To minimize the possibility of having its corporate veil pierced, a business owner can take several steps. One step that is often neglected is observing proper corporate formalities. Some examples of corporate formalities that a business owner would be wise to employ are as follows:

• Establish a company bank account and avoid commingling company funds with his or her personal funds
• Maintain complete and up-to-date company records
• Hold periodic meetings, especially annual meetings, and keep a detailed record of the minutes
• Put major company actions to a vote and keep a record of the results
• Operate properly through directors and officers, members and managers, etc.
• List the company name on all contracts, leases, and other documents

If you would like to schedule an audit of your company’s legal records or discuss the steps that you can take to minimize the risk of a veil-piercing claim, please do not hesitate to contact us today.

Serving the greater Charlotte area, Starrett Law Firm is a Ballantyne law firm that focuses on wills, trusts, estate planning, probate, estate administration, and business law. Allen founded his law practice on the strong desire to be the trusted, lifelong advisor to families and small businesses. You may reach Allen at (704) 887-4944 or ars@starrettlawfirm.com. For more information about the firm, please visit the firm’s website at www.starrettlawfirm.com.

To commemorate NHDD this year, more than 80 national organizations and 700 state and community organizations will be working to increase awareness about the importance of advance care planning.

As such, now is a great time to review your healthcare directives to make sure they still reflect your wishes. Also, tell your loved ones you have created documents pertaining to your healthcare choices. Better yet, share copies with them. Your family will have the peace of mind that comes with knowing you’ve set a plan for emergency medical situations.

If you would like to schedule an appointment to update your existing directives, create new directives, or make any other changes to your overall estate plan, please contact our office today at (704) 887-4944 or info@allenstarrettlaw.com.

Serving the greater Charlotte area, Allen R. Starrett, PLLC is a Ballantyne law firm that focuses on wills, trusts, estate planning, probate, estate administration, and business law. Allen Starrett is also North Carolina Liaison for NHDD. For more information about the firm or NHDD, please contact Allen at (704) 887-4944 or ars@allenstarrettlaw.com.

While a comprehensive estate plan review every two or three years sounds sufficient, I recommend an annual review for greatest protection and peace of mind. A good time to kick the tires, so to speak, of your will and other estate plan documents is at the very beginning or very end of the year as you conduct other tax, insurance, or financial planning.

As a partial guide, the events listed below likely signal an estate plan update is in order.

• Marriage, divorce, or separation
• Birth or adoption
• Death, disability, or serious illness
• Retirement or unemployment
• Increase or decrease in asset values
• Acquisition of real estate in another state
• Change in business interests
• Move to another state
• Changes in state and federal laws

Resist taking a “set it and forget it” approach to estate planning. Review your estate plan annually and make revisions to accommodate changes in personal and financial circumstances. For more information on updating your will, trust, or other estate plan document and to discuss your specific circumstances, please contact our office today at (704) 887-4944 or info@allenstarrettlaw.com to schedule a consultation.

Serving the greater Charlotte area, Allen R. Starrett, PLLC is a Ballantyne law firm that focuses on wills, trusts, estate planning, probate, estate administration, and business law. Allen founded his law practice on the strong desire to be the trusted, lifelong advisor to families and small businesses. You may reach Allen at (704) 887-4944 or ars@allenstarrettlaw.com. For more information about the firm, please visit the firm’s website at www.allenstarrettlaw.com.

A custodial account refers to an account under the Uniform Transfers to Minors Act and the Uniform Gifts to Minors Act. However, North Carolina’s Uniform Transfers to Minors Act (NCUTMA) superseded its Uniform Gifts to Minors Act in 1987. Essentially, NCUTMA is a more flexible statute and provides for a wider assortment of property that can be held for minors.

Perhaps the primary attraction of a custodial account is its simple set up and management. NCUTMA provides a list of property and the procedure for converting each property type into custodial property. Generally, a transfer of property to the person or institution who will serve as custodian of the property for a minor child accomplishes the desired conversion. NCUTMA also includes sample language that must be used as well as a sample form that may be required in certain circumstances to establish a custodial account. Afterward, the custodian can direct the investment of the custodial property and determine how the account is used to benefit the child.

Several possible disadvantages exist. First, custodial accounts are currently taxable. You do not get the tax-deferred growth as you do with a Coverdell ESA and a 529 Plan. Second, a custodial account is terminated and property is distributed to a beneficiary who has turned 21, or in some cases 18, which can be an unsettling thought for parents. Third, custodial property may impair the beneficiary’s financial aid eligibility since the custodial account is considered the child’s asset for financial aid purposes. Finally, if your goal is to remove property from your estate for estate planning purposes, then avoid funding a custodial account and serving as its custodian. Otherwise, the account will be counted in your estate if you die before the beneficiary turns 18 or 21 and the account is terminated and property is distributed.

A custodial account may be an easy way to set aside property for college savings. However, be sure to consider the potential disadvantages listed above as the amount of property increases beyond modest levels. For more information on custodial accounts and the NCUTMA, please contact our office today at (704) 887-4944 or info@allenstarrettlaw.com to schedule a consultation.

Serving the greater Charlotte area, Allen R. Starrett, PLLC is a Ballantyne law firm that focuses on wills, trusts, estate planning, probate, estate administration, and business law. Allen founded his law practice on the strong desire to be the trusted, lifelong advisor to families and small businesses. You may reach Allen at (704) 887-4944 or ars@allenstarrettlaw.com. For more information about the firm, please visit the firm’s website at www.allenstarrettlaw.com.

The 529 plan is named after section 529 of the Internal Revenue Code which authorizes them. All states have some form of 529 plan, and many states allow non-residents to open a 529 plan. Be sure to research the specific details of any 529 plan that interests you.

North Carolina’s 529 plan is open to residents of any state, although only NC taxpayers are eligible for a state income tax deduction on contributions. Investments grow tax-free and account earnings escape federal and NC income taxes if withdrawals are used to pay for qualified higher education expenses such as tuition and room and board. Also, none of the assets will count against the beneficiary for financial aid purposes if the account owner is someone other than the beneficiary.

The generous contribution limits are, perhaps, the main attraction of 529 plans. Donors face no income-based contribution limits. Generally, individuals can contribute up to $13,000 annually ($26,000 for married couples) per beneficiary without incurring federal gift or generation-skipping transfer taxes. Under a special IRS rule for 529 plans, you can get a jump on tax-free growth and make five years’ worth of gifts in one year per beneficiary without incurring a gift tax as long as there are no further gifts to the beneficiary in the same five-year period. Under the NC 529 plan, a single beneficiary can receive contributions totaling approximately $380,000.

A potential disadvantage of 529 plans is the limited number of investment options provided under many 529 plans. Also, the IRS allows you to change your existing investment mix only once each calendar year or if your 529 plan beneficiary changes. A third consideration is the Pension Protection Act of 2006, which directed the US Treasury Department to issue regulations that guard against 529 plan abuse. Those regulations have yet to be released and may restrict some of the current flexibility of 529 plans.

To help you begin building a college war chest, I have planned a series of posts to highlight several college savings options that you may wish to consider. One such option is the Coverdell Education Savings Account (ESA).

Named after the late U.S. Senator Paul Coverdell, ESAs were originally known as Education IRAs. An ESA allows for tax-free investment growth and withdrawals as long as the funds are used for the qualified elementary, secondary, or college expenses of a designated beneficiary.

In 2010, a donor may contribute up to $2,000 per child subject to limitations on the donor’s modified adjusted gross income. Just about any investment can be made inside of an ESA, and none of the assets will count against the beneficiary for financial aid purposes if the account owner is someone other than the beneficiary.

A perceived drawback of ESAs, besides the $2,000 annual contribution limit, is beneficiary-based age restrictions that affect contributions and distributions. Unless the beneficiary has special needs or an intra-family transfer is completed, contributions may not be made to an ESA after the beneficiary turns 18 and the ESA must be distributed before the beneficiary turns 30. Also, unless Congress acts before January 1, 2011, the annual contribution limit will decrease from $2,000 to $500 and only college expenses will be permitted.

As you work through the process, pay special attention when completing your primary and contingent beneficiary designations. It is critical that they align with your overall estate plan. One misstep can result in negative, unintended consequences. For example, improper or incomplete designations can subject proceeds to the lengthy and costly probate process, result in a higher than anticipated estate tax bill, or risk the eligibility of a child with special needs for public benefit programs.

After naming your beneficiaries, be sure to get written confirmation from the insurance company acknowledging the designations you requested. Also, review your designations on a regular basis and make changes when appropriate. If you have any questions, speak with your estate planning attorney. Don’t leave this important arrangement to chance!

From email accounts and online banking to credit card statements and utility bills, we all find ourselves going to great lengths to protect our login information from prying eyes and hackers. But what happens if you become incapacitated or die? How will your family members gain access to your online accounts and digital information that may prove invaluable in settling your estate?

This scenario is one that very few people consider. But in an increasingly digital society, everyone should make it a priority to create a comprehensive list of every online account they have and should record the username and password for each one.

This task can be as simple as handwriting a list. Of course, you must then remember to update your list periodically with changes to existing accounts or information for new accounts. And depending on where you store your handwritten list, this may mean repeated trips to the bank and your safe deposit box.

Perhaps a more convenient solution is to sign up for an account with one of a number of companies offering an online “virtual vault.” Inside your vault, you can store all of your usernames and passwords securely and make changes 24/7/365. Plus, changes are only a computer away.

Either way, you should act now to record this information as one element of your estate planning. Don’t let secrecy now impede your family’s access to your online accounts later.

From that moment, preparations quickly ensue. While most parents succeed in having the crib assembled, the tiny clothing washed and hung in the closet, and the bags packed before leaving for the hospital, many parents fail to have one of the most essential items checked off of their “must-have” list: an estate plan.

An estate plan is crucial to protecting your children.  Here are 3 reasons why.

1. You can plan for your children’s short- and long-term guardianship. Imagine you and your spouse are involved in a serious car accident on the way home after a date night. You are both rushed to the hospital. Have you planned for where your children should go and who is going to watch them in the immediate aftermath of an accident? What if you and your spouse do not survive the accident? Have you selected the person you would prefer to raise your children? These are unpleasant thoughts, to be sure, but that’s no excuse for failing to make these critical decisions today.

2. You can plan for medical emergencies while your children are under the supervision of a nanny or babysitter. Did you know that you can authorize the nanny or babysitter to make an emergency medical decision for your children in case you and your spouse are unavailable? Making this arrangement is wise, especially if you and your spouse work out of the home or travel frequently.

3. You can plan for the management of your children’s property. Remember the serious car accident? Let’s say you and your spouse die as a result. Have you thought about what would happen to your property? How about life insurance proceeds? Bank account balances? Minor children cannot own property. So you and your spouse can either prepare now and express your specific desires as to what should happen to your property on behalf of your children, or you may leave the matter for a court to decide. It’s your call.

So, go ahead, buy the baby monitor and cabinet locks. But don’t overlook the estate plan. Too much is at stake.