AXELROD BLOG

Legal Matters

An Important Estate Planning Document




A letter of instruction is a cheat sheet for anyone involved in settling your affairs. Unlike a will, this letter has no legal authority. However, it can provide an easy-to-understand explanation of your overall estate plan to your executor and lay out your wishes to your family for things not covered by the will.


When it comes to estate planning, we highly recommend that everyone, regardless of the size of their estate, prepare a letter of instruction for their surviving spouse or other family members. This letter amounts to the keys to the castle. While you are living, it is important that your spouse and children know where important estate planning documents are located and how to access them in the event of your disability or other medical or financial emergency.



Your instruction letter may include:

  • The location of legal estate planning documents such as a Living Will, Living Trust, Health Care Proxies, and Powers of Attorney

  • The contact information for your attorney, accountant, financial advisor, and personal contacts who should be notified in the event of your death

  • Access to all necessary networking or digital information to access social or financial records, including account numbers, user names, and passwords

  • A detailed list of monthly payments and from which account payment is coming from

  • Instructions as to who should get items that aren't necessarily valuable but might be sentimental

  • Any personal wishes or messages to your family



As with any other estate-planning document, your letter of instruction should be updated annually and kept in a safe place that is easily accessible by your relatives or heirs. At Ron Axelrod & Associates, our office stores all legal documents relating to your estate electronically and can forward them in an emergency. Our firm’s goal when planning estates is to make sure the plan works.



Buying an existing business is an exciting undertaking. There are many advantages to buying an ongoing business over trying to start one from the ground up – from an immediate cash flow to having a customer base to grow on. But, there are also many drawbacks as well. That’s why it’s important for you to have an experienced business lawyer who can guide you through the process.


Here are five things a business lawyer can help you with:


#1 – AVOIDING TRANSFEREE LIABILITY

Transferee liability situations can arise when the person/entity that you’re buying the business from transfers assets to you (the ‘transferee’) while still having debt that is or may become a lien against them. Being responsible for the seller’s debts is obviously something you’d want to avoid. This becomes particularly important if the seller owes taxes to the IRS, or more likely, to the State of New York. Unless proper steps are taken, the buyer of the business could become liable for the seller’s back sales tax obligation. One of the most important things a buyer’s attorney does when representing the buyer of a business is to protect his client from becoming liable for the seller’s back sales tax obligations. Once a Purchase and Sale Agreement is signed, it is incumbent on the buyer’s attorney to send the proper notices to the New York Department of Sales Taxation and Finance to obtain a release of liability for the Buyer.


#2 – QUANTIFYING REPRESENTATIONS AND WARRANTIES

When buying a business, you’re relying on certain representations that the seller is making about his or her business – whether it is sales, profits, contracts with customers employees, vendors, or the condition of equipment. A business law attorney can help to protect your interests, if these and many other representations are not true or inaccurate.



#3 – DRAFTING AN ENFORCEABLE COVENANT NOT TO COMPETE

Nobody wants to buy a business only to have the seller go back into competition with him or her. A buyer’s protection from this is to have the seller sign an agreement not to compete with the business he or she is selling for an agreed upon time and in an agreed upon area. Sounds simple, but as a general rule, the courts are reluctant to enforce these agreements unless they meet specific parameters. This is a tricky, but an important part of every business transaction. Your attorney can draft an enforceable non-compete agreement.


#4 – SELECTING THE PROPER ENTITY FOR YOUR NEW BUSINESS

What type of business entity should you choose for operating your business? Should you form an S-Corporation, C-Corporation, Limited Liability Company, partnership, or sole proprietorship? Each of these forms of ownership has different tax and asset protection advantages and disadvantages. It is very common where the business includes an operating company and real estate for there being an LLC to own the real estate, and a corporation to run the business. Choosing the right type of entity to own your business before you close on your purchase is very important. A wrong choice can cost you money down the road. That is why it’s important to work with an experienced business law attorney who can properly guide you into choosing the right way to own your new business


#5 – PROVIDING GOOD AND UNENCUMBERED TITLE TO THE ASSETS YOU ARE BUYING

Banks or suppliers may have placed liens against the assets you are buying. It is important that these liens are cleared before you pay your seller any money. It is the buyer’s attorney’s responsibility to make sure there are no liens against the assets you are buying so that you end up with good title to these assets.



For these and many other reasons, if you are buying an existing business it is important that you have an experienced business law attorney guiding you through the process. Ronald J. Axelrod, a business law attorney in Rochester, NY, has the experience you need to offer the guidance you deserve. Call our office at (585) 203-1020 to schedule a free office consultation.


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It's Never Too Soon

A long-time client of mine recently passed away from COVID. Over the past 20 years we had had numerous discussions about wills and estate planning. Being an avid procrastinator, he never followed up. He died intestate; which means the State of New York decided how his estate should be distributed, regardless of what he and his wife wanted. Unfortunately, this meant half of his estate went to a daughter from a prior marriage that he hadn’t talked to in 25 years and the other half went to his wife, who needed every penny to hold things together.


Not updating wills, trusts and other estate planning documents can, and often does, create unintended consequences. The same goes for beneficiary designations on IRA’s, 401k’s and life insurance policies. In this era of COVID, we never know what tomorrow holds.



Who Will Decide?

Another totally different, but important example, was a client who went through a divorce and as part of the divorce settlement was required to maintain a $500,000 life insurance policy for the benefit of his minor children. This is not an unusual situation where there is a requirement to pay child support. Unfortunately, the divorce lawyer named the two minor children individually as the beneficiaries on the life insurance policy. The State of New York does not permit minors to be the beneficiaries of life insurance policies in their name alone. If this happens, the State of New York requires that the proceeds of the policy be deposited in a savings account and that the minor beneficiaries can only receive the interest from the account until their 18th birthday. The interest was obviously not enough to support the children. Many court proceedings later, an understanding Judge helped the children out (and saved the divorce lawyer from a malpractice claim) by permitting the use of the insurance proceeds for their support, but only under certain limited circumstances.



The point of all of this is to emphasize how important it is to review all of your financial and estate planning documents on a regular basis. It is never too soon because we never know what tomorrow may bring. People often ask me what kind of law I practice. I tell them, “proper estate planning”. When they ask what that means, I tell them that when my clients pass and look down from heaven, their assets have been left to those they intended and in the manner they desired. That is proper estate planning.


Peace of Mind

As a service to our clients, once every three years, or when there has been a life-changing event, we offer a complimentary review of all of their financial and estate planning documents to make sure everything is up to date.



To ensure that you have done ‘proper estate planning’, call us to schedule your complimentary review of your estate plan at (585) 203-1020. You can also email us at ron@ronaxelrod.com.


Learn More About Our Estate Planning Services



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