Pet Trusts in Illinois

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A year and a half ago, my wife and I added Leah, a stoic black lab, to our family.  As any dog owner would expect, Leah is much more than "just a pet" to us.  She is the closest thing to a child that we have at this point. 
When my wife and I are out of town, we call my friend, Kristin Skelton, owner of Floofins & Co., which provides pet sitting and dog walking services, to make sure that Leah is taken care of while we are gone.  Kristin recently told me that many of her clients had asked her about pet trusts, which are trust funds you can establish to ensure that your pets are taken care of after you pass away.  Being a dog lover myself, I was thrilled to write an article on the subject at Kristin's suggestion. 
Pet trust law, including the validity of such trusts, varies from state to state.  Fortunately, Illinois recently enacted a statute that explicitly provides for the creation of pet trusts.  
When you create a pet trust, your attorney will draft a trust document naming your pet as the beneficiary of the trust after you pass away and also naming a trustee, who will be responsible at that time for managing the assets of the trust for the benefit of your pet.  You and your attorney can then transfer assets into the trust. 
Such assets will remain in your control during your lifetime, but will not be included in your estate at your death.  Instead such assets will be legally held by the trust until they are distributed for the care of your pet according to the terms of the trust.  
For more information on trusts in general, please visit our estate planning page, where you can watch a short video of our recent estate planning seminar.  
If you are considering a pet trust, you should keep the following information in mind:

• Trustee:  It is advisable for the trustee to be someone other than the caretaker of the pet.  You should also name at least one successor trustee in case the original trustee should be unwilling or unable to perform his or her duties.  The Illinois statute provides that no portion of the trust assets can be used for the trustee's own purposes, unless specifically provided for in the trust document.  Your trust document  can provide for compensation to your pet's caretaker or to the trustee, should you so choose.  

• Beneficiary:  You may identify each beneficiary pet by simply stating your pet's name.  However, you can also reference your pet's microchip, if you have had one inserted.  In addition, you may include any descendants of your pet as beneficiaries.  

• Management:  In the trust document, you may provide a detailed description of how your pet should be cared for, including naming specific veterinarians that are authorized to care for your pet. 

• Termination:  The trust will terminate when no beneficiary pet is living.  The trust document should describe how you want the remaining trust assets to be distributed at this point.  If the document does not contain such a description, the remaining assets will be distributed to your heirs, according to statute.   

• Funding:  The trust may be funded by transferring your assets to the trust during your lifetime.  However, it may also be funded by a life insurance policy, of which the trust is the beneficiary.  If the assets in the trust are substantially more than reasonably necessary to accomplish the trust's purpose, the court has the power to reduce the amount of assets held by the trust.  

Please visit our website for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles. 



  

March 22: Open Bar and Small Business Primer at Shanahan's in Woodridge

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O'Flaherty Law and DDZ Accountng invite you to join us on Thursday, March 22, 2012 for an informative and fun evening at Shanahan's pub (1999 W. 75h St., Woodridge, Illinois).  Open bar and free appetizers will run from 7pm to 9pm.

Attorney Kevin P. O'Flaherty, accountant D Zorea, financial adviser Justin J. Villanueva, and commercial real estate broker Troy Golden will discuss strategies for small business success.  Whether you are just starting your business or an experienced business owner looking for a tune-up, this event will provide you with a road map to keep your business legally and financially secure. 
After the presentation we hope you will stick around and get to know the speakers as well as the O'Flaherty Law staff.  
If you have any questions about this event or any other topic, pleas feel free to give us a call at (630)324-6666, drop us an e-mail at info@oflaherty-law.com, or check out our website.  We look forward to seeing you there!  

Videoblog: O'Flaherty Law Small Business Seminar

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Please enjoy part 1 of the Small Business Primer seminar presented by O'Flaherty Law and DDZ accounting.  Parts 2 and 3 of this seminar can be found on our youtube channel along with our previous seminar on wills and trusts and all of our informational videoblogs.  

The topics discussed in our Small Business Primer seminar include:

I. Entity Selection - how to choose between S Corps, LLCs, C Corps, and Partnerships

II.  How to get your business up and running

• Incorporation and maintenance of your corporate book
• Quickbooks
• The initial meeting with your accountant
• Insurance
• How to obtain an EIN (Employer Identification Number)
• Contacting the Illinois Department of Revenue for a Tax Identification Number 
• Dealing with special licenses and regulations that are necessary for your particular business

III.  How to make the transition to being an employer

• Hiring a payroll service
• Dealing with benefits - steering clear of ERISA problems
• Obtaining Department of Labor posters
• Registering with the Illinois Department of Employment Security & Dealing with Unemployment Insurance
• Worker's Compensation insurance
• The elements of an employment agreement
• Non-compete clause
• Confidentiality of trade secrets and other info
• Enforcement clause
• Probationary period
• Creating an employee handbook for systematized and documented expectations and discipline
• The importance of termination letters 
• Considering independent contractors as an alternative

IV.  Finding space for your growing enterprise.
If you are a small business owner, please do not hesitate to contact us with any questions you may have, or to set up a free consultation.  

O'Flaherty Law is based in Downers Grove and Chicago, Illinois. Our attorneys have expertise in Corporate Representation, Commercial Litigation, Divorce, Bankruptcy, Estate Planning, and DUI defense. Please visit our website at www.oflaherty-law.com for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles.

"I'm a new business owner -- how many different types of taxes do I need to pay?"

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Today, our friend, D Zorea of DDZ Accounting Group, submits the following article:


If you're a new business owner and are feeling overwhelmed by the prospects of paying too many taxes, it might be because there are so many different types of taxes for which to account.  Depending on your type of business, an Illinois business owner will be liable for different taxes including (but not limited to):

• Sales: Does your business sell widgets, or food products? You are responsible for collecting the state (and sometimes local municipality's) Sales and Use Tax and remitting these back to the appropriate taxing agencies. Sales tax rates can range around 7.5% to 10%.
• Payroll: Do you have employees?  You will be matching your employee's payroll withholding taxes, as well as contributing to federal and state unemployment insurance premiums based on your employees' earned wages.
• Franchise: The state of Illinois charges a Franchise tax of 1.5% for corporate business owners. This includes LLC, C-corporations and S-corporations, but not sole-proprietors or unincorporated partnerships.
• Income: Similar to sole-propietorships, S-corporations and LLC's are considered "pass-through" entities.  In other words the net profits of those businesses "pass-through" to their owners and are taxed at the business-owners' individual tax rates.  The income tax returns for S-corps and LLC's generate a K-1 form for each shareholder or LLC member; these are the business owner's equivalents to an employee's W-2 form.  However, different from a W-2 which typically already includes income tax withholding, a business owner with net-income from his/her business can either file and pay quarterly estimated taxes throughout the year or pay the lump-sum with the year-end income-tax return.

For the above taxes, the IRS and Illinois state agencies may apply late file or late-pay penalties; so work with your tax-professional to calculate the correct taxes due, maximize your tax return, file on time, pay on time, and save all that time and headache of doing it alone. For other questions, please contact D Zorea at DDZ Accounting -- e: d@ddzgroup.com, p: 630-368-0183, other client-testimonials at www.facebook.com/ddzaccounting.



O'Flaherty Law is based in Downers Grove and Chicago, Illinois. Our attorneys have expertise in Corporate Representation, Commercial Litigation, Divorce, Bankruptcy, Estate Planning, and DUI defense. Please visit our website at www.oflaherty-law.com for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles.

Tenants' Rights 101

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Most apartment tenants have a horror story or two: busted pipes, leaks, mold, infestation, horrible neighbors, etc.--and many of these apartment tenants probably did nothing about these horror stories, believing that their only remedy was moving out.  Historically this was the case, but today tenants have a variety of rights to ensure that they live in peace and comfort.
Implied in every lease is an implied warranty of habitability, which requires that the apartment be maintained in a livable condition by the landlord.  Working pipes, plumbing, heat, removal of insects and rodents, and keeping the premises within the housing code are the some of the basic requirements of this warranty.  
If a breach of the implied warranty of habitability arises and the landlord fails to remedy the problem within a reasonable time, the tenant has several remedies.  The tenant may (1) move out and terminate the lease, (2) repair the problem and deduct that cost from the rent, (3) reduce the rent by the damage done, or (4) sue for damages.  If the tenant does not wish to take advantage of these remedies, he or she should document all of the damage to ensure that the security deposit is not reduced due to the landlord’s negligence.  
Additionally, If the tenant entered into a nice, clean apartment with relatively high rent, only to see the place fall into disrepair, the tenant can sue to have rent reduced by the lowered property value of the premises.
Tenants may not own their apartment, but they do own the possessory right to that apartment: they are entitled to exclusive possession of their entire apartment for the term of the lease.  Unless the law of the city provides otherwise, even landlords are not allowed to enter a leased apartment without permission. If the landlord does so he or she is committing a trespass. 
Further, Landlords cannot evict tenants without good cause.  Good cause generally requires nonpayment of rent for no reason, illegal activities, or severe damage to the building.  Historically a landlord could personally enter into your apartment and evict tenants, but today only police are allowed to evict tenants, and they need a court order to do so.
Every city has different rules regarding landlord-tenant relations.  Therefore, you should consult with an attorney to determine your rights and remedies before taking action against your landlord. 
                                                                                         --Submitted by Eric Turner

O'Flaherty Law is based in Downers Grove and Chicago, Illinois. Our attorneys have expertise in Corporate Representation, Commercial Litigation, Divorce, Bankruptcy, Estate Planning, and DUI defense. Please visit our website at www.oflaherty-law.com for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles.
  

Reviewing today's Skype conversation

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I have just finished Skype conversation with Filipino teacher.  I would like to refresh the class, of which topic was friends.

(There are two pictures.)
- The first one has a boy sitting in front of the beach with his dog, also sitting.  He is pointing our somewhere with his left hand.
- The second is a funny picture.  There is a mouse sitting on the cat's back, which is sitting on the dog's back.  Those three are typically enemies; mouse dislike cats and cats was chased by dogs.

How do you think borrowing money from friends?
- I do not think it is good idea because borrowing money may damage friendship.  When I have to borrow money, it is more often that I have already been in trouble.  Borrowing money would make the problem more serious.  Fortunately, I have neither borrow money from nor lend money to my friends.

What a friend should do and should not do?
- What a friend should do is to help or just listen to someone in trouble.  What a friend should not do is to invade his or her privacy too much.

How do you think about a fair-weather friend?
- I think I have some of such kind of friends.  Some of my acquaintance might regard me as a fair-weather friend.  I mean I can say the same as someone.  I think that kind of situation is inevitable more or less because it typically needs long time to make and find best friends and we have limited time, cost, interest and energy in our lives.

I already had 13 classes in this website.  I am feeling a little improvement so far, and am satisfied with those classes basically.  However, I need to spend more time to review and refresh the classes because this is the most meaningful time for me to improve English skill.
  

Corporate Formalities: How to Maintain your S-Corp

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Most small business owners are aware that it is preferable to operate your business as a corporation, an LLC, or an LLP rather than as an individual, because doing so shields your personal assets from business creditors.  However, many business owners that I have met with did not know that in order to maintain this liability protection, they are required to do more than simply file articles of incorporation.  In fact, your corporate liability shield will only be effective so long as your corporation continues to maintain certain corporate formalities throughout its operation.
Since we generally recommend S-Corps rather than LLCs or LLPs (for more information, read our article: LLCs and S-Corps: Selecting a Corporate Form for Your Small Business), I will limit this discussion to the corporate formalities required for S-Corps.
Do not be intimidated by the procedures listed below.  You should be aware of these formalities, because you are the person ultimately responsible for following them; however, your attorney should guide you through this process and should handle most of the procedural work.
You and your attorney should work together to ensure that your corporation follows the following procedures:  

1. File Articles of Incorporation with the Secretary of State -  this filing will create your corporation and name its shareholders.
2. Draft Bylaws - Bylaws are the rules for the operation of your corporation and the interactions between shareholders.  Even if your corporation only consists of one shareholder, you will need a set of bylaws in order to show that the corporation is distinct from the shareholder as an individual. 
3. Hold an Initial Meeting of Shareholders - At this initial meeting, you should adopt your bylaws and elect directors.  Your attorney should draft minutes from this meeting and file them in your corporate book.  Again, even if you are the only shareholder in your corporation, it is important to hold and keep minutes of initial and annual shareholder meetings.
4. Create a Stock Ledger - A stock ledger is a document recording the issuance and transfer of all shares, as well as the names and addresses of all current shareholders as well as the number of shares held by each.  
   
5. Create a Corporate Book - This is a book that should be created and maintained by your attorney to   house all corporate documents including your bylaws, meeting minutes, and notices. 
6. File Annual Reports -  This is an annual filing required by the secretary of state to update the information on file for the corporation.  An accompanying fee is required to be paid on an annual basis. 
7. Hold an Annual Meeting of Shareholders - At least one shareholder meeting per year is generally required.  In preparing for the meeting, it is important to comply with the notice requirements in your bylaws.  Minutes of the meeting should be recorded in your corporate book. 
8. Hold Special Meetings of Shareholders as necessary - Depending on your bylaws, certain decisions may require a shareholder vote, rather than simply director consent.  If this vote cannot be taken at the Annual Meeting of Shareholders, you should hold a Special Meeting with proper notice to all shareholders.  
9. Follow the Bylaws for Corporate Action - Your bylaws should indicate which corporate actions require the Directors to vote or consent in writing, which require the vote or consent of shareholders, and which require neither.  You should know what your bylaws require and comply with them before taking corporate action. 

Depending on the number of shareholders and the operational procedures you desire, you may choose to file your Articles of Incorporation as a Close or Closely Held Corporation, which will allow your S-Corp to do away with some of the decision-making formalities listed above.  Close and Closely held corporations will be the subject of next week's article.  
Please visit our website for more information and resources or e-mail us at info@oflaherty-law.com with any questions or suggestions for future articles.