Month: February 2018

What Employment Risks Entrepreneurs Should Be Aware of With Minors Onsite.

Preface: This week a memo from Jeff Worley of GKH, with regards to Child Labor Laws in Pennsylvania.

A Partner a GKH, Jeff practices in the areas of employment law, business law and general litigation. Jeff is a member of the firm’s Advocacy Group and Corporate Practice Group.

In the area of employment law, Jeff has extensive experience counseling employers in the context of employment–related litigation as well as general employment counsel and litigation avoidance. Representative matters include employee discipline and termination, workplace harassment, disability accommodations, FMLA leave and drafting employment policies and employment agreements.

Jeff is a graduate of Lancaster Mennonite High School and lives in East Hempfield Township with his wife and two children.

 

Click the following link to access the memo

Child Labor Laws 2.23.18

Preface: With tax season in progress, entrepreneurs want to maximize tax deductions.  The tax treatment of deductible meal expenses varies, and proper categorization of bottled water or those chicken nugget expenses makes your tax filing more accurate. Consider discussing with your accountant sooner rather than later what meal expenses you have, and how to categorize them for financial reporting, because this blog is only an introduction to expensing business meals:

Subway Expenses: And Say Can You Deduct Business Meals?

Credit: Jacob Dietz, CPA

Does your business buy meals for employees and customers? The tax law treats meals differently, depending on the circumstances, and the new tax reform law changes treatment for some meals. This blog explores the treatment for certain meals.

Meals on Premises for Convenience of Employer

An employer may deduct 50% of the cost of meals provided on its premises for the convenience of the employer. For example, suppose ABC Store, LLC runs a huge sale for a week, and their peak sales time is 11 AM to 1 PM. The store wants to have its employees take a short lunch so that the employees can maximize their time on the floor selling to customers. ABC brings in pizza each day of the sales week so that the employees can get back to work in 15 minutes. ABC provided the meals on its premises for its own convenience, and they will deduct 50% of the cost on its tax return. In the past the expense was 100% deductible, but starting in 2018 it is only 50% deductible.

Meals while Traveling

Meals while travelling are generally 50% deductible. For example, suppose there is a 2-day product show in another state, and you send employees to the show with your product. They buy some food while at the show. You deduct 50% of the cost of those meals.

Meals with Clients

If you take a customer to lunch to discuss business, that is still 50% deductible. For example, suppose you take a customer to the local diner and finalize some details of what they will purchase from you. The diner invoice is $30. You deduct $15 on your tax return. This deduction stays the same as it was in the past.

Holiday Banquets and Company Picnics

Some companies enjoy a holiday banquet, such as for Thanksgiving or Christmas. The food for those banquets is 100% deductible. The food for company picnics is also 100% deductible.

The tax treatment of food varies, and proper categorization of food expenses makes your tax filing more accurate. Consider discussing with our  firm sooner rather than later what meal expenses you have, and how to categorize them for financial reporting.

Preface: Featuring Nevin Beiler, Esquire this week, a PA-licensed attorney who practices primarily in the areas of estate planning, business law, and nonprofit law. In a three segment series, you have the opportunity to learn how competent legal counsel can lead to more rewarding decision making, e.g. applied to estate planning counsel.

Seven Common Mistakes in Estate Planning—And How You Can Avoid Them (Segment III)

#5. Failing to Properly Fund a Living Trust

Revocable living trusts are a popular estate planning tool that can provide significant benefits for some (but not all) people. Potential benefits include (1) simplifying the probate process, especially for a person who owns real estate in more than one state; (2) possibly saving money on legal fees and probate costs; (3) allowing for easier property management if the grantors of the trust become incapacitated; and (4) avoiding having all the details about the grantors’ estate being filed as a public record (as is done with a will).

Living trusts, while often beneficial, require extra steps to properly document and implement. Something that is commonly missed after an attorney prepares a living trust is the essential step of transferring assets into the living trust (called “funding” the trust). For example, to transfer a home or business property into a trust, a deed must be executed. Failing to fund a living trust means the trust will not function like it was supposed to.

If you have created a living trust in the past, or decide to create one in the future, it is very important that all assets that are supposed to be in the trust are actually transferred into the trust. Some attorneys do a good job of ensuring this is done. Others seem content to collect a fee for drafting the trust without following up to ensure that the trust is properly funded. Make sure you confirm with your attorney that all assets have been appropriately transferred, and if you purchase a major asset (such as real estate) in the future, you should consider putting it directly into the trust.

#6. Not Considering How an Inheritance May Affect Those Who Receive It

Professionals working in the estate planning field generally assume people want to leave all their assets to their children, with perhaps a small amount left to charitable purposes. There is great emphasis given to preserving and passing along family wealth. This might seem like the normal thing to do, but is it the right thing? Obviously, the answer is not going to be the same for everyone. Many people would probably agree that winning millions, or even several hundred thousand, in the lottery can be harmful to a person’s work ethic and spiritual well-being. But those same people may not think twice about leaving a multi-million dollar estate to their adult children who are already financially self-sufficient.

For Christians who seek to follow the teachings of the Bible, failing to give any thought to “how much is too much” when leaving behind a sizable estate to their children can perhaps be the biggest financial mistake of their lives—because it can have eternal significance. The Bible clearly does not encourage heaping up wealth, but instead warns of the dangers of riches (e.g. Matt. 6:19-20; Mark 10:23-25; Luke 16:13; 1 Tim. 6:9-10). While a reasonable amount of inheritance may be a blessing to children, too much can potentially cause serious harm. Take the time for careful thought and prayer about who should receive your assets when you are gone. Consider getting counsel from other people such as trusted friends or church leaders, not just your attorney or financial advisor.

#7. Not Obtaining Good Legal and Tax Counsel

Many of the above mistakes can be avoided by seeking trusted and competent legal and tax counsel to assist in the estate planning process. Unfortunately, with the availability of low cost or free will templates and other legal documents, “doing it myself” becomes a tempting option. Some people with small, simple estates have been able to successfully draft and sign their own wills that ended up working just fine. But many others that tried to do it themselves ended up costing their family much more (in money and headaches) than it would have cost to do it right the first time.

Unfortunately, going to an attorney for assistance does not always mean that everything will be done right. Some attorneys offer estate planning services, but know little more than the basics of estate planning. Others are so busy that they fail to take the time necessary to work with clients before and after the estate plan is signed, which may result in substandard work. When hiring an attorney to assist with estate planning, make sure that at least a significant part of that attorney’s legal practice involves estate planning. This will increase the likelihood that the attorney has more than a basic understanding of the estate planning process.

Also, make sure the attorney takes the time to understand your goals and values, so that the plan drafted by your attorney is consistent with those goals and values, and so that the attorney’s advice does not lead you astray. Finally, consider involving your tax adviser in the estate planning process so that you can avoid unpleasant tax surprises. While the best estate planning attorneys have a strong understanding of relevant tax issues, many attorneys do not. Having your trusted legal and tax advisors work together can add an extra layer of protection and quality for your plan.

Conclusion

The foundation of estate planning is good stewardship and love for people. It is being responsible and caring for those we leave behind. It is also, for many of us, a lifelong process. Take time to plan. Update your plan as your life changes. Communicate. Organize your affairs. Seek counsel. Learn from the mistakes of others. And may God bless you in your journey.

Nevin Beiler is a PA-licensed attorney who practices primarily in the areas of estate planning, business law, and nonprofit law. Nevin is part of the conservative Anabaptist community and is passionate about practicing law in a way that builds the Kingdom of God and is consistent with the Anabaptist faith. He lives and works in Lancaster County, PA, and can be contacted by email at nevin@beilerlegalservices.com or by phone at 717-287-1688.

Preface: Featuring Nevin Beiler, Esquire this week, a PA-licensed attorney who practices primarily in the areas of estate planning, business law, and nonprofit law. In a three segment series, you have the opportunity to learn how competent legal counsel can lead to more rewarding decision making, e.g. applied to estate planning counsel.

Seven Common Mistakes in Estate Planning—And How You Can Avoid Them (Segment II)

By Nevin Beiler

“You must learn from the mistakes of others. You can’t possibly live long enough to make them all yourself.” – Samuel Levenson.

#3. Not Organizing Records Prior to Passing Away

We all live with varying levels of organization in our lives. Some people can live quite happily in a rather disorganized state. They can mostly remember what things are stored where, and can usually find a bank statement or deed without too much paper shuffling. The problem arises when a completely new person suddenly has to manage all the affairs of a disorganized person. This is essentially what happens in many cases for executors. A disorganized estate can be a major headache for an executor, and can significantly increase legal fees if an attorney is needed to assist with more of the administration. Even if organizing your records does not seem worth it to you personally, consider those who are coming after you.

As you get older, consider consolidating your financial accounts. Do you have multiple bank accounts, investment accounts, or IRA accounts with different companies? Consider consolidating them. If there is the possibility of adverse tax or management issues, consult with tax or legal counsel prior to the consolidations. Leave written instructions for your executor explaining where all your financial accounts are held and where your important records are located.

Ensure that your executor has access to important your records. If you have financial records on a computer that is password protected, make sure your executor can obtain the password. The same goes for online accounts. Make sure your executor knows about any safe deposit box you might have, and how to access it. If you have made private loans to other individuals, make sure there is adequate documentation for all those loans, including the current balance. If you want any of those loans to be forgiven upon your death, ensure the loan documentation or your will specifies this (don’t relay on just verbal agreements!). Taking a few hours to organize your records will likely save your executor many times that amount of time, and perhaps hundreds or thousands in legal fees.

#4. Not Coordinating Non-Probate Assets with the Overall Estate Plan

Many people believe that a will is to be carried out exactly as written, but wills have limitations when it comes to controlling the distribution of assets. For example, a will can only direct who gets assets that go through the probate process. Examples of assets that typically do not go through the probate process include the following:

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1. Real estate that is held in joint tenancy with a right of survivorship (with anyone), or as tenants by the entirety (with a spouse).
2. Assets that have a valid “payable on death” or “transfer on death” designation.
3. Financial accounts such as IRAs, 401(k)s, or life insurance policies, that have a valid beneficiary designation.
4. Jointly owned bank accounts.
5. Property held in a revocable living trust.If a will tries to direct that an asset from the list above be given to a certain person, that attempted gift will usually fail. Instead, the asset will go to the joint owner or designated beneficiary. For example, consider a married man who owns a rental property jointly with his brother, with a right of survivorship (meaning the property will avoid the probate process and go directly to the joint owner). If the man dies first, his brother will automatically become the sole owner of the rental property, even if the man’s will directs that his share of the rental property should go to his wife. This is also a common problem with IRA or other retirement accounts, where the will might try to divide the account equally among certain heirs, but a beneficiary designation on the account leaves it all to one person (such as the oldest child or a sibling who is the executor). This would defeat the intent of the will, causing the named beneficiary to end up with an unintended share of the inheritance. Some IRA accounts contain hundreds of thousands, even millions, of dollars. Even if the beneficiary decided to “do the right thing” and voluntarily shared the account with the intended heirs as stated in the will, the tax consequences could be unpleasant. To avoid this problem, review your estate plan to ensure that your property ownership and beneficiary designations are all consistent with your overall estate plan, and that your non-probate property will end up where you want it upon your death.

Nevin Beiler is a PA-licensed attorney who practices primarily in the areas of estate planning, business law, and nonprofit law. Nevin is part of the conservative Anabaptist community and is passionate about practicing law in a way that builds the Kingdom of God and is consistent with the Anabaptist faith. He lives and works in Lancaster County, PA, and can be contacted by email at nevin@beilerlegalservices.com or by phone at 717-287-1688.