2019 Tax Planning Webinar

May is perfect time to start planning your taxes for 2019. On May 18th (Saturday) Sanjiv Gupta CPA will conduct a personal seminar to go over various techniques you can implement now to reduce your taxes in 2019.

Tax Planning is critical if want to pay minimum tax possible.

So many large companies in the United States Pay ZERO taxes. Why should you pay more than you have to ?

Foreign Income and Asset Disclosure Webinar

When – March 23rd (Saturday)

Online Webinar – Join From Any Where

We will send you the login URL couple days before the event.

We will talk about your reporting obligations of any income, bank account and assets you may have outside of United States.

New FATCA Rules now require foreign banks and financial institutions to annually disclose to IRS information about their US.S depositors.

Sanjiv Gupta CPA will be available to answer your questions during this webinar.

  • Who is required to file FBAR, or Form 8938?
  • What types of accounts or assets must be disclosed and what are the penalties for noncompliance?
  • What is an FBAR form, how does it differ from an 8938 form, and what are the penalties for not filing one?

Get Ready To File 2018 Tax Return – Learn About The Tax Changes

wealth-summit 2015

2018 Tax Reform Changes

A lot has changed this year, and it is going to impact every single tax payer.

Join us on January 19th, 2019 for a two hour long webinar to see what you should pay attention to.

Save Your Seat Here

Sanjiv Gupta CPA will join us and explain to us what has changed and how we can reduce our taxable income.   Here are some of the key changes you can expect Sanjiv to talk about.

  • 529 college savings plans
  • ACA individual mandate
  • Alimony
  • Alternative minimum tax
  • Bicycle commuting
  • Child tax credit
  • Corporate taxes
  • Estate taxes
  • Gains made on home sales
  • Medical expenses
  • Miscellaneous tax deductions
  • Mortgage and home equity loan interest deduction
  • Moving expenses
  • Pass-through businesses
  • Personal casualty or theft
  • Personal exemptions
  • Standard deductions
  • State and local tax (SALT) deduction
  • Student loan debt discharge
  • Tax brackets and income taxes

This is a FREE Webinar – But Registration is Required.




Wealth Summit 2018 – Dec 1st @ Royal Palace

Wealth Summit 2018 Tickets are Now Available

Buy Your Tickets On Event Brite

 $35 for Full Day Admission (Lunch is included )

Use Coupon Code “Black-Friday” to and get $10 off your admission.

Dec 1st, Royal Palace in Fremont CA

Learn how to legally reduce your taxes by 25% or more.

We will focus on many areas of tax planning including:

  • Foreign Income and Asset Reporting
  • Income Taxes (Federal & State)
  • Capital Gains Taxes
  • Estate Taxes
  • Windfall Events
  • Qualified Retirement Plans
  • Non-Qualified Retirement Plans
  • Proceeds From Sale of Your Business
  • Commercial Property Sales
  • Alternative Safe Investments
  • Leveraged Deferred Comp Solutions

Special Programs are available for those paying $100K or more in taxes.

Certified Financial Planner will be onsite to answer questions related to your investments.

Protecting Your Business – Limit Your Liability

This is no joke. Bad things can occur even to the kindest of people at any point in time. They do not have to be negligent or irresponsible to be sued. Therefore, for business owners or any individual to protect what they have, it is crucial that they take on defensive measures. This makes ir harder for creditors to obtain their assets just in case they lose a lawsuit when a judgment is filed against them. This also protects them when they find themselves bankrupt, not by their own doing but because they were forced to do so.

  1. Resort to Business Entities

Entrepreneurs of any kind must separate their personal assets from that of their business. If these specific legal steps in creating the business as a separate entity, corporation or LLC is neglected, the owner will find him or herself in dire consequences. It may even cost them everything that they own and all that they worked hard for.

Here are business entities worth considering:

* Sole Proprietorships. These offer no limit on the individual’s liability. The downside to this is that a single mistake can easily cost the individual his or her home, depending on the state that he or she resides.

* General Partnerships. These are the worst option. If the business partner has personal disputes that have nothing to do with the other partners, everyone can lose the lawsuit because all the partners are joined by the hip. Usually, lawyers come after every partner because of one’s action whether it be concerning the business or the personal lives of those running it.

* Limited Partnerships. These can help limit the liability of the individuals. If they invest as limited partners in partnerships, then they cannot be sued for anything that is more than what they possess and have invested in the company. The worst scenario is when the investments are totally wiped out. Lawyers cannot come after every owner and maximize the claims against the corporation. The kicker is that the owners cannot completely participate in running the business. If this is one, then the individual who does so is the general partner. Therefore, his or her assets are fair game.

* Corporations. These provide excellent protection of the owners’ assets. This come with the exception of cases when it comes to fraud. Therefore, if the person fails to pay the payroll taxes to the IRS or they do not treat the corporation as separate entity for themselves, then these personal assets cannot be stripped away from them. This is in the event that the business also loses the lawsuit. Entrepreneurs should know that there are two kinds of corporations: the C Corporations and the S corporations. These are taxed differently. Entrepreneurs should also know that they have varying restrictions when it comes to ownership. However, both of these provide the same asset protection for the owners.

* Limited Liability Companies. Limited liability companies provide the protection of the business owner’s assets against lawsuits hurled to them. However, there are few restrictions on the ownership for LLCs than with S corporations. They also let their owners choose whether they would like to file the federal taxes as some form of partnership or corporation. There is a major advantage that the LLCs have some jurisdictions and this because they charge their order protection. If the corporation loses the lawsuit then the judge can award the number of shares to the business and award this to the creditor. This also gives them access to the books of the business. However, with the LLC, the plaintiff gets an interest in the membership. They also cannot force the distribution of the cash but they are also taxed once this has been received. This is why they regard it as a “poison pill.” Despite the name though, it also helps in preventing the lawsuit and settle these on the favorable terms.

  1. Business Owners’ Insurance

There are professions that generate vast exposure to liability when compared to other businesses. If the individual is a real estate agent, financial advisor, gynecologist or any professional in various fields that generates lawsuits for malpractice, they need to have their errors along with their omissions coverage paid up. If they cannot afford to do this, then they can invest this in extra or even in expanded coverage. They should also not stop there. They need to enact this in different kinds of coverages:

* Homeowners Insurance. These help in covering the individual is someone is hurt within his or her property. The individual must choose a deductible that can cover savings and also make sure that the liability coverage is adequate just in case someone gets hurt within their property and they are sued by this.

* Commercial Liability Insurance. These kinds of insurance protect the business if someone is hurt on the premises and is injured as the result of the action by the employee.

* Worker’s Compensation Insurance. These are mandatory and carried through by most jurisdictions. The worker’s compensation also protects the workers along with them ensuring that there is enough liquidity that comes in place in order to take care of the employee when they get hurt on the job. Their expenses pretty much do not come out of their pockets.

* Auto Insurance. Individuals must not settle for the legal liability coverage at its most minimum. Instead they should always check if they can afford the additional coverage. Individuals must buy additional coverage when looking into insurance so that they are protected just in case their vehicle is involved in the accident that results to a lawsuit. It is a general rule of thumb that they are made liable to coverage equal to the total assets.

* Umbrella Coverage. These are back up insurance that are used in the situation where other coverages are regarded inadequate. Just in case the individuals’ auto, liability or homeowners coverages are all exhausted, then the umbrella coverage eventually pays the benefit that is limited to the policy. Take this example. If the individual has $1 million for auto liability and is sued $2 million in judgment, then this umbrella policy eventually picks up additional $1 million in terms of coverage. Otherwise, the plaintiffs can also start seizing the assets for the accumulated damages. These policies are underwritten for the amount of $1 to $5 million in face value. It is also usually quite affordable.

* Long-Term Care Insurance. These are the insurance the protect the individual against unexpected costs that are financially devastating. This can be in the form of nursing home care or in-home care for chronic ailments like dementia, paralysis, Alzheimer’s, multiple sclerosis, paralysis, strokes, and spinal cord injuries just to name a few. Medicare does not provide the coverage for these kinds of afflictions and a number of medical insurance policies also do not provide this. If the individual has no long-term care insurance, then they could be spending $200 for just one day at a nursing home. These expenses can drive them to poverty that it is enough for them to qualify for Medicaid. The longer the individual waits, the higher that the premium gets. Additionally, they can also develop an ailment that can preclude them from getting a coverage or at least then make it expensive. Alternatively, it is important that the individuals consider the long-term care insurance for the parents if it will otherwise be on hook for the expense.

  1. Retirement Accounts Must Be Used. The Federal law provides asset protection that is unlimited for the ERISA-qualified retirement plans. It can amount to a total of $1 million in terms of assets just in case an event of bankruptcy occurs in the IRA. There are some states that proved more protection but there are also some states that chose to opt out of the Bankruptcy Reform that was created in 2005. The federal bankruptcy exemptions can also exempt this to a decreasing amount.

Individuals must check the laws of their states in order to see how protected they are just in case these funds are provided to their accounts. They can also speak to their attorneys as long as the latter is familiar with the laws that are indicated in their state. They can also determine whether the creditors can choose between the federal and the state exemption amounts.

If the state has generous exemption then they can consider moving the cash that they do not need until they reach the age of 59 1/2 into their protected entries. They should also remember that there will be a restriction on the annual contribution limit and this varies depending entirely on the kind of retirement plan. If the individuals go beyond this limit or they are able to withdraw the funds prior to the age indicated, then they can be assessed for penalties. The retirement accounts are also excellent transport to protect their long term savings. They can also provide the substantial tax benefits and are needed to thoroughly and understand then use this with care.

  1. The Exemptions in Homestead. There are some states that provide tons of protection to the home equity. This means that if the individual declares bankruptcy then the law also prohibits the courts in awarding the home equity to the creditors. There are some states that include Florida and Texas. There are also state laws that protect the unlimited amount that is the home equity. Other states can also provide quite a little protection in the events of bankruptcy to home equity.

Individuals must check the laws in their states. If the state is able to offer generous homestead exemption, then they should consider contributing extra to the mortgage payment principal in order to protect the funds. The principal contributions of the housing market along the vagaries are also subject to risk if the individual loses access to the equity. The cash of the property value often falls.

Alternatively, if the state is able to provide a homestead exemption that meets the minimum requirement, then they can also accelerate the mortgage payments and then also pay the down principal that can also make sense if they are looking to protect the assets along with the creditors.

  1. Obtaining Titles. Take this for example. Check how an individual’s home is titled. If the individual owns the home with his or her spouse as the tenants, then both the individual and the spouse own an interest for the home that cannot be divisible. If only the individual is sued, then the creditors can also not force the other spouse to sell for his or her share of the interest in the house. The interest is indivisible, therefore this also protects the home equity where the law eventually states the provision for the sufficient homestead exemption.

Only a number of states has this kind of option available for them. It also applies to the personal residence and never does it apply to the investment property. There are other kinds of titling that also includes the tenancy as well as the joint tenants that possess the rights for survivorship.

The way that the property is titled can also profound the ramifications just so it goes with the event that the creditor can also make an attempt to obtain this. Individuals should speak to lawyers that are licensed in their state for the specifics that concern this kind of situation.

Individuals must not wait until the lawsuit is made imminent before they can even make any of these. If they do, then the court will only rule that the transfer of funds be conducted to a protected class. This is a fraudulent conveyance and the court may not even allow this transfer. This results to the assets being exposed.

The most important consideration is for the individual to not be a target. This can also be done by avoiding display the conspicuous consumption. This can also attract the trial lawyers and can also create the plaintiff’s case where they would also otherwise pay for this.

Free Webinar on Foreign Income and Asset Reporting

Foreign Income & Asset Compliance Is Growing Every Year.

More and more people are coming forward and properly reporting this foreign income than ever before.  Recent Michael Cohan case has put a new spotlight on this issue.  On September 29th, Sanjiv Gupta CPA will discuss the details of Foreign Income and Assets Reporting.

How did the IRS learn about the money hidden in an offshore account? From the SWISS Bank.  Yes, Banks across the world are now sharing information with the US agencies.  In fact, as per FATCA rules, foreign banks get penalized for non-compliance.

In the upcoming webinar, Sanjiv will go over what needs to be reported and what should be ignored.  He will be available to answer your questions as well.

Please register here – 





Prepare your business for these emergencies today

Planning ahead and planning smart can help businesses run even when disaster strikes. Entrepreneurs must take the necessary steps so that they can prepare for disaster. Better yet, they can also prevent a disaster from happening if they set their goals to doing so. If disaster does strike, it is important for the business to know where they can get aid.

Emergency Preparedness

25% of businesses fail top open once more after major disasters. This is according to research conducted by the Institute for Business and Home Safety. Business owners must protect their companies by identifying the following risks that are somehow relevant to their location. These can be both man-made and natural. Each scenario must have an action plan for a solution. It would be even better if these action plans are updated.

The first thing to look at is the checklist and toolkit prepared by FEMA or the Federal Emergency Management Agency.

Specific disaster checklists and tips:


  1. Stay updated on the progress of the storm via TV, radio or the NOAA Weather Radio All Hazards receiver
  2. Determine the save evacuation routes as well as the alternative routes.
  3. Review the Shelter-In-Place plan and make sure that the disaster kit has the essentials and is fully stocked.
  4. Ensure that there is an emergency communication plan before the storm.
  5. Backup all the data on the servers and personal computers. If the backup site is within the eye of the storm, take these during the evacuation.
  6. Turn off the non-critical devices like server monitors, workstations and other electrical equipment that are really unnecessary.
  7. Check the power supply and see if it indeed uninterruptible. Move the UPS to the highest level possible which is above the floor.
  8. Inspect the drains, flashing, and gutters and make emergency repairs if necessary.
  9. Strap or anchor the roof deck support assembly and mount equipment like the exhaust vents and HVAC units.
  10. Notify a third party about the relocation of the business in the situation that the storm makes these locations inaccessible.
  11. Protect and relocated the vital records which also include the insurance policies.
  12. Install the plywood and shutters over the windows and doors.
  13. Remove the loose debris, anchor and relocate the non-essential equipment and bring this to a safe and indoor location.
  14. Secure flammable liquid drums in a storage and then move these to a sheltered area and not in the main facility.
  15. Anchor the portable buildings to the ground.
  16. Make sure that heavy equipment such as the large cranes is secure.
  17. Outdoor signs must also be braced properly.
  18. Ensure that volunteers stay within the site and have the necessary equipment and supplies such as non-perishable food, potable water, medical, walkie-talkies, flashlights. If there is an official evacuation order, no employee must be left behind.
  19. Have cash on hand for the post-windstorm needs for supply, food, paying contractors and employees.
  20. Business owners must make sure that the employees are certified in EMT, CPT, etc.
  21. Tanks that are above-ground must be filled with fresh water.
  22. Generators, fire pumps, and other company-owned vehicles must be filled with fuel.
  23. Shut off the natural gas supply so that fire loss can be minimized.
  24. Disconnect the main electrical fields that are directed to the facility. This is to prevent the potential fire from a damaged equipment getting short-circuited.
  25. Ensure the remote access of the company’s websites so updates can be made available.


  1. Be aware of the risk level. Add the map to the Preparedness Plan and make sure that everyone is aware of this.
    2. Think about the communication plan because phone companies and cell towers may go down. The disaster recovery and response team must be contacted immediately in order to ensure that the plan is activated as quickly as possible. Have two-way radios or text messages as part of the plan. Another invaluable communication resource is the Alert Notification System.
    3. Develop a plan around the communication and this must be delivered to the team. Identify the role and responsibility of every individual before the earthquake.
    4. Structural and non-structural hazard mitigations actions that have to be implemented are: bolting the furniture to walls, latching the cabinet doors safely, using hook and loop fasteners to keep equipment such as computers from falling, installing fire sprinklers and ensuring that hardware and technology are secure.
    5. Insurance provider must inform the business owner what the coverage is. Extra expense and business interruption policies must be thoroughly understood before any interruption occurs.
    6. Contact the facilities manager or the property owner and inquire about having a plastic film or a laminated board placed on the inside of windows. This is to prevent the glass from shattering and also endanger employees.
    7. Assemble and store the emergency supply kit at least for a minimum of 3 days.
    8. Assemble the building floor plans and site maps and identify the fire escapes, utility valves and shutoffs, hydrants, hazardous materials, locked or restricted areas, standpipes, fire extinguishers and stairways.
    9. Prepare your building for extensive power outage and also look at the power options, particularly the generator requirements.
    10. Review the current data backup procedures of the business and consider having a contact with a colocation facility or data center that is in another part of the country. Opt for one that is not prone to hurricanes, earthquakes or any kind of aggressive natural events. Back up all the data of the business on a daily basis so in the situation where you lose the servers and networks, then you can back up and restore the saved data in order to replace the equipment.


  1. Make sure that there is a weather alert radio in the office.
  2. Have a plan that can provide the emergency notification that serves as the warning system to the employees, visitors, customers and clients in an emergency.
    3. Put the crisis management plan for everyone in terms of writing and hand this to all the employees.
    4. Conduct drills on a regular basis so that the employees are prepared when the real thing happens.
    5. When the timeline is established on the workplace front, then the employees must also prepare their families so that they can take care of their personal matters. Enough time must be allotted for them to execute their preparedness plans on a personal level.
    6. Identify the critical employees and make sure that they comprehend what they are expected to accomplish especially during the disaster. For example, there are certain employees that are responsible for IT to stay up and working even during a disaster so that the technology systems are protected and re-established. If these employees are required to work remotely, then the employers must make travel, meal and hotel arrangements in advance Employers must also ensure that the support and equipment needed to perform their duties.
    7. Employers must allow a plan to let the payroll, HR functions, benefits in order to operate during the disaster, post-disaster and during periods when access to the workplace has been restricted.
    8. If employees are required to return to the business so that they can assist in the recovery process before the services are restored. They should also obtain an adequate supply of water, first aid supplies, cleaning supplies, flashlights, batteries, generators, non-perishable food and other necessities.
    9. Update the employee contact information on a regular basis and this should be done at the beginning of the season wherein natural disasters are more likely to happen.
    10. Look for the following warning signs. The sky is often dark and greenish and they come with large hail, low-lying dark clouds, and a loud roar.


  1. Keep a good number of fire extinguishers in well thought of locations like waste collection areas and docks and maintain these properly.
    2. Train the employees o how they can use the extinguishers correctly.
    3. Maintain a water supply within the facility so that smaller fires can be controlled until the emergency personnel arrives. Businesses can install water tanks, hoses, and pumps near lakes, rivers or ponds. Be sure that the hoses are also long enough so that these can be inspected regularly.
    4. If the business is located in an area that is prone to freezing temperatures, be sure that the pumps and water outlets are protected.
    5. Evaluate the water levels in the extreme cold and hot weather conditions.
    6. If the water pump turns to electrical power to function, consider obtaining the gasoline or even the diesel-powered generator or pump so that when the electricity is cut off during the fire, it can still function. Businesses should nonetheless be aware that there is a risk when large quantities of fuel are stored. Use the appropriate storage facility and ensure that these protected against fire and other impacts.


  1. Review the Emergency Plan with key employees and the team.
  2. Take all the necessary steps in preventing the release of the dangerous chemical that can be stored on the property. Locate the electrical shut off and the main gas in order to anchor the fuel tanks.
    3. Postpone the receipt of couriers, deliveries, and goods.
    4. Contact the company’s insurance agent and discuss this policy.
    5. Establish the emergency communication method such as the phone tree or the Alert Notification System. Identify the meeting time and place for the key employees that are involved in the Crisis Management Team. Examples are creating the voicemail for evacuation and also checking in people when they are out of office.
    6. They should also update the disaster recovery kits and start the back-up procedures for the crisis.
    7. Maintain the accurate inventory of the products on the website.
    8. Use the plugs to prevent the floodwater when backing up into drains and install the flood vents in order to flood-proof the barriers.
    9. Stay tuned to the local media as well as the messages of the community.

Winter Weather

  1. Check the insurance coverage if there is protection against hazards brought by winter. 2. Develop the procedure when restoring the electrical services on a per item basis.
    3. Develop the procedure required when relocating undamaged and salvageable supplies and stock.
    4. Add the following supplies to the disaster supplies kit such as sand so that traction can be improved, rock salt in order to melt the ice on the driveways and snow shovels such as removal equipment.
    5. Determine the greatest risk potential such as loss of heat, loss of access due to ice and snow and frozen pipes.
    6. Identify the responsible person for keeping the heating equipment that is in good working order – it can either be the landlord or the business owner.
    7. Identify the person who is responsible for removing the snow and ice. It can either be the landlord or the business owner.
    8. Determine the equipment that is necessary to protect from freeze up such as telecommunications, computers, manufacturing equipment.
    9. Check if portable heaters or other emergency equipment are required.
    10. Make sure that there are alternative ways to enter the business promises if snow and ice do prohibit the access.
    11. All openings must be sealed with insulation and caulking where cold air can also enter.
    12. Repair the roofs and walls so that draft is prevented. Inspect the roof drains for debris.
    13. Make sure that the storm windows are effective, as long as this is appropriate.
    14. Make sure that the heat-producing process and heating equipment is in proper working condition and can operate efficiently.
    15. Arrange the removal of snow from doorways, driveways and roofs.
    16. Drain all the idle pumps along with the compressors and make sure that the jackets are vented. Provide the proper lubrication on the necessary equipment in order for it to operate properly during the cold.

Businesses are in charge of their employees and the companies before, during and after the emergency. By making sure that all the bases are covered, they can still function once the weather goes back to normal.


Do I Need a Living Trust ?

Those who have heard “living trust” probably are wondering if they need this. Since this is a legal question, the answer might be “maybe.” If that is the case, then it is worth knowing more about living trust and what it entails. First of, it is important to note that the living trust is different from last will. Those who are considering of having a living trust must also decide if they should make this or not. Whatever is decided, the individual must have a legal document proving the disposition of his or her assets just in case he or she passes away.

Definition of a Living Trust

A trust is more technically a revocable trust or a revocable living trust. This is legal paperwork wherein the individual’s assets are put into a trust for his or her benefit while he or she is alive. The individual is regarded as “grantor”. This is then transferred to the beneficiaries of his or her choice upon death by the one who has been assigned as the “successor trustee.” This person will then be the representative just in case the owner of the trust become incapacitated. There is no intervention of the court whatsoever in this scenario.

A living trust can also be canceled. IT can have its own terms changed at any given point of time as long as the grantor deems fit.

What are the Benefits of the Living Trust?

There are various reasons why it is very crucial to have a living trust especially when there is estate planning. This avoids probate. Probate is when the court supervises the process of distributing the estate of a deceased person. In other words, if this happens, it costs money and time from beginning to end. Probate varies from one state to another, therefore the time and costs frames are also different. The process takes a couple of years just to finish and in that time being, it has already probably eaten up 10% or even more of the over-all value of the estate.

This is why those who have estates are already encouraged to have a living trust so that the transfer to the beneficiaries can occur outside what is mentioned in the previous paragraph. This move leads to a faster delivery of the individual’s inheritance to his or her benefactors and there’s not even a lot of additional costs.

Another advantage of the living trust is that it serves as a private document and this never ever becomes viewable by the public. This is one of the main differences of the living trust from a will. The transfer of assets when conducted via the living trust is confidential and only known by the parties that are involved. No one can search for this and figure out what is left to whom.

Steps on Creating a Living Trust

Setting up a living trust does not have to be particularly difficult. The preliminary steps involve in this process is conducting an inventory of the assets and deciding where these will go at the event of the benefactor’s death. Another question that has to be answered is who will be the person responsible in handling the trust in case the benefactor is unable because of incapacitation or death. If the individual needs a template on how to write up the trust, there are living trust forms that can be found on the Internet.

Nonetheless, an experienced specialist is invaluable in the process of making a living trust. This is because it ensures that the benefactor is doing all the steps correctly, not only in composing the document but also in funding the trust along with the assets of the individual. Therefore the benefactor must make sure that his or her assets are titled properly. If this is not done, then these possessions will not be included.

Speaking of assets that are not included, a will that pours over is always commendable when it comes to trust because it catches the property that is inadvertently left in the trust. This also is included in the distribution. This saves the property from even being subjected to the intestacy of the state laws. This comes into effect when someone passes without a will. These laws also provide the distribution depending on the familial relationships which may also not match what the benefactor prefers.

The difference Between the Living Trust and the Will

When the benefactor decides whether he or she needs a will or a living trust, it is very crucial to understand what makes them different from the other. A will, like a living trust, directs the assets and its disposition after the death of the benefactor. However, it does not provide for the management of assets the way that the living trust does. The will has provisions and it goes effect only after the death of the individual.

Other than that, the will also goes through probate and because of this, it becomes a public record.

For those who are engaged in a complicated familial situation, for example, children are from more than just one marriage or relationship, a business within the family, vast amount of assets and properties in more than just one state, the people involved, especially the benefactor, use a living trust so that everything is clear and coherent and there is an estate plan if something does happen to him or her.

As for the people who have fewer assets, whether it be a simple distribution plan for a business or a modest estate, they are suggested to not go about the route of creating a living trust. This is because it will cost them more upfront to do this as opposed to just writing a will. Therefore, the latter is something they have to consider instead.

The Bottom Line is Get A Living Trust

Everyone can benefit making a living trust. Even if the benefactor is not ready, drawing up a living trust with the help of a lawyer or an experienced professional can get the affairs in order even before something unexpected happens.

It is important to note that estate planning is done because it provides the benefactors and everyone involved the peace of mind that affairs and businesses are handled accordingly to the wishes of the individual and things will be made easier for the loved ones especially during a trying time.

Drawbacks to Living Trusts

Living trusts have a downsides. When compared to wills, trusts are more time-consuming and this also involves ongoing maintenance. It is more troublesome to modify compared to a will. A trust that is drafted by a lawyer can cost as much as $1,000 and even more. However, there are self-help tools that are made available online and the cost is not as much as the one mentioned. A living trust must also have a simple will to serve as the back-up device.

Factors to Consider When Creating A Living Trust


Living trusts are not for the middle-income people who are in good health and younger than 55 years old. A living trust has no effect for an individual described as such. This is because this age group really do not have anything to worry about for the next years. Therefore, a serviceable will is easier to live with and also establish and can create a fine job in transferring the property to the benefactor’s choice of beneficiaries. The will is already enough to do the proper job of transferring the assets to the benefactor’s loved ones in the even that something occurs unexpectedly.

Another reason why a healthy younger person who earns in the moderate bracket does not have to worry about creating a living trust is because it is best that he or she avoids the probate. In the last decade, there are easy-to-use probate avoidance techniques like naming the beneficiary to inherit the securities and even free of probate. This trend will likely continue.


The biggest factor when it comes to creating a living trust is wealth. The wealthier the individual is, the more he or she can save for the inheritors by going around the probate.

The assets owned by the benefactor is significant. Owning a business or assets that he or she do not want tied up in the process of the probate might also push in creating a living trust at that tender age. Even if there is a small possibility that the benefactor will die soon, he or she won’t risk making the executor report to a judge.


If the beneficiary is married, then he or she and the spouse must plan to leave a majority of the property to each other. There is also less reason to problemize and obsess about going around the probate. If there are many couples that own the big assets altogether and have filed in a joint document, then the probate will most likely not occur on the assets that they share. As for the other properties, there are a number of states that let the surviving spouse turn to expedited and probate procedures that are cheaper and faster than the average and standard rate.

Reasons Why A Living Trust Is Not Needed

There is no need to protect the assets from a probate. The benefactors must also arrange for the assets to go to the beneficiaries outside of the probate. Home or other properties that are owned in a joint scenario along with the right of survival goes directly to the owners when the benefactors die. The same can be said about pensions, life insurance policies and retirement accounts. This then automatically transfers to the beneficiary.

It is possible to keep the bank accounts out of the probate and set it up as payable on the death accounts. This gives the recipient the access to his or her money immediately when needed. There are a number of states that even allow the benefactor to name the beneficiary for cars. Then there are dozen states that let the transfer of death deeds for real estate be conducted.

Probate can be daunting. There are states that streamline probates. For example, in California, the inheritors of estates have a value of $150,000 and this excludes the property that is passed directly from the beneficiary. If the individual finds this complicated and most likely to create confusion, then living trust is not the way to go.

There may be consequences that are unforeseen when creating the trust. When this is created, the beneficiary must name himself or herself as the trustee so that it is possible to control the assets firsthand. THose who are married obviously name their spouses as the successor trustee. This can, however, create problems if both become incapacitated. The family is then forced to come up with a co-trustee or successor to gain access to the finances. Naming another successor, like an adult child, is the best way to go around this.

Is Living Trust Right For The Benefactor?

The drawbacks mentioned in the previous paragraph are easily outweigh by the benefits that the benefactor gets especially those possessing large estates and those who are expected to die in the next decade.

Then there are cases wherein the probate is supervised so that the beneficiary receives what is rightfully so. There are individuals looking over the executor and his or her actions and there to make sure that the assets are documented and located and all debts and taxes are paid. All these are done to meet and honor the terms of the will.

Sometimes a living trust makes sense. If there are out-of-state property like a vacation home, putting this trust can save the heirs from the probate in the state. It is recommended that the living trusts are kept in place and updated whenever needed.  In doing so, this makes it less complicated for the people involved. It is also easier for everyone to go into the affairs when everything is written down and documented.



Treating Employees Like Contractors Can Cost You A Lot

“Gig economy” is filled with the promise that the workers want more flexibility, therefore it is also financially and legally fraught between employee and employer.

There are growing number of lawsuits that should not be classified workers considered as free agents. For example, a commission in California ruled that Uber drivers are really employees. Then there’s Hillary Clinton promising that bosses who exploit employees by considering them as contractors will be cracked down.

The US Department of Labor has already offered guidance on how the tests must be interpreted so that the worker can be determined and classified as either an independent contractor or an employee.

The agency also considers the workers to be employees because they follow the Fair Labor Standards Act. It is also likely that they apply a definition that is broad when they investigate the practices of the company.

Differences Between Full Time Employers and Independent Contractors

The employers will be cautious because there is already war declared on the relationship with the independent contractors. Littler Mendelson is a firm that represents employers and they are very much concerned with the department wage of the labor.

To put simply, independent contractors maybe cheaper and more affordable for companies to hire. The employers also do not have to offer benefits such as 401(k)s and health insurance. They don’t even have to get paid days off or overtime. They also do not have to pay the state unemployment insurance or also the worker’s compensation funds when it comes to the behalf of the contractors. They don’t also have to cover the share of their employer when it comes to the payroll taxes. They also do not withhold the income taxes for the employees.

In return, the freelancers or the contractors can also have the autonomy when it comes to deciding where, when and how they can do the work that is assigned. They can also take on the projects for free with the other companies. They need to run their own businesses and also have their own employees, equipment and office space.

Consequences for Employers When They Hire Independent Contractors

This is the case that is supposed to be and the lines also blur whenever the company goes out to hire someone that they regard as the individual that would do integral work and connected to the business. This is what a full time employee usually does. This also dictates when, where and how the work should be done. This also restricts the ability of the worker for the other clients.

If the company has misclassified the workers as independent contractors, then they would have to pay the back wages, back taxes, legal fees, damages and penalties. These are the deadly consequences for the employers when they hire contractors instead of full time employees.

The Department of Labor along with 22 states and the IRS have also cracked the misclassification that results to the employers paying $79 million in terms of back wages for 100,000 workers or even more in different industries.

The mission of the Labor Department is to be vigilant when it comes to protect the workers and their rights and to protect themselves from being violated. This is done in industries such as meat processing, personnel services, landscaping and construction.

However, there are those who choose to be an independent contractor and not a full time employee.

The Labor Department also explicitly stated that “economic realities” determine the working relationship if the worker is an independent contractor or an employee. They would also override the agreement between the employer and the worker. This, however, may pose a problem.

The downside is that this may be a problem for some people. There was a survey that was conducted by the Freelance Union that reached an estimate of 21 million independent contractors in the US alone. Then there are 2.8 million that regard themselves as freelance business owners. A number of them does not want to go back to the conventional 9 to 5 job. The courts usually have a big say when it comes to violating the labor standards and who are independent worker and who are full time employers. It is also clear whether they will regard the definition of an employee in the broad term of the Labor Department.

This is quite a common mistake for business owners whenever they would hire new workers. They weigh the pros and cons for hiring someone as an independent contractor or an employee. There are consequential differences. Employees must be compensated for wages, and tax withholdings. They will also abide by the strict wage orders in their state whenever they incur breaks and overtime. For independent contractors, the employees are not really liable for the tax liabilities or their accidents. Employers often make the mistake of classifying workers. 70% of employers have already made this costly mistake. This can be prevented if they have an idea of what their responsibilities are for independent contractors and full time employees.

Employers must have control

There are businesses that conduct tests in order to determine if the worker will be considered as independent or full time. The test is chosen depending on the work of the individual. The more control the employer has, the more productive the worker will be. Also, the more chances and possibilities that they will be classified as full time employees.

The IRS has their own view when they determine the status of workers. They use a 20-factor test. Few of these areas look at the work that is expected of the individual, the training and instructions given to the employee and the right to terminate the work relationship along with the compensation. These factors are out of control of the individual.

Therefore, it is very important for the business owners to exercise the control. Once they have retained this right, then they can classify the individual as an employee. Just because there is a draft of the written argument that calls the worker freelance or independent, it is not enough to determine and establish the independent contractor relationship. This is still quite an easy distinction whenever they would have to remember if these individuals are one-time workers or they do the job at a priced that is fixed and set for many companies. If it is the latter, then they are independent contractors.

Tips To Determine if the Worker is A Contractor

There is really no clear definition of an independent contractor in any state for that matter. However, the Fair Labor Standards Act does indicate that the decisions by the enforcement agencies and the state employment to see the classification of the contractor is discussed in may ways that workers can actually be classified as independent contractor in a justified manner.

Here is an exhaustive list of the factors that determine if the business has an independent contractor relationship:

– needs little control
– distinct occupation
– expert on a niche
– hired quickly and just for a short time
– paid per project
– neither party sees that the relationship shared is that of the employer and the employee
– the instructions are minimal
– the work is not personally rendered
– there is no set hours
– employee works off premises
– expenses are not reimbursed
– there is an opportunity for either a profit or a loss
– the service is available to the general public
– there is no right to be terminated or discharged at any time
– the employee can also be hired by others
– there is a significant investment on the equipment that is used.
– there is minimal reporting
– the employee is not required to work full time
– the relationship is expected to not continue
– the training is minimal
– the hiring party is not a business, neither does it benefit the business

– the duty is not part of the employer’s regular business
– the employee provides his own tools or equipment
– the occupation is a specialist without any supervision

It is important to note that if the employer’s instructions to the worker do not include how, where, when to work then the working relationship is considered to be an independent contractor. This is very important in relation to the local, state and federal taxes. The IRS also puts some degree of independence and control of the employees that the businessmen hire in three categories: behavioral control, financial control and the kind of relationship that both parties enter.

Why All This Information Matter

For obvious reasons, employers are held financially responsible if employees make mistakes. Often times, when a worker is negligent with his or her actions and these result to dangerous situations, the company may get served. In fact, there are sections on the civil code that clearly states if one of the employee is negligent during the transaction of any agency or business, the wrongful acts that were committed by the worker, as long as this is within the scope of the employment, pretty much opens the business and makes it quite prone to financial liability. It really does not matter if the employer had nothing to do with what the employee did. Because the former is the owner, then he can still be held liable by the party that had been injured.

Should Employers Pay for the Mistakes of An Independent Contractor?

If there is an independent contractor working for the company, the businessman will still be liable for their omissions and mistakes

However, there are still some exceptions to the rule and this includes the work that is done in hazardous settings. Another exception is when the independent contractor is instructed by city ordinance or a statute and expected to provide the precautions and safeguards and also maintain the equipment in top notch condition.

If the businessman fails to show that he is responsible for the contractor and the latter physically injures someone else, then this makes it more prone for the former to be sued. it is also important to note that the instructions that resulted to this negligent act is the very reason why business owners can be sued.

Exempt vs. Non-Exempt

Way to Classify As Exempt

One of the key areas that employers must know in determining if the worker is a full time employee or an independent contractor is that 51% of their work is exempted. The monthly salary is also equivalent to twice the minimum wage for the full time employee in order for them to be considered as exempted.

What is 51% of Work?

When the employee is determining if the worker is exempted, the number to remember is 51. If the position that is in question has the employee spending more than half of his or her shift doing exempt work then they are classified under that category. On another note, if the worker also makes the rules as opposed to following the rules, then he or she is regarded as exempted employee and cannot receive compensation for overtime.

Fixing Wrong Classification on Federal Taxes

If there is a wrong classification for the kind of employment, federal taxes can result to stiff penalties. It is one of the areas that must be addressed first when working with new business clients. This is to help them be able to reclassify themselves as personnel. Quite often, there are workers that are not listed as employees but are mentioned in the books. There are also other cases wherein the damage has already been done to the company but it can still be fixed nonetheless.

As stated in the VCSP or the Voluntary Classification Settlement Program, eligible employers can also obtain the relief from the federal payroll taxes that have been owed in the past. This plan is then made available to the businesses, government entities and tax-exempt organizations that have filed these in past so that they can be considered as just one class.

It is everyone’s business to make sure that the company is running well. Any question related to the kind of employment that an employee has must be answered by the employer.