Powers of Attorney

POWERS OF ATTORNEY

Everyone is at risk of becoming incapacitated and not being able to manage his or her financial affairs.  A power of attorney or POA allows a person, usually referred to as a principal, to name someone to manage his or her affairs.

1.         “Durable” Power

To provide for a potential disability, a person executes a durable power of attorney.  A durable power of attorney has language that causes it to continue in effect even when the principal becomes disabled.  Also, under Texas and most other states’ laws, a notary public must acknowledge the principal’s signature.  The usual POA is no longer effective when the principal becomes disabled. Read More...

IRA’s and Nontraditional Assets

Upon retiring, many corporate executives and other employees decide to start a second career.  In some cases, these people roll over funds from their corporate retirement accounts to an individual retirement account (IRA).  The IRA then purchases a business that the person runs.  The goal, of course, is to avoid currently paying tax on the funds from the corporate retirement plan.  There are business brokers that advocate this strategy. Read More...

Cashing Out of the Corporate Business (Part 2)

In the previous post, we discussed the advantages of making an S election five years prior to a corporation selling its assets.  A corporation that makes the S election typically avoids the two levels of tax (corporate level and shareholder level).  However, a corporation that makes an S election and sells its assets within five years can be subject to a corporate-level tax called the “built-in gains tax.”  Nevertheless, an S election may make sense even if the corporation makes such a sale. Read More...

Care for Pets

Pets are an important part of many people’s lives. If you are one of those people, what would happen to your pets if you died or became disabled?  What would happen if your spouse is not around to care for the animal?

The pet owner needs to provide for two different scenarios.  One scenario is where the person is temporarily unavailable to take care of his or her animal.  In advance of a need, the pet owner needs to find a caregiver to take care of the animal for a limited time.  There should be a procedure so the caregiver knows that they need to take action. Read More...

Retirement Plans and Trusts

People frequently use trusts as part of their financial and estate planning. A beneficiary typically may designate a trust to receive an interest in a qualified defined contribution plan (qualified plan) or IRA on his or her death. The problem is that the trust may not be able to stretch out the distributions from the qualified defined contribution plan or IRA. Stretching out the distributions from a qualified plan or IRA can increase the after-tax amount that the beneficiary’s heirs may receive. Read More...

Getting Paid by the Bankrupt or Almost Bankrupt Client

Given what is going on in the Houston economy right now, we are anticipating a substantial increase in the number of companies that end up in bankruptcy (“BK”). You likely have clients or customers that are really struggling to survive and/or are actively preparing to file BK.

If a client is preparing to file BK, they will likely need your assistance to gather the information needed to file.  This typically brings up 2 questions: Read More...