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Common Ways of Transferring Assets

Common Ways Of Transferring Assets, including your Business Assets On Your Death Without Going To Court, And Why That Can Be Particularly Important To A Small Business Owner's Family And Other Beneficiaries

Going to Court can be an expensive experience. If you are in a sole proprietorship business, or in some other type of small business, the expense and delay of a Court proceeding can have a detrimental economic impact on the business and on your family and other beneficiaries.

COMMUNITY PROPERTY AGREEMENT

Having a Community Property Agreement is one way a surviving spouse of a deceased small business owner can either continue, or sell, the deceased spouse's business without having to go to Court.

A Community Property Agreement is a written, notarized agreement that the surviving spouse gets everything on the death of a spouse. It is like a deed of everything to a surviving spouse.

Although Washington is a Community Property State which means that each spouse owns one-half of the assets acquired during the marriage as a result of the earnings of the spouses, the surviving spouse does not automatically get the deceased spouse's interest on the death of a spouse.

Many times each year attorneys are consulted by a surviving spouse who erroneously believed she or he would automatically get the deceased spouse's interest in assets acquired during their marriage without going through a Court proceeding.

Attorneys have to tell those persons it will be necessary to go through the delay and expense of a Court process.

If you want your spouse to be able to continue, or sell, your business after your death and you want your spouse to be able to avoid going to Court, be sure to have a written, signed and notarized Community Property Agreement.

REVOCABLE LIVING TRUST

If you are not married and want to have your children or other beneficiaries to be able to continue, or sell, your business after you die without going to Court, you should consult with an attorney about creating a Revocable Living Trust Agreement.

A Revocable Living Trust Agreement is an Agreement between you as the Trustmaker with a Trustee who manages and distributes your assets for the benefit of beneficiaries. You can be the beneficiary and also the Trustee as long as you are not mentally disabled. On your disability or death, the person you have named as Successor Trustee then carries out your written instructions concerning the transfer of your assets to your children or other beneficiaries without the necessity of going to Court to obtain an order allowing such transfer.

SMALL ESTATE AFFIDAVIT

A third way to have your assets transferred to your beneficiaries without going through a Court process is to use a Small Estate Affidavit. This method of transferring assets can only be used if your assets are valued at $100,000.00 or less, and consist only of personal property as distinguished from real estate.

Other ways of passing assets without requiring your beneficiaries to be involved in a Court process include:

1. Use of Joint Tenancy with Right of Survivorship;

2. Use of Payable on Death Accounts;

3. Use of Deeds Creating Life Estates with a Remainder Beneficiary; and

4. Use of Buy Sell Agreements for corporation stocks or membership interests in Limited Liability Companies.

Lastly, when thinking of passing on your assets including your business interests to beneficiaries, remember to consider:

1. Possible Estate Taxes;

2. Business Continuation Plans.

Currently the federal estate tax is 35% on any amount over the federal exemption. The amount lost to federal and state estate taxes can be substantially reduced through estate planning.

In some cases where there has been no business continuation plan in place, businesses have been poorly run after the owner's death with substantial losses, or sold with substantial losses.

Remember, it may not matter if you accumulate well if your assets are distributed poorly on your death.

Call legal assistant, Cindy Hutchinson, at (360) 695-7909, to schedule an appointment with attorney Dan Marsh to discuss what you should do with regard to your estate planning.

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Marsh, Higgins, Beaty & Hatch, P.C.
1112 Daniels Street, Suite 200
Vancouver, WA 98660

Toll Free: 866-678-1372
Phone: 360-450-0993
Fax: 360-694-1758
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