|
|
|
Equity Search Services:
Financial Solutions
You've worked so hard for your assets ... shouldn't you protect them?
You've worked day in, day out to build assets for your family and your retirement. One day, a creditor appears, threatening to take everything. Or you fall ill, without a
clear plan for your future ... or for your estate.
In the back of your mind, you know that you should take a more active role in finding out how to protect your assets. But the day-to-day management of life and business takes up all of your time. Tomorrow you’ll have time to figure it out. Or next week. Suddenly, it becomes apparent that the future is now. Are your assets protected? Do you have your say in what happens to the things that you worked for?
Equity Search can help!
There are basic steps that everyone can take to protect their assets. Equity Search can help individuals and businesses identify those steps and recommend a broader strategy based on individual needs and requirements.
Simple things can cause the greatest complexity
Certain activities can have great impact on asset protection from creditors and taxes.
These are the most basic activities, but they can cause the greatest complications in times of crisis. Here are just a few
examples:
- The way your property is titled
- The joint filing of tax returns
- Who signs checks in a business and who is listed on a bank signature card
- Being secured on loans made to your business
- Cash vs. accrual accounting
How is your property titled?
People’s homes are often their largest asset, but they frequently don’t know how their property is titled, and they are unaware that the way the property is titled is of great significance. The title affects whether the property can be attached by creditors, how it is taxed and distributed after death and what happens to the property in the event of divorce.
There is no one best way to title property, and laws vary from state to state. As an example, New York State offers four basic ways to title property: Individually, Tenants in Common, Joint Tenants with Right of Survivorship and Tenants by the Entirety. Each method has advantages in protecting the property from a spouse's creditors, control of the asset at death, whether the property will be subject to probate and the effect of estate taxes.
In general, property should be held in the name of the spouse with the least chance of incurring debts that creditors may act against. For example, if one spouse owns and operates a business, there is a possibility that at some point the business may fall behind in employment taxes with the IRS or incur a debt to some supplier that cannot be paid. In this instance, it would be wise for the other spouse to own the home individually in his/her name, thereby protecting the assets from the IRS or other creditors.
Are you filing joint tax returns?
In the scenario described above, the couple must also decide whether to file a joint tax return. Most think, "We always pay our taxes, and besides, we’ve never been audited. Why shouldn't we file jointly, it saves us money, doesn't it?"
The risk is that, when both spouses sign a joint return, they both become liable for any taxes now due or determined to be due later at an audit. Unless both spouses have impeccable records know their return is 100% audit proof, do they want to take the chance to expose the other's assets to your tax debt and possible levy or seizure?
Tax benefits of joint returns may not be as great many have been led to believe. In some cases, couples may even pay less by filing separate returns. A simple way to make the determination is to have the returns prepared both ways.
Is your spouse listed on your bank signature card?
It is common practice for spouses to be listed on a business’ bank signature card, although the business may be owned only by one spouse.
It can be a convenience, in case the business owner spouse is ill or unavailable.
But consider the consequence of this simple procedure in a situation where the business
can't pay its employment taxes to the IRS. Upon subpoena of the
businesses' bank records, the IRS could make the determination solely from
examining signature cards and checks signed that both spouses are responsible for the trust portion of the tax
owed. A penalty can be assessed against both spouses, and the IRS can move to collect against assets of both.
Have you correctly determined the best business type for your business?
Do you own a business? Are you thinking of opening a business? If
so, take the time make sure you select the proper type for your
business. Are you a sole proprietor, partnership, or corporation? If
you own a corporation, do you know whether to make the Sub S election?
There are many variables in determining the best structure for your business. The nature of the business and the risk factors involved should dictate the type of business in order to best protect the business and its owner. For example, a corporation might be best suited for businesses with high volume, high risk from product liability or warranty claims from services performed. There are benefits to the various types of business, and only after a thorough review can the proper decision be made.
Equity Search: Ensuring your long-term success
Equity Search has experience that transcends tax problems and solutions. Every day, we help business owners make the right choices to ensure their long-term success. Make sure that everything you’ve worked for remains protected—contact us at Equity Search, and protect your
future. It could arrive any day.
|
