Frequently Asked Tennessee Business Litigation and Estate Planning Questions
Frequently Asked Questions
Our goal is to assist Middle Tennesseans with accurate and trustworthy information regarding their legal needs. Utilizing any of the following information does not constitute an attorney-client relationship between you an Elmlinger Law office and we recommend consulting an attorney before taking any legal actions.
What type of legal entity should I choose for my business?
A. Choosing the right legal entity is an important step toward achieving your business’ goals. Limited liability, tax minimization and ease of operation are among the many concerns clients have. Some of the factors that go into the decision are the level and types of risk associated with your particular industry, whether you have partners or employees and whether you want to attract investors. Among your many choices are LLC’s (limited liability companies), Partnerships (general and limited), S-Corps and C-Corps. The decision you make can have a profound impact on your bottom line. Generally, LLC’s provide flexible management structure and are easy to operate, while S-Corps offer different options for taking income from the company with potential tax savings. At Elmlinger Law Office, we help you choose the right legal entity that best suits your business’ needs.
Should I choose a will or a revocable living trust as my primary Estate Planning document in Tennessee?
A. Some people will tell you that everyone should have a revocable living trust. Others will tell you they are a waste of time and money and that a will is all you need. The answer for you, of course, depends on your particular situation and concerns. Some of the most important factors that go into this decision are the size of your estate, the types and location of the assets you own, whether you own a business, whether you have beneficiaries that are children, the likelihood of a dispute in the settlement of your estate, and concerns about privacy and avoiding the creation of a public record. In short, there is no right answer for everyone. Elmlinger Law Office prides itself on listening to clients and providing sound advice as to the proper documents that meet your individual needs and concerns.
Why can’t I just do it myself?
A. You can do it yourself, but do you have the experience, knowledge and resources required to make the best decisions for your particular situation and needs? With the advent and growth of the Internet, there is no shortage of information available, but much of it is contradictory, confusing, and, in some cases, simply wrong. Still, there are some situations where it simply does not make sense to hire an attorney. If you have a small fender bender with no bodily injury or a dispute with a contractor for $1,000, it might not make economic sense for you to pay an attorney. However, your business is your livelihood and financial security and your Estate Plan deals with your life savings and affects the security of your loved ones. A mistake in these areas can have dire consequences for you and your family. In many cases, we provide free, no-obligation initial consultations, in which we provide alternatives, make recommendations and give cost estimates, so you can make informed decisions.
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Based out of Brentwood – Elmlinger Law office regularly assists businesses and individuals in Brentwood, Nashville, and Franklin areas, and throughout Middle Tennessee, with their legal needs.
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Limited Liability Update
Business owners should definitely consider these entities, especially if they have one or more partners or employees. Sole proprietors and general partners may be held personally liable for injuries or damages caused by their employees and partners. This can mean that personal assets may be lost due to the actions of other people.
In many instances, even solo business owners should consider forming a separate legal entity. This is particularly true if you operate a business with high liability exposure, such as restaurants, transportation companies, and medical providers. This list is illustrative only; there are certainly other businesses with high liability risks.
This may sound shady or even illegal and in some instances it is. However, there are some perfectly acceptable practices that make assets harder to find. Trusts are often used for this purpose. For example, people sometimes put real estate in a trust. A person bringing a lawsuit may search the public records looking for real estate they can use to satisfy any judgment they receive. If the property is in the name of a trustee, it may be difficult for them to find. Be aware, however, that merely putting property in a trust does not necessarily put that property totally beyond the reach of creditors (although in some specific cases it does); it just makes it harder to find.
Offshore bank accounts are a commonly used way of hiding assets. Again, this may sound shady, but there is nothing per se illegal about opening an offshore account. Of course, using such an account for an illegal purpose, such as tax evasion, is illegal.
In many cases, the secrecy practices and laws of other countries may make these assets very difficult to find. Even if they can be found, the additional legal expense and difficulty of reaching them may discourage creditors from trying.
This method, of course, has limitations, too. First, U.S. bank deposits are federally insured. Foreign deposits usually are not. Second, foreign financial institutions may have minimum balance requirements. Generally, while offshore accounts are not just for the super wealthy, they are not for people of limited means either.
A liability insurance policy is a contract in which the insurer agrees to pay certain liabilities of the insured. Most people are familiar with auto insurance and homeowner’s insurance. These policies typically include liability insurance.
While homeowner’s and auto insurance may provide protection from personal liabilities, they may not provide protection from business risks. Business owners should review these policies carefully – or have them reviewed by a professional – to determine if they have protection. If not, the business owner should consider adding additional insurance to cover some or all of the risks associated with their business.
There are several limitations on insurance as a way to protect assets. First, insurance may not be available to cover certain risks. Second, insurance costs money and may be prohibitively expensive in some instances. Third, insurance policies may have technical exclusions or exceptions that are not readily apparent to the insured without a thorough review of the policy provisions. Fourth, insurance typically does not cover the entire risk; policies have limits and deductibles that leave the insured bearing a portion of the risk.
Persons reading this should not act upon this information without seeking professional advice. Receiving or reading this information does not form an attorney-client relationship.