Incapacity planning. You may have a plan for what will happen to your business when you die, such as having a trusted family member take over, or an agreement that allows other LLC members to buy out your ownership stake upon your death. But what happens if an accident or illness renders you incapable of fulfilling your business duties? If your LLC interests are held in a trust, the trust can be structured so that your incapacity immediately triggers the authorization of another person (i.e., the trustee) to take over on your behalf.
Asset protection. Depending on the type of trust in which you place your LLC membership interests, the trust can make it more difficult for creditors to go after the trust assets.
Types of Trusts You Can Use for an LLC
The three main types of trusts that are commonly used with LLC asset transfers are revocable trusts, irrevocable trusts, and asset protection trusts. Each type has pros and cons for holding LLC assets.
Revocable trusts (also known as living trusts) are trusts that can be changed or canceled during the lifetime of the grantor (the person who establishes the trust). The grantor can name themselves as the trust beneficiary (the person who receives a benefit from the trust) as well as the trust’s trustee (the person who has the right to manage trust assets, including any business interests). Using a revocable trust allows you to avoid probate, control the LLC, and receive income from the trust as the beneficiary during your lifetime. The trust can be set up in such a way that, upon your death or incapacity, a new trustee and a new beneficiary (or beneficiaries) are named. However, as long as you are still alive and maintain control over the trust, the trust assets could be subject to creditors’ claims.
Irrevocable trusts, unlike revocable trusts, cannot be changed or canceled after they are created. The advantage of an irrevocable trust is that creditors cannot go after the assets of the trust’s grantor. However, if an LLC is held in an irrevocable trust, the grantor loses access and control over the LLC, as somebody other than the grantor will presumably be named as trustee and beneficiary. This also means that the grantor loses any income from an LLC that is placed in a trust.
Asset protection trusts (also called self-settled trusts) allow LLC owners to enjoy both the ownership and control benefits of a revocable trust and the asset protection benefits of an irrevocable trust. These types of trusts are highly specialized and quite complicated from a legal standpoint. Although they are required to be irrevocable, they can also allow you to receive distributions from the trust as the beneficiary and specify who will receive your LLC membership interests when you die. Not all states allow domestic asset protection trusts, but you do not have to be a resident to establish a trust in a specific state. Foreign, or offshore, asset protection trusts are another possibility.
Other Considerations for Placing Your LLC in a Trust
Placing your LLC interests in a trust means that the trust—not you as the business owner—is legally an LLC member and a party to the LLC’s operating agreement. Although the law permits a trust to own an LLC, the LLC operating agreement may not. Therefore, you will first need to check whether the operating agreement allows for this arrangement.
Even if the LLC operating agreement permits trusts to be members, you may still need to obtain consent from the other members (assuming it is a multimember LLC). Obtaining their consent could require a unanimous or majority vote, depending on the rules in the operating agreement.
If you can proceed with the transfer of your LLC into a trust and have it become an LLC member, you will need to take the following steps:
Transfer the LLC into the trust with the appropriate documentation prepared by an attorney
Update LLC documents, including the operating agreement, buy-sell agreements, and the articles of organization, to reflect the fact that the trust (not an individual) is now a member
Have the LLC members sign a resolution that formally recognizes the change of LLC ownership from an individual to a trust. This is not required, but it is a good business practice that can underscore the validity of the transfer of your LLC interests.
The advantages of having a trust-owned LLC should be weighed against the disadvantages—including any unforeseen consequences that can only be uncovered through a careful evaluation of the LLC’s operating agreement, buy-sell agreements, and transfer restrictions.
If you would like more information about transferring ownership of your LLC into a trust, or for other questions about Wills, Trusts, and other estate planning documents to take care of your loved ones, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

Peak 65 – Estate Planning at Retirement

Admin — Wed, 01 May 2024 18:11:23 +0000

In 2024, more people are expected to turn 65 than ever before. It’s called “Peak 65” and according to the US Census Bureau, as many as 12,000 Americans per day will be turning 65 this year. This is the age that many Americans associate with retirement. This stage of life is also a great time to make sure your estate plan is up to date.

Retirement is a major transition period. Whenever there is a major change in your life, it is a good idea to review and update your estate planning documents. Estate planning involves organizing and managing your money and property so that it can be distributed to your desired beneficiaries at your death with maximum efficiency. It also involves naming agents that can act for you if you become incapacitated and are unable to make financial and health care decisions.

Avoiding probate and planning for incapacity are two important reasons to do estate planning. It is best to plan ahead rather than leaving things to chance. Placing real estate into a trust allows you to pass it on to your desired beneficiaries without the need for them to go to probate court after your death. It also allows for flexibility in the way that property is distributed, which is especially important for minor children or those with special needs. Naming the people you trust to help with managing your money and property and making health care decisions on your behalf are additional benefits of planning ahead. If you prepared a Will and even a Trust when your children were born or when you purchased your home, there are most likely some updates that need to be made to who you would like to name as your Successor Trustee and agents for financial and health care decisions.

If you or someone you love is planning for retirement, this is a great time to consider updating or putting in place an estate plan. If you would like more information tailored to your particular situation, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. I provide estate planning services in Utah County and beyond.

CTA Imposes New Small Business Reporting Requirements for 2024

Admin — Wed, 01 May 2024 18:08:13 +0000

Small business owners have one more item on their compliance to-do list now that the Corporate Transparency Act (CTA) has taken effect.
The CTA, enacted as part of the Anti-Money Laundering Act of 2020 (AMLA), places new reporting requirements on many business entities in an effort to expose illegal activities, including the use of shell companies to launder money or conceal illicit funds. Around 30 million small businesses will be impacted by the law, which will establish a federal database of information, furnished by “reporting companies,” that will be accessible to certain authorities and organizations.
A final rule has been issued stating how the new law will be implemented to help businesses understand whether the law applies to them, how to comply, and which agencies will have access to the information they must report. CTA violations carry civil and criminal penalties, including imprisonment.
Why was the CTA passed?
The CTA was passed as part of the National Defense Authorization Act for Fiscal Year 2021. It directs the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to gather information from private companies about their owners and controlling persons. Acting Director Himamauli Das said, “FinCEN is taking aggressive aim at those who would exploit anonymous shell corporations, front companies, and other loopholes to launder the proceeds of crimes, such as corruption, drug and arms trafficking, or terrorist financing.”
To counter the risks allegedly posed by anonymous shell companies, the CTA mandates the creation of a national registry that contains certain information about business entities that are formed by filing a document with a state’s secretary of state or similar office.
What does the CTA require?
Effective January 1, 2024, the CTA requires that certain businesses disclose to FinCEN information about the company, its beneficial owners, and in some cases, the company applicant.
DEADLINES
Reporting companies—defined as any company with twenty or fewer employees that is formed by filing paperwork with the Secretary of State or equivalent official—that are created or registered prior to January 1, 2024, have until January 1, 2025, to file an initial report; reporting companies created or registered after January 1, 2024, and before January 1, 2025, will have ninety days after creation or registration to file a report. Entities created on or after January 1, 2025, will have 30 days to submit the reports to FinCEN.
Does the CTA require my business to report?
The CTA applies to companies that are created by filing a document with a state authority. Typically, this includes corporations and limited liability companies. Depending on the state, it could also include limited partnerships, professional associations, cooperatives, real estate investment trusts, and trusts. In addition, the CTA applies to non-US companies that are registered to operate in the United States.
NFIB estimates that, based on these rules, 30 million small businesses will have to report to FinCEN. However, the CTA exempts around two dozen categories of companies, including companies that
are publicly-traded;
have more than twenty full-time US employees;
filed a previous year’s tax return showing more than $5 million in gross receipts or sales;
have an operating presence at a physical US office location;
operate in a regulated industry, such as banking, utilities, or insurance, that already imposes similar reporting requirements; or
are subsidiaries of exempt organizations.
The exemptions, which generally include larger companies that are already subject to regulation, underline the primary purpose of the CTA: to combat money laundering and other illicit activities conducted via small, private, and anonymous shell companies.
What information must be provided in the reports?
The CTA requires three categories of information to be reported: company, owners, and applicant.
Domestic reporting companies created before January 1, 2024 must provide information about the company and its beneficial owners.
Beneficial owner is defined in the CTA as an individual who exercises “substantial control” over the reporting company or has an ownership interest of at least 25 percent. Company senior officers, directors, and others who make significant decisions on behalf of the company may meet this statutory definition of “substantial control,” although the broad definition may cause confusion in some instances.
Domestic reporting companies created on or after January 1, 2024, must provide information about the company, its beneficial owners, and its company applicants.
A company applicant generally is the individual who files the formation document with state authorities for the reporting company.
Technically, the information to be filed with FinCEN is called a Beneficial Ownership Information (BOI) Report. The following is what is required in the report for a company, an owner, and an applicant:
The reporting company must provide its name and any alternative (DBA) names, the address of its principal place of business, the state of formation, and its taxpayer identification number or FinCEN identifier.

Each beneficial owner of a reporting company must furnish their full legal name, date of birth, residential address, and an identification number from a driver’s license, passport, or other state-issued identification (ID), along with a copy of the ID document.

A company applicant is required to submit the same information as a beneficial owner.
Who has access to FinCEN BOI reports?
The CTA authorizes FinCEN to disclose BOI information to five categories of recipients:
US federal, state, local, and tribal government agencies
Foreign law enforcement agencies, judges, prosecutors, and other authorities
Financial institutions
Federal regulators
US Department of the Treasury
FinCEN may only disclose BOI information “under specific circumstances”: there are more stringent requirements for agencies other than those engaged in national security, intelligence, and law enforcement activities. There are also restrictions on how the information may be used and how it must be secured.
Some small business owners have expressed concerns about the privacy implications of the CTA. The NSBA has filed a lawsuit challenging the CTA’s constitutionality, in part on privacy grounds over sharing “sensitive information” with the government.
Are there penalties for noncompliance with the CTA?
Penalties for noncompliance may be steep. Willingly providing false information (including false identifying documents) to FinCEN, or failing to report complete BOI information, can result in:
Fines of $500 per day, up to $10,000
Imprisonment for up to two years
Civil and criminal liability may be avoided if an individual who submitted an original, erroneous report did not knowingly submit inaccurate information and submits an updated report correcting the inaccurate information within ninety days.
Get help with CTA reporting requirments.
Compliance is crucial to avoid being subject to noncompliance penalties. FinCEN began accepting reports on January 1, 2024. Reports can be submitted with FinCEN by going to https://www.fincen.gov/boi
If you would like help with determining beneficial ownership and/or submitting reports to FinCEN for your business, we are happy to assist. You will be required create your own FinCEN ID for each individual or entity that may have a beneficial ownership in the company submitting the report. You may create a FinCEN ID by going to https://fincenid.fincen.gov/landing
If you would like more information about the Corporate Transparency Act, or for questions about Wills, Trusts, and other estate planning documents to take care of your loved ones, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

Are Estate Plans Just for The Wealthy?

Admin — Wed, 01 May 2024 18:05:03 +0000

When you hear the word “estate” it may bring with it an image of a large tract of real estate with a large manor filled with valuable furnishings and artwork. However, estate plans can make an impact on those of more modest means as well. Everyone has an “estate,” which just refers to your possessions, money, property, insurance policies, and other valuables. While you may not have priceless works of art to distribute in your estate, you likely have assets that will need to be distributed at your death.

If you have someone who is dependent on you, estate planning documents such as a Will can address who will be the guardian of your minor or dependent adult children after your death. Life insurance can accomplish the goal of providing for those who are dependent on your income after your death. If you own real estate, then a Will and Trust can be useful tools for naming who will manage your affairs and who you want your property distributed to after your death.

Thinking about what will happen to those you love and your money and property at your death can be a difficult task. However, leaving no estate plan in place will lead to difficult decisions for those you leave behind, and it may result in an outcome that you don’t expect or desire.

If you would like more information regarding an estate plan tailored to your particular situation, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

Temporary Delegation of Parental Rights

Admin — Sat, 05 Aug 2023 06:54:52 +0000

The temporary delegation of parental authority through a Power of Attorney can be a useful tool for parents who will temporarily be unavailable to make decisions on behalf of their child. If you are planning an adults-only vacation, a business trip, or if you are at risk for jail time or deportation, then a Power of Attorney allows you to nominate an agent to act on your behalf with regard to your children.
These are the requirements for a temporary delegation of parental authority through a Power of Attorney in Utah:

Signed under oath in the presence of a notary public
Expires within six months of the signing date
Names an adult (18 or older) to act on behalf of the parent or guardian

The power of attorney may allow the named agent to make decisions regarding health care, schooling, housing, child care, etc. However, a parent or guardian cannot delegate the power to consent to marriage or adoption. Additionally, a parent may place limits on the agent’s decision-making powers.
The power of attorney can be revoked at any time by delivering a written notice to the agent named in the power of attorney.
If you would like more information regarding the temporary delegation of parental rights, please don’t hesitate to contact me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

What is a SLAT?

Admin — Wed, 05 Jul 2023 06:22:39 +0000

A SLAT is an estate planning tool that may become more popular as we approach the current federal estate tax exclusion’s sunset on December 31, 2025. SLAT stands for Spousal Lifetime Access Trust.

A SLAT is an irrevocable trust, so any assets funded into a SLAT are removed from your estate. In 2023, the federal estate tax exemption is $12.92 million per person, so there are not too many people who are concerned about avoiding federal estate taxes. Utah does not have its own state estate tax; so again, there is no reason to transfer wealth outside of your estate to avoid Utah estate taxes. However, in 2026, the federal estate tax exemption will be cut in half unless some other action is taken by the federal legislature. Any assets transferred into a SLAT now can take advantage of the larger federal lifetime gift and estate tax exclusions.

Advantages of a SLAT

Removes assets from your estate for state and federal estate tax purposes
Allows access to the assets through distributions to the spouse as the beneficiary of the trust
Provides asset protection from creditors
Transfers assets to the next generation or other beneficiaries upon the death of the spouse
Passes through income to the grantor when set up as a grantor trust
- Taxes are paid at the individual level rather than at the higher trust tax levels
- No additional tax returns are required during the donor’s lifetime
Allows individuals to take advantage of the large estate and gift tax exclusion levels that will likely come to an end in the next couple of years.

Disadvantages of a SLAT:

Complex administration of an irrevocable trust and costs of an independent trustee
Donor’s indirect access is terminated upon the spouse’s death
- The risk of death can be mitigated by a life insurance policy taken out on the spouse.
Donor’s indirect access may be terminated upon divorce even though the former spouse continues to benefit from the SLAT
- This can be prohibited in the terms of the trust.
There is a loss of the step-up in basis at death
- This can be mitigated by allowing for a swap of assets of equal value

If you would like to discuss whether a SLAT is right for your situation, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

Judicial Recognition of Marriage for Inheritance

Admin — Mon, 05 Jun 2023 05:40:16 +0000

Imagine a couple who shares a bank account, purchased a home together, and in most respects lives and acts as though they are married. However, this couple never actually obtained a marriage license or had a marriage ceremony recognized by the State. What happens to their property if one of them dies intestate (without a Will)?

According to the US Census Bureau, marriage rates are declining across the country, including a significant decrease in the state of Utah. This likely means that the scenario described above is becoming more common. However, Utah does not recognize common law marriage. That means there are no legal protections for a surviving partner, even if they have been in a relationship together for many years. When this is the case, a long-term partner may have no legal interest in property held by the other partner unless it is titled jointly or there is estate planning in place, such as a Will or Trust.
There may be circumstances where it would make sense to ask for judicial recognition of marriage to inherit property. This must be requested by either partner or next of kin within 1 year of death. It would require evidence that the partners agree to be married. Some things that can help prove consent are:

a written agreement
witnesses who testify that they were present when the agreement to assume marital responsibilities was made
holding joint banking and credit accounts
purchasing and jointly owning real estate together
one of the parties using the other party’s last name
filing joint tax returns
talking about each other in the presence of third parties as being married and
declaring the relationship in documents while living together, such as deeds and wills (Whyte v. Blair, 885 P.2d 791, 795 (Utah 1994)).

If the court grants your request to have your past relationship recognized as a marriage, it is the same as getting married. The intestate inheritance laws would then apply to provide for the surviving spouse at death.

If you would like more information about filing for judicial recognition of a marriage for inheritance purposes, or for questions about Wills, Trusts, and other estate planning documents to take care of your loved ones, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

1 https://www.census.gov/library/visualizations/interactive/marriage-divorce-rates-by-state-2011-2021.html
2 https://www.utcourts.gov/en/self-help/case-categories/family/marriage/common-law.html#:~:text=Many%20people%20want%20to%20get,never%20had%20a%20marriage%20ceremony (site visited on August 18,2023).

Why Should I Have An Estate Plan?

Admin — Wed, 03 May 2023 11:57:37 +0000

According to Caring.com’s 2023 Wills and Estate Planning Study[ https://www.caring.com/caregivers/estate-planning/wills-survey/], 64% of Americans think having a Will is important, yet only 34% of Americans have any type of estate plan in place. While many Americans say they just haven’t gotten around to creating their estate plan, 35% of Americans say they don’t have a plan because they do not have enough assets to leave to anyone. This includes a significant number of people (24%) who are making $80,000 or more per year.

Estate planning provides many advantages that are important for everyone, not just those making six-figure salaries. I believe that for families with minor children, one of the most important things a Will can do is allow you to name who you would like to take guardianship of your minor children in the event of your death. Without a Will, it is left up to the State Court System to appoint a guardian for minor children. The State Courts do not know your children or the people who know your children best. Preparing and executing a Will is the best way to make sure that your wishes are known and followed.

While a Will becomes effective at your death, a Revocable Living Trusts allow you to name someone that can act on your behalf to manage your money and property if you become incapacitated during life. This way, if you are not able to manage your finances, you can name a Successor Trustee that can step in to manage them for you. This, along with an Advanced Health Care Directive, often avoids the need for petitioning a court to appoint a guardian and conservator to make such decisions.

If you have real estate, or over $100,000 in other assets that don’t have a beneficiary designation, a Revocable Living Trust is a great way to spare your loved ones from the probate court to transfer your assets after death. A Will is a tool that can be used to name beneficiaries at your death, but a probate court must still be involved to give your personal representative the legal authority to take ownership of your property after death. In contrast, the Revocable Living Trust allows your successor trustee to step into your shoes and follow the terms of the trust for paying final expenses and making distributions to beneficiaries without the hassle and expense of going through probate court.

If you would like more information tailored to your particular situation, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.

When Do I Need A Will?

Admin — Wed, 12 Apr 2023 11:54:04 +0000

The majority of Americans believe it is important to have a Will, but only about 34% of Americans actually have a Will.[ See the 2023 Wills and Estate Planning Study conducted by Caring.com, key findings available at .] These are a few life events that should motivate you to consider preparing a Will and other Estate Planning documents.

1. Marriage – The marriage of two people is an event that usually means the combining of assets. This is a crucial time to consider what will happen to those assets in the event of the death of one or both of the spouses.

2. Birth of a Child – The responsibility of raising a child is immense, and it should include consideration for who would care for your child if anything were to happen. A Will and Trust are vital for naming a guardian and providing a structure for inheritance. Updates should be considered after the birth of each child.

3. Home Ownership – The purchase of real estate is a great time to start thinking about estate planning. For many people, the best way to transfer real estate to your beneficiaries after death is through a Revocable Living Trust because it avoids probate court proceedings after your death.

4. Retirement – Often the end of a career will trigger individuals to consider their legacy and how they would like to be remembered. Making the necessary effort to prepare a careful estate plan can save your heirs and beneficiaries from probate court, family disputes, and unnecessary taxes. It can also provide structure to the way you leave an inheritance.

5. Divorce – In the event of a divorce, it is vital to update your beneficiary designations, powers of attorney, health care advanced directives, and all estate plans that were made with your former spouse.

How Your Revocable Living Trust Can Increase Your FDIC Insurance Coverage Limits

Admin — Tue, 21 Mar 2023 10:15:17 +0000

With all of the news coverage of recent bank failures, I thought it would be good to talk about how a Revocable Living Trust can increase your FDIC Insurance Coverage Limits. After the Financial Crises in 2008, the FDIC insurance limits were adjusted. Deposits up to $250,000 at FDIC insured banking institutions are backed by the full faith and credit of the United States. When your Revocable Living Trust owns your bank account, the living beneficiaries of your revocable living trust are also insured. According to the FDIC regulations, when there are five or fewer beneficiaries, coverage is calculated by multiplying the number of owners by the number of beneficiaries, which is then multiplied by $250,000. For example, if Adam is the Trustmaker and names his two children, Beth and Charles, as his beneficiaries, the maximum coverage on his deposits would be calculated as follows:

1 Trustmaker (Adam) X 2 Beneficiaries (Beth and Charles) X $250,000 = $500,000

If the number of beneficiaries is greater than 5 and the total balance of accounts exceeds $1,250,000, the calculations are more complicated, but the minimum coverage will be $1,250,000.

The FDIC website has an Electronic Deposit Insurance Estimator that you can use to calculate the coverage on your account. It is available at https://edie.fdic.gov/index.html.

This is just one additional benefit of funding your bank accounts into your revocable living trust. If you would like more information, or if you would like to start the process of estate planning, please don’t hesitate to call me at 801-874-4546 to schedule a free consultation. I am an estate planning attorney in Spanish Fork, Utah. While my office is in Spanish Fork, I provide estate planning services in Utah County and beyond.