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Santa Cruz Business and Commercial Law Blog

Tips for those developing an estate plan

Creating plans regarding the distribution of one's assets can be a daunting and time-consuming endeavor for many individuals. However, because of the current state of affairs in California, if a person dies without creating such a plan, his or her friends and family members may be faced with some difficulty. An estate attorney might be able to help a client create a strategy that considers a number of different factors.

The benefits of drafting an estate plan are numerous. In addition to providing a way for a person to avoid excessive tax penalties on certain assets, an effective plan might also streamline the estate administration process for any beneficiaries. A plan might also help an estate save money and could provide additional privacy to the person devising the documents.

Articles of incorporation creates legal foundation of corporation

California businesses wanting to incorporate will need to create several documents, some of which will be filed with the state. The articles of incorporation establish the legal foundation of the corporation and contain the name and purpose of the company, the entity who will serve as registered agent and information concerning ownership shares.

The name of the corporation can be just about anything the owners desire as long as it is unique. This can be determined by a search of the names listed in the state's database. The name will usually end with "Inc." but it could also end with "Incorporated" or "Corporation." The purpose does not have to be very specific. In most cases, it can be as simple as saying that the company will engage in any lawful business.

Do I need a living trust in California?

California residents who are embarking upon their estate planning may be interested in learning what a living trust is and when they are needed. This type of trust allows someone to retain control over their assets during life and avoid probate after their death.

A revocable living trust involves moving assets into the trust, which can then continue to be used for the benefit of their owner. This person often acts as the trustee as well, retaining control of their assets. If the trustee is incapacitated at some point during their lifetime and is unable to administer the trust, another person is usually named in the trust to perform these duties.

What is the probate process in California?

Probate is a complicated process that includes the verification of a will, the settling of a decedent's obligations and the transfer of property from a deceased person's estate to heirs and beneficiaries. The probate process can take a long time to complete. In some cases, proceedings can continue for more than a year.

While court officials generally handle the process of verifying the will, the other probate duties are often handled by an executor appointed by a will. If no will is available, the court generally appoints an administrator to handle those duties. While under the supervision of the courts, the person who is charged with the duty of estate administration must settle outstanding balances and debts that are attached to the estate before distributing the assets to those who have the legal right to inherit.

Using crowdfunding for commercial real estate investment

A California man has recently helped to start a company that facilitates the purchase of commercial real estate through crowdfunding. Based in San Francisco, Realtyshares is an online platform that connects accredited investors with buyers. After putting up a minimum $5,000 initial investment, the accredited investor will wait for buyers to pledge a certain amount of capital. When the monetary goal is reached, Realtyshares will take care of the real estate transaction.

Although using crowdfunding for the purchase of commercial real estate is a new concept, many people expect the idea to take off. According to the co-founder of Realtyshares, investors like real estate for its stability. Since crowdfunding for investments became legal just two years ago, investors have only recently been able to use it to purchase commercial real estate. It should be noted that the Securities and Exchange Commission has yet to issue final regulations in this area.

The basics of wills, an integral part of any person's estate plan

Santa Cruz residents who have an interest in estate planning may want to know some of the basics about wills, an important element of a person's estate plan. Though the will is just one element of a comprehensive plan, it serves a very valuable role in the distribution of the person's estate.

A will is a document that contains instructions on what to do with a person's property after they die. A will can dictate who gets what property, who will execute the will and who will serve as a guardian for any of the person's children who are still minors. Some assets that a person owns will not be covered by the will, however. For instance, insurance policies and retirement plans have their own named beneficiaries. Property with a right of survivorship will go to that other person automatically, regardless of what a will dictates. Living trusts are another type of estate planning vehicle that are controlled by their own terms. The will, however, can direct that the person's assets are distributed into a trust.

Joint ventures provide way to conduct international trade

California businesses may want to look into joint ventures as a way to expand into the international market. Joint ventures allow a company to create an agreement with a foreign entity that is already established and operating under the laws of another country. This process is often much quicker than trying to form a new business in that country. For example, it avoids many of the complications associated with business structure, product liability and taxes.

There are two basic types of joint ventures: corporate or equity joint ventures and non-corporate joint ventures. In the first type, a new entity is created in the country where it is formed. The second type uses a contractual arrangement that does not create a new entity. Entering into either type of joint venture arrangement will require an agreement that details ownership and operating guidelines that are consistent with the laws of the country where the joint venture is formed. In many cases, this will mean drawing up articles of incorporation and bylaws.

Forming a corporation in California

Several legal business structures are available to California entrepreneurs who are looking to start a business. Although limited liability companies have become popular due to their relative simplicity, many businesses are still organized as corporations. Sections 200 through 213 of the California Corporations Code sets forth the requirements for the business formation of a corporation.

A corporation can be formed in California by the filing of articles of incorporation by one or more persons or entities, whether or not they are residents of the state. The corporation's existence commences upon the filing of the articles, which among other things must set forth the name of the corporation and a statement of its purpose. The name cannot be one that is already in use or reserved or one that the Secretary of State believes could mislead the public. The articles must include the name and address of the corporation's agent for service of process.

California start-ups should choose their structure wisely

Santa Cruz residents ready to start a business have several options when considering the structure of their company. Understanding those options can make a big difference in how taxes are paid and can affect the business's bottom line.

Small businesses have a number of basic options for legal structure. They include sole proprietorship, partnership, a limited liability corporation, which is otherwise known as the LLC, an S-Corporation or a C-Corporation. The structure determines how a business is run, who makes the decisions and how taxes are paid, among other important details.

How to solve disputes in a California family business

Research shows that only 30 percent of family businesses make it to the second generation while only 12 percent make it to the third generation. It is estimated that only 4 percent of businesses make it any further than that. The reason given by many experts is that the solution to problems in a family business are emotional in nature as opposed to practical in nature.

The biggest rift in such an arrangement may come from the difference in philosophies between spenders and savers. Spenders may want to invest more money into the company to increase the odds of making a profit while others may be more conservative and wish to see more money being held back. To reduce the odds of a business going under and relationships being strained or broken due to business conflicts, experts say that it may be worthwhile to create a buy-sell agreement ahead of time.

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