Daily Archives: May 20, 2021

It is possible that you will need to make changes to your Will at some point. Can a will be changed? Making a Will ensures that one’s property is distributed as desired. And that the appropriate heirs receive their fair share. A Will is a legal declaration of the testator’s intention regarding his property that he wishes to be carried out after his death.

When a major life event occurs, such as marriage, divorce, separation, the birth of a child, the death of a relative, or a change in your financial situation, it is critical to review your Will. These events may have an impact on both your estate distribution wishes and the validity of your current Will.

A testator has the ability to alter his or her Will.

A testator has the right to change his Will at any time and in any way he sees fit. A Will can be made by anyone of sound mind who is not a minor. If a person is not of sound mind when making a Will, the Will is unenforceable.

A Will obtained by force, coercion, or undue influence is a void Will because it removes the person’s free agency. A will made under the influence of intoxication. Or in such a state of body or mind as to deprive the testator of free agency is null and void.

A Will can be written at any point in a person’s life. A testator may make a Will as many times as he or she wishes. However, only his last Will and Testament made before his death is enforceable. A Will must be signed or affixed with the testator’s thumb impression before it can be executed. It must be attested by two or more witnesses, each of whom must have witnessed the testator signing the Will.

Wills are registrable –

Although the registration of a Will is not required, it can be done with the sub-registrar. If the testator wishes to withdraw the Will at any time, he may do so. A Will can also be sealed and kept in a safe place. An executor of the Will or an heir of the deceased testator can apply for probate after the testator’s death. The court will then ask the deceased’s other heirs if they have any objections to the Will. If no objections are raised, the court will grant probate. A probate is a court-certified copy of a Will that serves as conclusive evidence that the Will is genuine.

A will can be changed due to factors like :

1. Civil Partnership/Marriage

Any previous Will that you may have made is automatically revoked when you marry. The only exception is if your Will expressly states that a marriage is about to take place. And includes explicit instructions that the Will will continue to be valid after marriage and will be changed

Members of a Civil Partnership have been treated in the same way as married couples since the Civil Partnership Act was passed in December 2004. When a civil partnership is registered, any previous Will made by either partner is automatically revoked.

2. Separation or Divorce

If you divorce or dissolve your civil partnership, your Will remains valid. However, many of its provisions will no longer be effective if you die before making a new Will. For example, any gift you left to your former spouse or civil partner in your will would take effect as if they had died on the date your divorce was finalised.

This usually means that the gift is returned to the estate residue for the benefit of the residuary beneficiaries. If your Will specifies that everything goes to your spouse. It is the same as if you died intestate and a will be changed(leaving no valid Will).

3. A child is born.

Even if you name your other children as beneficiaries, if you have a child after writing your Will, they will not automatically become a beneficiary. As a result, you should update your Will and a will be changed as soon as possible after the birth of a child to ensure that your wishes are carried out.

Can a will be changed?

How to Modify Your Will?

You cannot simply make changes to an existing Will in order to change it. Such alterations are presumed to have occurred after the Will was executed and a will be changed. Thus, do not constitute a part of the original legally valid Will.

The only way to legally change a Last Will and Testament is to either add a codicil to the existing Will or
Create an entirely new Will.

Using a Codicil to Modify a Will

A codicil is an addition to an existing Will that makes some changes while leaving the rest of the Will untouched. It is a legal document that has the same legal force as the original Will.

A codicil must be signed, dated, and witnessed in the same manner as the original Will on a separate sheet of paper. The witnesses, however, do not have to be the same as in the original Will. There is no legal limit to the number of codicils that can be added to a Will. But they should only be used for minor and straightforward changes.

After the codicil has been executed, it should be kept in a safe place with the original Will. It is suggested that codicils be numbered so that executors know how many documents to consult in addition to the Will. Do not attach the codicil(s) to the Will, as doing so would render the Will null and void. It is best to notify your executor(s) and provide them with the location of the codicil.

Changing a Will After Someone Has Died

It is possible to change a person’s Will regarding the distribution of their assets if they die with or without a valid Will. In some cases, beneficiaries may find it advantageous to change a Will and a will be changed for tax purposes after the deceased’s death. This can be accomplished through the use of a Deed of Variation, also known as a Deed of Family Arrangement.

This must happen within two years of death and only if all of the beneficiaries agree to the changes. A Deed of Variation must be in writing and signed by the beneficiaries agreeing to the changes. And if more tax is payable as a result of the Deed, the Deed must be in writing and signed by the beneficiaries agreeing to the changes. The executors will be required to sign the document as well.

The following are the most common reasons for changing a Will after death:

To reduce the amount of Inheritance Tax that must be paid.
Provide for someone who has been left out of a Will or who has not been adequately provided for in a Will (such as new grandchildren).
To make provision for someone who has a legal claim to the estate.
Redirect a joint tenancy property that would otherwise pass to the surviving joint tenant.
To clear up any doubts or flaws in the Will.

To be valid and effective, a Deed of Variation must include significant changes to the way assets are to be distributed. It is not legal to transfer assets on paper to another person while the original beneficiary continues to benefit from them. Spouses cannot pass assets to their children and then pass them back to the parent to avoid inheritance tax charges. When establishing a Deed of Variation, there should be no reciprocity at all.

Published by: Somya

Legal

Can a trust own an annuity?

May 20, 2021

An annuity is a contract between you and an insurance firm. It allows you to pay a lump-sum payment or a series of payments in exchange for regular payments. It may start right away or at some after the date. An annuity’s purpose is to provide a consistent flow of income, usually during retirement. Funds grow tax-deferred. If you reach the age of 59.5, it can be done without any pay. The question arises that Can a trust own an annuity?

Corporate and government securities, stocks, mutual funds, separately managed accounts (SMAs). Trust can only use a few assets and Annuities is one of them. Financial advisers and trustees, on the other hand, may ignore the annuity option.

Irrevocable trusts are considered as their own taxable entity. It should take advantage of the same benefits that people can get from annuities: tax deferral, income control, and a variety of investment options.

This isn’t a particularly uncommon situation. Holding an annuity in a trust will work in certain situations, as long as you choose the right annuity and the right trust. The annuity recommendation most often does not include a trust, so each case is unique.

Benefits of owning an Annuity-

1. Trust Issues With A Twist

Volatile markets and low-interest rates present problems for trustees today. The confidence standards do not vary with the markets. Trustees must nevertheless adhere to the trust’s terms. And attempt to fulfil beneficiaries’ expectations for revenue, development, capital preservation, and cost and tax control. Annuities should assist with these issues.

2. Obligations of Dual Trust

Individuals who receive revenues from the trust as well as those who receive assets after the trust allocates are the beneficiaries of several trusts. It can be tricky to balance these competing interests. Through income control and tax productivity. An annuity may assist a financial professional with dual trust responsibilities.

3. Asset Allocation That Works

When trust is first established, the asset allocation is usually determined by the trust’s terms, long-term goals, and the current economic climate. However, the trust assets’ allocation may need to be altered or amended over time.

A reallocation of assets may result in higher transaction costs for many financial instruments. And the sale of one asset to purchase another may lead to capital gains taxes. A trustee should reduce transaction costs and redistribute assets without causing taxable incidents by using a variable annuity.

4. Control of Income and Efficiency of taxes-

The trustee of an annuity should have jurisdiction over the acknowledgement of revenue, which is a taxable event. Many annuities held by trusts qualify for tax deferral.

Any percentage of trust assets that benefit from tax deferral is not subject to annual taxes for capital gains, interest, or dividend with a tax-deferred annuity. As a whole, trustees should avoid tax-motivated distributions, allowing the trustee to reduce income allocations while allowing any profits to grow tax-deferred.

Deferred annuity Trust –

1. Can a trust own a deferred annuity? Unlike brokerage assets or money at the bank, annuities forever have named beneficiaries and upon death. Provisions help contractually to know the income is paid out. The qualities inside the rente are asset protected to varying degrees in most states. Despite whether or not the rente is commanded in an exceedingly trustworthy way.

2. Additionally, a number of the newer “stretch provisions” permit your beneficiaries. They distribute rent financial gain over their time period are unobtainable with trust-owned annuities. As a result, we frequently question the shopper and also the lawyer on why they like a rente to be trust owned.

3. In several cases, it’s merely a previous habit, and also the lawyer. And comptroller is typically unaware of the downsides that will exist. A straightforward discussion can establish the right type of possession.

4. As a result, we always ask the client and the attorney if they prefer a trust-owned annuity. In many cases, it’s just a bad habit, and the attorney and CPA aren’t aware of the potential drawbacks. A straight forward debate can help in determining the correct form of ownership.

Investing in an Irrevocable Grantor Trust with an Annuity-

If a trust is holding a deferred annuity for the benefit of others. One should consider a grantor irrevocable trust. You should make cash donations using your annual gift tax exclusion if you use an irrevocable trust.
The cash is used by the trust to buy annuity policies for you as the named annuitant. When the annuities begin to payout, the funds are transferred to the trust, which can then distribute the funds to beneficiaries. For this trust to be considered outside of your estate. The beneficiaries must be living individuals, not organisations.
If you’re in good health and want to provide continuing financing for your beneficiaries. This can be a wonderful way to take some of the tax burdens off your estate. This strategy will help you raise funds while you’re still alive and get your legacy off to a good start.
The laws of the annuity, however, cannot change after you pass away. Only two choices will be available to the trust. It has the option of receiving the annuity in one lump sum or over a five-year period. This is where those who employ this strategy run into difficulties.

Trust shouldn’t use annuity?

When the annuitant dies, it will be more difficult to use annuities in trust. The contract should only pay out consistent payments if you’re alive because it’s based on your life. After the death, the annuity contract will need to be dissolved. After that, the trust will be taxed.

When you withdraw money from an annuity, you must pay royalties on the profits. The biggest advantage of annuities is that they grow tax-free once you’re alive. When payments are made, they must be organised in such a way that they can last for a long time in order to reduce the tax burden.

Published by: Somya

Coporation

Can an LLC own a C Corporation?

May 20, 2021

In the current age of continuous human advancement, fiscal and financial literacy is the need of the hour. Information about the various kinds of corporations is ingrained in the core concept of the above-mentioned literacy. First of all, to get started on the subject, the right step would be to get a brief idea about the various aspects in question. Can an LLC own a C Corporation?

What is an LLC?

LLC or Limited Liability Company is a form of a private limited company that effectively combines the crucial taxation attributes of a sole proprietorship. Or a partnership with the limited liability of a corporate entity. An LLC has a separate business identity from its owners. This means that it can open a bank account, perform transactions and file for taxes all on its own.

The most favourable attribute of an LLC that makes this venture a viable option in fact. That every member in an LLC has an identity separate from the company. This means that if the company goes bankrupt, the members are not obliged to pay off the creditors. Even if the amount recovered after selling its assets is not enough to settle the debts and liabilities. The creditors cannot legally hold the members responsible. Compared to other formats, an LLC need much fewer legal and financial courtesies, thus making it a practical choice.

When it comes to taxation, an LLC is not treated as a traditional tax entity like in the case of a corporation. Instead, it is seen as a ‘Pass-through entity’ or a ‘Flow through Entity’. This is similar to the tax procedure in a partnership or a sole proprietorship business where the income. And the losses directly seep through to the members, who then file it as their personal tax returns.

Although, this mandate is not rigid as the perspective changes depending upon the number of members in the corporation. In the case of a single member, LLCs are treated as a sole proprietorship for tax purposes and in the case of multiple members. LLCs are treated like a partnership where the profit and losses are distributed according to the percentage interest in the business.

What is a C Corporation?

A-C corporation or popularly known as a C-Corp is a legal structure for a corporation in which the owners are taxed or seen as having a taxpaying identity separate from that of the corporation itself. While the prevalent burden of double taxation, both corporate and personal. Might seem harrowing but keeping in mind the aspect of ease of convenience makes it a good option. Just like an LLC, the personal liabilities of the different members of a C corporation are also controlled. Keeping the unbridled debt payback duties in check.

Another term that is almost antonymous to a C corporation is an S corporation. S corporation, also known as S Subchapter is a kind of entity that does not pay income tax. Instead, the profit and losses of the corporation are spread among the members which are then reported on their personal tax returns. Unlike C corporation, S corporation does not need to bear the burden of double taxation. This in turn leads to various other advantages like improved trust and personalized dedication to the company in the eyes of the public/investors.

C- corporation –

Despite having certain similarities in their attributes and functions. The members being able to enjoy the typically limited liability partnership privileges, absolute separate legal identity from the company and formative structure and components. There are certain differences between a C corporation and an S corporation.

Where a C corporation has its identity of being a separate taxable entity. An S corporation on the other hand acts like a ’Pass through’ tax entities. This unique characteristic of not having to pay income tax directly is the major point of difference between them.

Now, coming to the burning question,

Can an LLC own a C Corporation?

The answer is yes, an LLC can effectively own and control a C corporation. Here too, the ploy of an S Corporation should be given due consideration because although an LLC can own a C corporation. It cannot do the same thing in the case of an S corporation.

The deciding point of difference between these two entities which play an integral role in the decision-making process is that of tax filing. An S corporation is a small-scale business entity that acts as a ‘pass through. This gives it the power to steer clear of paying income taxes while the members have to bear the weight of the profit and the losses. Due to the fact of them being a ‘pass through, they also need to adhere to one important rule of thumb.

According to the rule, only individual people are allowed to own stock in an S corporation. This ‘pass through’ nature of an S corporation prevents the LLC from deciding to own it mainly due to the added hassle of having to pass the profits first through the S corporation and then again through the LLC. But in a true sense of disparity in the two types of entities being discussed. In a C corporation, both individuals and other business entities can own stock due to which an LLC can effectively own a C corporation if it wants to.

Proper attention –

While undergoing the process of purchasing a C corporation. Proper attention should be given to the various niches available to the LLC. They can either opt for full ownership of all the available assets in the C corporation. Or choose to own a handful of shares. In the case of a C corporation, the purchaser gets to enjoy certain conveniences. Like the ease of transfer of ownership and operations. Either way, the decision-making process is streamlined and made much easier. This is because the profitability opportunities of the purchasing LLC increase much more.in this case of purchasing the C corporation.

Published by: Somya

Coporation

Can I be fired for not signing a non compete?

May 20, 2021

In layman’s term, a non compete agreement can be defined as a type of contract, where an employee promises not to enter into any kind of competition with the employer after the employment period is done with. These contracts primarily deal with the protection of confidential information and an unfair playing field for the company. And information falling into the hands of a competitor or a market adversary. The validity of the contract depends on various factors and sometimes may come with certain incentives for the person signing the contract after his employment period is complete. Many people remain worried if they can be fired for not signing a non compete. Employees, consultants, agents, contractors, everyone may come under the purview of this clause.

Can I be fired for not signing a non compete?

Protection-

Protecting the company’s foothold in the market and protecting it from malicious intentions of the investors are the main causes of the emergence of this contract. Although, proper steps should be taken before both the parties enter into this contract to make sure. That it does not get lopsided at any point and is equally beneficial to both the parties considering the various factors which come into play. Like the geographical location and the duration of the agreement.

The legality of a non competes agreement differs greatly from one place to another. Although steadily gaining importance in various crucial fields like telecom, media and information technology among others, from the perspective of Indian Law. A non compete agreement is not at all binding and can be considered null and void in court.

Non-Disclosure Agreement

Another term that lies in the same ballpark as a non compete agreement is a Non Disclosure Agreement (NDA). A Non Disclosure Agreement is an agreement where two or more parties enter into an agreement to not disclose any of the information. That is passed between them during the course of the venture to protect the interests of the concerned parties. It is a legally binding document that allows the parties to freely share sensitive information between them.

Difference between a Non-Compete Agreement and a Non Disclosure Agreement

Although both the contracts are powerful legal instruments enforced to safeguard the integrity and privacy of the organization and employee alike. There are some subtle differences between a non compete agreement and a non-disclosure agreement.

In the non compete agreement, the recipient who is resigning or whose contract is being terminated enters into an agreement. To not compete with the party with whom they are signing the contract in adherence to certain factors like duration, incentives and field of business. It protects the company from unfair competition and thus levelling the playing field. One of its special characteristics is that it’s usually a one-way contract.

Can I be fired for not signing a non compete?

A non-disclosure agreement, on the other hand, restricts the independent employee, contractor and agent to share sensitive information. Like the company’s trade secrets to external parties. It is a mutual contract that cannot come into existence without the consent of both parties.

Although similar in nature, a non compete agreement and a non-disclosure agreement specifically perform a distinctly different function. Which leads to the protection of the interests of the parties.

Can I be fired for not signing a Non-Compete Agreement?

With the non compete agreement being a characteristically one-way contract. Employees after entering into a new workplace may deal with the dilemma of choosing between signing and non-signing a non compete agreement. Is its long term impact on his growth and progress of the company.

To summarize the facts of the matter, a non compete agreement is made in the best interest of the company to keep parties. Like the employees, contractors, agent, etc. from competing against the company itself in the long run after the resignation or the termination of their contracts.

Keep in Mind –

Keeping in mind the fact that an employer can neither force you nor you are in any way obligated to sign a non compete agreement. The decision is ultimately in the hands of the employer. He or she may choose not to hire you or pose the signing of the contract as an ultimatum towards your future in the business. The signing party also has the backing of the legality of the courts as a whole. Because the court does not really approve of a non compete agreement.

Upon dispute between the employer and the employee regarding matters of the contract. It will go over the contract to see whether the contract is practical and biased. And does not favour the employer in an unhealthy manner. With the premises of the contracts seemingly favouring the employer who holds the strings regarding hiring or promotion of the employee.

Like the geographical aspect of the contract. The contract is certainly not fair if signing a non compete agreement within the given geographical boundary. It will hamper the employee to make a living after resigning or getting terminated from the company. There are also aspects like duration and incentives where a specific duration for the adherence of the non compete agreement. It is given in the agreement itself and another one where, after the resignation/termination.

Certain incentives or bonuses are given to the employee to save. Or relieve him from any distress caused by not being able to function efficiently. To expand his new enterprise or not being able to find a livelihood. Due to the signing of the agreement in the last job respectively.

The Conclusion-

Can I be fired for not signing a non compete? This a general concern. Like in all legally binding contracts the above-mentioned points are some of the niches of the non compete agreement. Which the employee should pay keen and proper attention to before entering into or signing the agreement. Keeping in mind the different ramifications associated with the act in relation to his hiring, future in the company. And future employment opportunities in not only the same fields but also in other different fields.

Published by: Somya