Your Business: Legal, Tax, and Estate Resource!

If you are a business owner, you are in the right place.  Here you will find thousands of ways to save legal, tax, and estate costs.  So read on. This is your legal boutique. I am your mentor. 

I can provide you:

Expert tax preparation: I use ProSeries Professional tax software developed by Intuit, the maker of Turbo Tax and Quickbooks. 

Win-Win Contracts that you understand. They benefit both parties so they last. 

The lowest taxes: enhanced with my personally designed Prep_to_Plan program.

Answers to your tax questions from a former IRS tax lawyer equipped with tax sources used by the largest firms, like Bloomberg and Kiplinger.

An Easy and Efficient Estate Plan: You cannot predict when you will need your estate plan. God will not send you an invitation. So make sure that you have the best estate plan. As an Accreditted Estate Planner, I provide you considerate, personal estate plans, wills, and trusts;

AND THERE’S MORE: Entertaining and informative seminars and updates on changing laws. Knowledge, Knowledge, Knowledge that puts you in control.

See more About Wis and  Testimonials

CONTACT ME HERE today fora FREE 1/2 Hour Consultation 

Posted in Businesses, Estate Planning & Probate, Individual Tax, Real estate, investing, Representation before the IRS, Speaking, What's New? | Leave a comment

Tax Busters for Investment Advisors

  • With this guide, an investment advisor  (or an investor) can save thousands of dollars. For example, you can double your after-tax return by using “qualified dividends” from domestic companies. See “Qualified Dividends below. Let check out the opportunities.
  • Is your hobby a business? Is it profit-seeking? If it is you can deduct business deductions, like auto, home office, and travel. As business deductions, they can save you money even if you cannot take them as itemized deductions.
  • Retirement accounts. Your business may allow you to contribute to a SEP and a SEP is not subject to age limits. You can contribute to 401(k)’s, 403(b)s, and IRAs are deductible so you can postpone your taxes and accumulate tax-free until you withdraw them. Roth IRAs or 401ks. Contributions to Roth IRAs do not give you an immediate tax break, since they are not deductible, but you do not pay taxes when you withdraw the money. Income and investment gains in Roth accounts are tax-deferred. Strategy: Decide whether you need a tax advantage more now or later.
  • Exchange that life insurance contract for a long-term-care policy you do need, tax free.Also tax free is the swap of an annuity contract or a long-term-care policy.
  • Long Term Capital gains (on sales of investments held 12 months or more) are taxed at much lower rates than ordinary income. For example, if you file a joint return with taxable income of $80,799 the rate is 0%! . Gains held for a shorter period can be taxed at up to 40.8%!
  • Pick the stock with the least gains. IRS rules allow you to specify which stocks you sell.
  • Capital Losses can offset 100% of your capital gains. You can use excess capital losses to offset up to $3,000 of other taxable income. You can carry remaining losses forward. Strategy: When you sell, pick those that cost the most.
  • “Qualified dividends” are those from domestic US companies. Qualified dividends are taxed at lower rates, just like long-term capital gains. Strategy: Be aware of the tax advantages of domestic stocks when you select investments.
  • A 3.8% Surtax on net investment income tax applies to the excess of net investment income over “MAGI” (adjusted gross income with some reductions) exceeding $250,000 for joint filers, $125,000 for married separate filers and $200,000 for other taxpayers. Investment income includes interest, dividends, capital gains, annuities, royalties, and passive rental income. Strategy: Sell in years with lower income.
  • Net investment interest. If you deduct itemized deductions on Schedule A you can deduct NII, up to the amount of net investment income. NII includes margin interest or interest on a loan to purchase an investment partnership, S corporation, LLC or corporation. Strategy: If you know how, you can increase this deduction by increasing net investment income with long term capital gain or qualified dividends.
  • Avoid gain on appreciated stock. If you contribute appreciated stock that you held it at least 12 months, you can deduct its full fair market value, yet the appreciation is not taxable.
  • Donor-advised funds. You can make a large donation to a DAV toward year end and deduct it immediately, while the fund contributes to charities you choose over a period of time. In a high-income year use this to benefit from more than a year’s deductions.
  • Senior tax-free contributions from IRA to charity. After age 70½, you can make donations directly from your IRA to charities. These are called “qualified charitable distributions” (QCDs). There is a $100,000 limit on QCDs per year, per spouse, to one’s IRA. QCD’s save taxes in several ways. (1) There is no federal income tax on the withdrawal even though you do not claim itemized deductions. (2) The QCD does not increase adjusted gross income, so it does not increase taxable Social Security benefits or investment income hit by the 3.8% surtax. (3) A QCD taken from a traditional IRA count as a required minimum distribution (RMD) on which you would otherwise pay taxes. The limits on these qualifies for a cost of living increase.
  • The BIGGEST Tax Buster for large contributions. A Charitable Remainder Unitrust (CRUT) is a tax-exempt trust for contributions of appreciated investments, which would produce a lot of capital gain if sold. If instead, you contribute your investments to a tax-exempt CRUT, it can sell them tax-free and reinvest their full value tax free. The CRUT can provide you income for your lifetime and thereafter distribute its assets to a charity of your choice. You get an immediate deduction for the present value of the contribution.
  • A CRUT can make a great retirement vehicle.
  • For donations of $15,000 or more,  the Community Foundation of Memphis can provide smaller versions of CRUT’s, “donor-advised funds” and more which give you some say so as to investments and charities to benefit and more.
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Why is estate planning more personal than financial?

I have written a number of posts discussing the little-known benefits of revocable living trusts (“RLT”). However, the fact is that the main benefit is that the RLT is the kindest to your family. I am sold on revocable living trusts (“RLT”) because I care about my clients! An RLT is the estate plan that is kindest to you and your family when they most need it. Who says? My Dad! A former Probate Judge who practiced law for over 50 years, he asked me to write an RLT for him and my Mother. What does this tell you?  

In contrast, a Harvard lawyer delayed and never got an RLT. His will required Probate. Probate meant lawyers, court, deadlines, affidavits, notices to beneficiaries, creditors, and TennCare; buying and selling assets, new bank accounts and tax returns, and much more. His spouse spent more than $16,000 in legal fees satisfying legal requirements. Another client spent over 150 hours as an Executor of an estate.

Have mercy on you and your family! To find out more, see the attachment below. It helps you get started. I offer a FREE short consultation.  

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A Little Known Estate Planning Strategy–Secret RLT’s

Did you know that a will is a public document once probated? It is published in the Probate Court files. Some of you may know that your revocable living trust gives you some privacy since it is a private agreement. But I bet that you do not know that you may form a “secret trust” under Tennessee law. What does this mean and why would you want one?

What is a secret trust and how does it work? In Tennessee Code Annotated Sec. 35-15-813 it says that “A trustee shall keep the current income or principal beneficiaries of the trust reasonably informed about the trust and its administration.

However, this duty to keep beneficiaries informed does not apply if the terms of the trust provide otherwise or the settlor of the trust, or a trust protector or trust advisor given such the power directs otherwise in writing delivered to the trustee. Furthermore, the trustee can require a beneficiary eligible to receive such information to keep it confidential.

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Revocable Living Trusts, Financial Management+

No one can afford to ignore estate planning. This series describes less-known features of a Revocable Living Trust as the back bone of your estate plan. Pass it on!

A well-drafted RLT package provides you and your family superior financial management. As the initial Trustee (manager) you manage your assets as long as you are willing and able. You choose a successor trustee to manage the trust if you are no longer willing or able to do so.

With sickness, accident, or death your successor trustee takes the reigns and manages the trust property on behalf of you, family members, and others who may not be able to manage it themselves, such as those who are too young or too old. Unlike a power of attorney, your RLT agreement works after you die and you can instruct your trustee how to take care of beneficiaries in almost any way that you can imagine. For example, a recent client had me draft instructions that the trustee distribute assets to his children at ages 22 and 25. He could have triggered it upon a certain level of education or upon marriage or buying a house. My RLT agreement also protects trust property from creditors of the beneficiaries.

If you used a Will to provide the same benefits it works only upon your death and it must be settled through the Probate Court when you pass on. You can give your loved ones proper time to grieve by avoiding the added anxiety, wasted time, and unnecessary fees of a Probate Court administration.

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How to Achieve Peak Negotiation

Contracts are essential to your business since they determine your legal rights and obligations. Yet they are frequently hard to understand, stressful, and sometimes crammed down your throat by a larger company with more lawyers.

In addition, most of us have negotiated with parties that we just could not push around. What if you could make each contract a blessing to your business? I call this “Peak Negotiation.” The key is to negotiate more effectively! 

  • There are some tips. First, play it straight and be flexible. I recommend a book by Stephen Covey called The 7 Habits of Highly Effective People. Covey recommends what he calls win-win contracts. With a win-win contract, both parties to a contract can win. To achieve a win-win contract you must (i) understand the other party, (ii) begin with the end in mind (iii) be proactive, and (iv) put first things first.  These are valuable rules that I use in negotiating. Write the contract so that the parties become like partners instead of adversaries. They work together.

Another good source of ideas comes from marriage counseling techniques. The parties improve their contractual relationship by communicating so they understand each other’s feelings and goals — what the other party really wants and really hates and why. This way, each party can try to give the other party what they want. See generally, The Power of Two, Susan Heitler.

Another obvious source of negotiating ideas is the One Minute Negotiator by Don Hutson and George Lucas. There is much to learn from this book, particularly, understanding your own likes and dislikes, strengths and weaknesses, and those of the other party. Don reinforces win-win and many of the above strategies. He has good material on how to deal with ornery folks.

Wis Laughlin has practiced law for over 40 years and is a former General Counsel of a national software company a former IRS attorney, and is an Accredited Estate Planner. Call for a FREE half-hour consultation. 901 218-7820.

See also The Nuts and Bolts of Contracts

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The best Tax Plan, Prep-to-Plan ™, — Can be Yours

FINANCIAL ADVISORS & TAX PREPARERS, you can make a difference with your clients! You can substantially enhance client wealth with my new one-of-a-kind tax planning application. It allows you to produce a simple, one-page tax plan for your clients.

Unlike typical tax programs, this program allows YOU to select tax-saving comments for each client and calculates the amount of taxes saved by a comment for that client. It is easy and effective. If anyone is interested in testing this application, Contact me. Your clients will love you. #planning #tax preparation.

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Revocable Living Trusts — a true story

I have been talking about the benefits of a revocable living trust plan for your family. The following true story says it all. In a meeting with recent widow, she asked me what she had to do to settle her late husband’s estate. She was worried because she had recently served as Executor of a friend’s estate and put in over 100 hours getting through a Probate Court settlement of that decedent’s will.

She was a business owner and effective manager, so I figured she had followed my instructions to place all of her husband’s property in his trust. She had. So I told her, “You are named as successor trustee of your husband’s trust. You and he had worked together on your finances. So you simply manage assets in the trust, just as you always did before. File your final tax return. Not much else. You do not have to go to Court. Keep paying bills.”

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Did you know your Revocable Living Trust could do this?

Considering the hardships of Covid-19, it should come as no surprise that estate planning is more important than ever. If you do not have an adequate estate plan, your family will likely suffer–financially and emotionally.Your estate plan is primarily for them! If you already have one of my current revocable living trust (RLT) plans, this e-mail will remind you of some of its great advantages.

In addition to the revocable living trust, the RLT package contains a Durable Power of Attorney (DPOA). If sickness or injury impairs your mental capacity, the DPOA authorizes a person of your choice to legally act on your behalf. Without it, your family might have to go to court so a judge can appoint a conservator to manage your legal affairs. This process is expensive, time-consuming, and potentially embarrassing. My RLT package allows your family to completely avoid a conservatorship, so avoid it!

As an Accredited Estate Planner and Super Lawyer in taxation, I can help you protect yourself and your family. If you don’t know whether an RLT Package is right for you, contact me for a free consultation. If you already have an RLT Package, please share this with your friends.

Harry W. (Wis) Laughlin

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Life and Death Without Revocable Living Trusts

While it is easy to get distracted by current events, you cannot ignore estate planning. If you already have one of my revocable living trust (RLT) plans, you are ahead of the game in protecting yourself and your loved ones. Here is a true story with the names changed.

Jill, came to me for help after her husband, Dave, had passed away. She was grief-stricken, but she had little time to grieve. There were bills piling up and family disagreements. As is all too common, they hadn’t prepared for this unfortunate situation. Probate Court proceedings were required. Jill was overwhelmed with hours of tasks, paperwork, deadlines, and pricey Probate Court appearances. Legal fees eventually exceeded $15,000!

If Dave had created a revocable living trust for himself, Jill would’ve been able to avoid Probate and save a substantial amount of money. Dave could have named her as the successor Trustee. She would be able to take control without Court interference.

Don’t entrust your assets and your family to an amateur or try to use Internet documents. As an Accredited Estate Planner and Super Lawyer in taxation with more than 40 years of experience, I incorporate many features into my RLT that would’ve made Jill’s painful experience MUCH easier. Some of my provisions came from my father, a former probate judge. Don’t you want the best for your family?

Contact me for more information.

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