Do You Own Business Holdings?

How to Make it Easier for your Survivors

If you or our spouse own a business, it is important to fully address ownership and taxation issues in your estate plan. This is a complex area but we’ll address some of the more common concerns.

What Should an Estate Plan for Business Owners Include?

An individual’s estate plan should include wills, will substitutes, trusts, power of attorney, medical directives, and tax considerations.

Business owners will also want to discuss these items with their estate planning attorney:

Trusts – A trust can help business owners to minimize tax consequences and pass on assets outside of probate. It can also address management issues such as the process for appointing a successor and requiring shareholders’ consent in order to take certain actions. Also, consider whether it should be revocable (can be changed, altered or even terminated completely during your lifetime) or irrevocable (permanent); if you were to transfer business assets to an irrevocable trust, you could not take them back out.
Financial Power of Attorney – This can help to ensure continued business operations if you are unable to run it yourself.
Insurance - A life insurance policy can help to ensure your family has liquidity (a source of income) if they lose access to the company’s funds when you pass away. “Key person insurance” is designed to protect a business from losses in the event of death. Consider buying both short-term and long-term disability insurance if you’re concerned about getting hurt or developing a debilitating illness.

Who Gets It?

As with other assets in your estate plan, deciding what will happen to your business is crucial for your heirs. Some considerations:

Buy-sell agreement – A buy-sell agreement is a contract that specifies how the ownership portions of a business may be reassigned upon death or retirement. It also should determine the valuation method. Depending on the documentation and specific circumstances, your heirs may decide to buy out the co-owners or sell it to them.
Fully-owned business – If you own 100% of your business, it makes ownership transfer easier:
- Selling the business: Depending on the situation, either the trustee or a person who inherits the business will have the right to sell it.
- Retaining the business within the family: There are a number of items that should be clarified in advance, in order to ease the transition and avoid family squabbles. These include:
  - Fairness in distribution - While the perception might be that “fair” clearly means an equal split of all assets to beneficiaries, this isn’t necessarily the case. In some circumstances, fair/equitable distribution (unequal distribution) better suits the trustor’s goals. For example, a business might have substantial assets (i.e., valuable if sold) but poor cash flow (in which case, the heir may be forced to sell the business in order to have a similar a cash distribution as compared to other heirs).
  - Multiple owners – Some business owners want to split ownership, such as half to the spouse and half to the children. In this case, it is important to consider who will be in charge of your business; some or all of your family members may not be appropriate selections but perhaps there is a key employee or business colleague that could help run the business.
  - Support for surviving spouse – If your spouse will rely upon income from the business, it is important to set up a long-term structure to support those needs (whether that means keeping the business as a going concern or selling it and managing the proceeds).

What is Succession Planning?

In order to ensure a smooth transition of ownership and management in case of incapacity or death, a “succession plan” should be considered in conjunction with your estate plan. This will help in preventing disruptions to company operations, minimizing potential estate taxes, and providing financial security for heirs or chosen successors.

Succession planning involves how your business will be continued after your death. This might include management structure, tax planning, operational plans, financing (especially if you have a personal guarantee for bank loans/lines of credit), etc. It typically, but not always, addresses ownership. Without this planning, your heirs can become absorbed with figuring out bank loans, outstanding accounts receivable, different business divisions or entities, real estate holdings, or various partnership arrangements. Succession plans are typically developed with your CPA firm in conjunction with your estate planning attorney.

On the other hand, estate planning determines who gets ownership of your property when you die. If you own a corporation, stock in that corporation can be distributed to heirs, while if you own a sole proprietorship, your business assets are personal property and will be distributed according to your estate plan.

Specialized Estate Planning Expertise for Business Owners

As a business owner, taking the time and effort to create an estate plan is one of the most thoughtful steps you can take for your family and loved ones. For many families, the less decisions that are left for your heirs, the better it is for all concerned.

If you need legal expertise in addressing your specific estate planning needs, please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

About the author:
Tamsen R. Reinheimer, Attorney, is a Certified Specialist in Estate Planning, Trust & Probate Law (The State Bar of California Board of Legal Specialization). She has significant experience in all aspects of estate planning, trust administration, and probate. Contact Tamsen at tamsen@ocestateplanning.net.

Body Contouring After Weight Loss

Continuing our series on weight loss after medications, many patients notice extra skin in the abdominal region. Also, sometimes in the inner arm and thigh regions.

Fortunately, there are effective surgical options available to help address these concerns.

What is Body Contouring?

Body contouring after weight loss can be the next step in the journey of self-improvement and well-being.

Body contouring, also known as body sculpting, involves surgical procedures to remove extra skin and/or liposuction to remove unwanted body fat.

Excess skin removal – Many women and men who have had significant weight loss opt for removal of excess skin with a tummy tuck. This body contouring procedure allows you to lead a more active, fulfilling life, as well as boost self-confidence, satisfaction with your appearance, and overall well-being. Other potential benefits can include improved comfort and mobility, and reduction in rashes and fungal infections between skin folds.

Liposuction – Liposuction is a cosmetic procedure used to remove excess body fat from specific areas of the body, such as the hips, abdomen, arms, and thighs. It can change the body’s shape and contour.

Why Do Body Contouring?

When you’ve done a lot to get yourself healthy and reduce weight, the next step toward improved appearance and quality of life might be body contouring.

We invite you to come in for a consultation with Dr. Zeineh. Please call us at 657.722.1400.

We look forward to seeing you.

About Linda L. Zeineh, M.D., FACS

Dr. Zeineh is an active member of the American Society of Plastic Surgeons and the American Society for Aesthetic Plastic Surgery. She combines over 18 years of experience with cosmetic and reconstructive surgery in private practice with new technology and techniques in the care of her patients. Her first priority is the satisfaction and well-being of her patients, providing compassionate and personalized care.

A complete range of non-surgical and minimally invasive rejuvenation procedures are personally performed by Dr. Zeineh on her patients to achieve and maintain a youthful, refreshed, and natural appearance, including facial injections, skin tightening and facial/body contouring. Surgical procedures that Dr. Zeineh performs include: facial rejuvenation, body contouring, reconstructive and cosmetic breast surgery, and reconstructive surgery.

Will vs. Living Trust vs. Living Will: Key Differences

When an estate plan is developed, some of the key components include a will, living trust, and living will. Since these terms are frequently confused, let’s look at each and explain the differences.

What is a Will?

A will is a legal document detailing what an individual wants to happen after they die. This includes their final wishes regarding their remains, as well as how they want their money, assets, and property to be distributed. It also allows individuals to name a personal guardian to care for minor children, and a person to manage property if it must be left to minor children. However, a will does not allow you to entirely avoid formal probate in California (except in cases of Small Estate Affidavits or Spousal Set Aside). Instead, a will may allow streamlining of the probate process.

What is a Living Trust?

Much like a will, a living trust (also called a “revocable living trust”) documents how you want your affairs handled after you pass away. The major difference between a will and a living trust is that living trusts do not require going through probate (i.e., Probate Court). Additionally, a living trust will take effect as soon as it is created – it allows you to control your assets (real property, personal property, investments, cash, etc.) while you are still alive, but then have it distributed to beneficiaries upon your death.

There are numerous considerations to having a living trust, so consider the pros and cons with your attorney. In addition to not requiring going through probate, a living trust can also: safeguard your assets if you become mentally incompetent; provide more flexibility and control over the timeline and disbursement to beneficiaries; and maintain privacy, since it is managed by the trustee and not entered into public court records. On the con side, a living trust is more complex than a will, and involves paperwork and record-keeping, which can be costly and time-consuming.

What is a Living Will?

Another name for a “living will” is an “advance healthcare directive.” This allows a person to dictate how they wish to be cared for in a life-or-death situation. It lets your physician, family, and friends know your health care preferences, including the types of special treatment you want or don’t want at the end of life. It also specifies your desire for diagnostic testing; approval or disapproval or certain surgical procedures; the location of your primary care facility; medications to avoid; whether or not to attempt cardiopulmonary resuscitation; and organ donation.

Do You Need Some or All of Them?

While you should seek the advice of your attorney on the appropriate selection of these documents for your situation, some generalizations can be made. Most people who wish to have an estate plan are thinking about the impact of their passing on their loved ones. As such, a living will/advance health care directive is typically recommended to ease decision-making in a life-or-death circumstance. As for a will, your attorney can advise whether to include both it and a living trust in your estate plan, which can allow you to take advantage of each tool’s benefits. The use of a living trust is less clear-cut, so discuss the pros/cons and your specific situation with your attorney.

Specialized Estate Planning Expertise

Taking the time and effort to create an estate plan is one of the most thoughtful steps you can take for your family and loved ones. For many families, the less decisions that are left for your heirs, the better it is for all concerned.

At Mortensen & Reinheimer, PC we have decades of experience in helping clients to navigate through myriad issues in estate planning. If you need legal expertise in addressing your specific estate planning needs, please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

Breast Reshaping after Weight Loss

Breast Lift and Implant Options

Weight loss medications are in high demand in the United States. With the success of weight loss comes the after-effect of excess skin, and with it many women are drawn to plastic surgery to improve the appearance of their breasts.

As with other parts of the body, changes seen in the breasts due to major weight loss may hinder a woman from feeling good about her appearance.

Many women have been coming in to our office for an evaluation to improve the position and volume of the breasts after weight loss. Options include a breast lift and/or an implant. Of course, the changes that have occurred in skin quality (sagging), and volume (size) vary, so Dr. Zeineh discusses with each patient the best way to achieve their goals.

Men – Gynecomastia/Breast Reduction

Male patients may also notice extra tissue in the chest region after significant weight loss. Quite often this excess tissue is not responsive to additional dieting or exercise, and the visible impact can understandably affect body image.

Surgical options to resolve these concerns include liposuction and also skin removal and lifting the tissue. This surgery is performed as an outpatient procedure. Most patients return to work within a week.

Book Now to Fit Your Schedule!

We invite you to come explore your options for your best look. Book now for your appointment – contact us now at 657.722.1400 to lock-in a time that is convenient for you.

We look forward to seeing you.

About Linda L. Zeineh, M.D., FACS

Are You a Caregiver? What You Need to Know About Estate Planning

(Editor’s note: This article will deal primarily with caregiving for the elderly, particularly as it relates to family members providing for daily care and helping with estate planning concerns).

Along with the many other day-to-day duties of a caregiver, attending to estate planning for those they look after can help give peace-of-mind for all concerned.

Quite often caregivers are the same family members who make sure the parents (trustees) have an estate plan, as well as preparing contingency planning for health care. Further, it is important to complete estate planning while the trustees still have the capacity to do so. This can help ensure that the trustee’s wishes are respected and their affairs will be managed in the best way for their needs.

So, it is important for family caregivers to know what should be included in an effective estate plan, in particular, as it impacts themselves and the person for which they are providing care. The following key components should be evaluated and discussed with an estate planning attorney:

Will - A will is a legal document detailing what an individual wants to happen after they die. This includes their final wishes regarding their remains as well as how they want their money, assets, and property to be distributed.
Living Trust - Much like a will, a living or revocable trust also documents how you want your affairs handled after you pass away. The major difference between a will and a living trust is that living trusts do not require probate. Additionally, a living trust will take effect as soon as it is created.
Advance Health Care Directive – This allows a person to dictate how they wish to be cared for in a life-or-death situation. It lets your physician, family, and friends know your health care preferences, including the types of special treatment you want or don’t want at the end of life, your desire for diagnostic testing, surgical procedures, cardiopulmonary resuscitation and organ donation.
Power of Attorney (POA) - This document that allows you to appoint someone to manage your money, property, and medical decisions if you become unable to do so yourself. There are several types of POAs for different situations, so always speak to a lawyer to determine the best option for your situation.

What if the caregiver is giving up their livelihood or lifestyle?

Family caregivers often devote a great deal of their lives to caring for a loved one, giving up their other life interests and even stopping working. Quite often, the caregiver is also a beneficiary, so it is common for these contributions to be acknowledged through compensation while providing the care and/or a special allocation from the trust assets (which sometime involves gifting the residence). This should be explained to other relatives while your loved one is still able to convey their wishes, as well as being clearly detailed in estate planning documents.

How are long-term care costs handled?

If you are the primary caregiver for a loved one and it is determined that a long-term care facility better suits their specific needs, the estate plan can designate specific funds from the estate to cover those costs. Of course, this possibility should be addressed in advance while the trustee has the capacity to work with legal counsel in preparing the estate plan.

There are many other estate planning-related concerns that caregivers may have, such as:

What are my legal responsibilities?
How do I interact with the executor?
If something happens to me, who will take over my role?
What if the loved one has dementia?
If the loved one dies, what do I need to do?
Who will take care of the possessions?

Talk with an experienced estate planning attorney about these and other concerns.

Decades of Experience Working with Caregivers and Trustees

The role of a caregiver in today’s world is increasingly important, especially since many elderly people prefer to stay at home instead of moving to a senior care facility. As can be seen, there are many issues and questions to be addressed in order for a caregiver to clearly understand and fulfill his or her role. Further, attending to these items can be crucial in heading off family conflicts.

It is important to document one’s wishes before it’s too late, so whether you are the trustee or a family caregiver, we invite you to contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.

“Leap Year for Your Best Look”

Leap Year Specials on 4 Popular Procedures

ONLY 2 WEEKS LEFT FOR 30-DAY SPECIAL!

2024 is a special year because it is a leap year, a once-in-4-years event. In celebration of leap year, we are offering a 30-day special on 4 of our most popular facial rejuvenation procedures:

BOTOX®
DAXXIFY®
RHA® Collection, the “Designer Filler”
Threadlifts

5th Option! As an added bonus, we are including the new injectable SkinVive^TM from Allergan, as part of this 30-day special. SkinVive^TMis an injectable gel to improve skin smoothness of the cheeks, “The first and only FDA approved hyaluronic microdroplet injectable in the US to improve skin smoothness of the cheeks, increase hydration, and provide a lasting glow.”

Book Now to Fit Your Schedule!

We invite you to come explore your options for your best look. Book now for your appointment – the special runs from Feb 29 through March 31^st, so contact us now at 657.722.1400 to lock-in a time that is convenient for you.

To accommodate your schedule, Saturdays are also being offered in March!

We look forward to seeing you.

About Linda L. Zeineh, M.D., FACS

Recent Engagement:
Turnaround to Avoid Bankruptcy

which way to go

Why the client needed help:

In this engagement, a number of financial issues (i.e., incorrect revenue recognition, job costing, bad financial data, out-of-control overhead, etc.) had caused the company to find itself in a deep hole, heading towards bankruptcy – and the owner would also lose his house, which was bank collateral.

MyCFO was brought in to turn around the company and set it on a long-term course to profitability and success.

Our client, a construction contractor, had purchased a business which he subsequently found the previous owners had provided dubious sales and other financial data. The company’s financial staff used different systems internally, thus producing inconsistent and inaccurate financial data.

Expenses were far beyond industry norms in certain categories, especially on overhead. On the sales side, deposits for jobs were recognized as revenue, and eventually used to fund other customers’ projects; bother were severe errors that exacerbated problems. It didn’t take long before a cash flow crisis arose and become increasingly severe.

Further, the prior company had a somewhat poor reputation, which required significant rebranding and related marketing expenditures.

A major issue was debt management. The owner had taken out two loans, including a term loan to buy the business and a working capital line of credit. Both were in violation of the loan agreements’ covenants and conditions. The owner was on the verge of losing his house, which was provided as collateral with his continuing guaranty on the loans.

Further, due to the cash flow crisis, the owner had maxed out his American Express card. The company’s largest vendor was also demanding payment on accounts payable that were far in arrears.

At the rate the business was going, it wouldn’t have been long until full collapse.

MyCFO’s work:

A critical item at the onset was bank negotiations, allowing for relaxed terms until the company got back on its feet, so that the working capital line could remain in place.

In addition, MyCFO negotiated acceptable payment terms with vendors, especially the largest, which allowed continued product procurement.

Detailed job costing systems were established. This is a method of calculating the actual costs and revenues by “job,” allowing for profitability projections and reporting per job.

Expense controls were established. To help our client manage them more effectively, MyCFO set up a “financial dashboard” which is a management tool that helps to track and analyze “key performance indicators (KPIs) to monitor financial health. This allowed the client to track expenses, sales and profit, then make appropriate financial decisions.

Another investor was brought in to raise cash for working capital needs. MyCFO negotiated terms and worked with an attorney to make certain the buy-in agreement was appropriate.

Results:

This engagement spanned about two and one-half years. The first nine months were spent identifying and then resolving the key near-term issues, helping to keep the company afloat. The next phase was building staff and systems for long-term success. The last phase was transitioning MyCFO’s management to the company’s internal management and staff, so that the company could safely provide for itself over a prosperous future.

Need help?

Whether your business is in a dire financial position or simply wants to increase cash flow and profitability, MyCFO can help. Contact us today!

Recent Engagement:
Turnaround to Avoid Bankruptcy

which way to go

Why the client needed help:

MyCFO was brought in to turn around the company and set it on a long-term course to profitability and success.

Further, the prior company had a somewhat poor reputation, which required significant rebranding and related marketing expenditures.

Further, due to the cash flow crisis, the owner had maxed out his American Express card. The company’s largest vendor was also demanding payment on accounts payable that were far in arrears.

At the rate the business was going, it wouldn’t have been long until full collapse.

MyCFO’s work:

A critical item at the onset was bank negotiations, allowing for relaxed terms until the company got back on its feet, so that the working capital line could remain in place.

In addition, MyCFO negotiated acceptable payment terms with vendors, especially the largest, which allowed continued product procurement.

Detailed job costing systems were established. This is a method of calculating the actual costs and revenues by “job,” allowing for profitability projections and reporting per job.

Another investor was brought in to raise cash for working capital needs. MyCFO negotiated terms and worked with an attorney to make certain the buy-in agreement was appropriate.

Results:

Need help?

Whether your customer’s business is in a dire financial position or simply wants to increase cash flow and profitability, MyCFO can help. Have your customer contact us today!

Recent Engagement:
Turnaround to Avoid Bankruptcy

which way to go

Why the client needed help:

MyCFO was brought in to turn around the company and set it on a long-term course to profitability and success.

Further, the prior company had a somewhat poor reputation, which required significant rebranding and related marketing expenditures.

Further, due to the cash flow crisis, the owner had maxed out his American Express card. The company’s largest vendor was also demanding payment on accounts payable that were far in arrears.

At the rate the business was going, it wouldn’t have been long until full collapse.

MyCFO’s work:

A critical item at the onset was bank negotiations, allowing for relaxed terms until the company got back on its feet, so that the working capital line could remain in place.

In addition, MyCFO negotiated acceptable payment terms with vendors, especially the largest, which allowed continued product procurement.

Detailed job costing systems were established. This is a method of calculating the actual costs and revenues by “job,” allowing for profitability projections and reporting per job.

Another investor was brought in to raise cash for working capital needs. MyCFO negotiated terms and worked with an attorney to make certain the buy-in agreement was appropriate.

Results:

Need help?

Whether your business is in a dire financial position or simply wants to increase cash flow and profitability, MyCFO can help. Contact us today!

How Does Divorce Affect Your Estate Plan?

If you are in the midst of a divorce, it’s easy to overlook estate planning. However, doing so will protect your estate from your former spouse and give you peace of mind knowing that your wishes will be honored. If you are contemplating divorce or have recently divorced, you should review your estate plan with your attorney to determine whether changes are needed to reflect your current wishes.

This article provides a very brief overview of common issues. Please note that this is a complex area of law, so it is important to consult an experienced estate planning attorney to help in protecting yourself and your heirs in the event of a divorce.

During the Divorce Process

During the divorce process, you have limited ability to make changes or revoke estate planning documents. However, you should consider the following available options:

Execute, update, or revoke your will – Some changes may be needed while your divorce is pending. However, note that you cannot disinherit your spouse from his or her share of the community property.
Updating powers-of-attorney and advanced health care directives
Name guardians for your minor child – Upon your death, your spouse will likely be given custody of your shared children. However, you can still name a guardian in the event that your spouse does not take custody.

There is a much longer list of prohibited estate plan changes, such as creating new trusts to hide assets; transferring, encumbering, hypothecating, concealing, or in any way disposing of property out of community property accounts without the written consent of your spouse or a court order; and creating or modifying a non-probate transfer without your spouse’s written consent (which includes life insurance, revocable trusts, IRAs, beneficiary designations, and profit sharing pension plans).

After the Divorce Is Finalized

Once the divorce has been finalized, California automatically changes your estate plan in several ways, including: removing your ex-spouse as an heir to your property; removing your ex-spouse as an executor, trustee, and power-of-attorney; and dissolving any living trusts that your ex-spouse and you created.

You will need to update your estate plan immediately following a divorce. If you fail to do so and then pass away, it can lead to expensive and time-consuming litigation for your heirs. There are several key items to consider:

Updating your will and living trust. This includes reviewing all beneficiaries and executors, and ensuring proper disposition of assets previously held jointly with your ex-spouse and any assets held in trust.
Updating Power-of-Attorney and Advanced Health Care Directives. Determine who should now handle these critical decisions.
Disinheriting your spouse from any insurance policies or retirement plans in which he/she is named as beneficiary.
Update named beneficiaries on life insurance policies, retirement accounts, bank accounts, and other financial accounts.

Contemplating Divorce?

Considering the above, if you believe that your marriage is ending but you haven’t formally filed for divorce yet, you should meet with your estate planning attorney before filing. You’ll want to consider what might happen if you pass away prior to the divorce being finalized, and to evaluate beneficiary designations and other key issues after the divorce is completed.

Specialized Estate Planning Expertise

If you are going through a divorce and are concerned about estate planning, Mortensen & Reinheimer, PC understands and can help you. If you need legal expertise in addressing your specific estate planning needs, please contact Mortensen & Reinheimer, PC at (714) 384-6053 to make an appointment, or use our online contact form. Our website is http://www.ocestateplanning.net.