Why You Should Hire a Business Attorney When Changing a Business Entity

Like other aspects of life, businesses change and grow. If your business is evolving and you are considering changing your business entity, it is essential to understand the procedural requirements, tax implications, and liability considerations of each type. A corporate business attorney can evaluate your circumstances and advise you on which option will best meet your needs and protect your interests.

Why Change Your Business Structure?

For many small business owners, a sole proprietorship or informal partnership is appropriate when first starting out. Although these structures can be effective for a company with one or two people, if a business starts to grow, hires employees, or wishes to woo investors, an LLC, partnership, or corporation provides protections and benefits that make more sense.

Considerations for Choosing a Business Entity

Before changing your business structure, it is vital to consider several elements, including:

• Taxation
• Liability
• Forms and fees
• Investment needs
• Operational continuity

All of these components should be taken into account when creating a business succession plan as well. Seeking the advice of an experienced business lawyer can help to ensure that important details are addressed so you do not choose a structure that could end up affecting your business negatively.

In rare cases, a business owner may decide to go from a more complex business structure to a simpler one, which can be challenging. An attorney can help you understand the common taxation, liability, and legal issues that may arise, depending on your specific situation.

A Lawyer Can Help with Paperwork and Procedures

If you are changing to a more complex structure like a corporation or LLC, you must register it with the state in which you do business. You may also need to update your Employer Identification Number (EIN) and file a DBA (doing business as) form. An attorney can help you complete this paperwork and send it to the proper government agencies.

In addition, LLCs and LLPs require formal operating agreements. These agreements outline the rights and responsibilities of the owners of the company.  It is important to make sure these agreements are sound and all your legal bases are covered. A business lawyer in West Chester will know what is required by state and federal authorities like the IRS and can help you draft an agreement that includes all relevant information.

Changing to a Corporation

If you’re switching to a corporation, there are certain legal requirements that must be met. You must file articles of incorporation with the state and appoint officers of the company, such as a president and secretary. You will also need to choose a board of directors. Corporate bylaws, which lay the ground rules for operating your corporation, should also be prepared. Stock may be issued and a shareholders agreement must be created. Having an attorney help you draft this vital document ensures that the rights and responsibilities of the owners and other important information are clearly stated in the shareholder agreement.

Regardless of which type of entity you choose, the seasoned business attorneys at Carosella & Associates can help you get it right and provide the legal guidance you need throughout the process.

This blog was originally posted at https://carosella.com/blog/why-you-should-hire-a-business-attorney-when-changing-a-business-entity/

How to Settle Contract Disputes Out of Court

Contract disputes are very common in almost all business sectors. Most contract disputes are settled out of court, as litigation is time-consuming and costly. Whether you are facing an issue with a commercial lease, non-disclosure agreement, or another type of contract, it is important to know the options available to help you get it resolved. Contract attorneys can assess your situation, determine possible ways to settle the dispute, and provide legal representation that protects your interests.

Informal Negotiations

The first step most business lawyers take when dealing with a contract dispute is to contact the party and try to work out a resolution. Sending a letter or having discussions can often be enough to settle a dispute. If you do negotiate a settlement both parties agree to, it is critical to have an attorney prepare a formal agreement that outlines the terms. That way, if one party does not hold up their end of the bargain, the other may pursue a legal remedy.

Mediation

Mediation is a popular alternative dispute resolution (ADR) method that helps parties in conflict resolve issues. In mediation, a third party facilitates and guides the process to help you reach a mutually agreeable outcome. However, a mediator does not make a decision about the dispute. Their job is to help you address specific matters and facilitate civil communication.

Mediation is often a good choice for resolving disputes, as it is much faster and less expensive than suing someone in court. Because the results are determined by the parties involved, not a judge, it can also help them feel like they have more control over the situation. If you decide to pursue mediation to settle a contract dispute, it is vital to have an experienced lawyer assist you throughout the process. For example, if you are dealing with a dispute involving the sale of a property, you should have a real estate attorney by your side in mediation.

Arbitration

Arbitration is a method of ADR that enables you to bring a contract dispute in front of a private arbitrator to decide your case. One advantage of both mediation and arbitration is that they are private, which allows parties to keep details confidential.

The arbitration may involve one arbitrator or a panel of three. Although the process is less formal than court proceedings, parties may present evidence and question witnesses. After all, evidence is presented and witness testimony is heard, the arbitrator makes a decision, much as a judge would.

In binding arbitration, the arbitrator’s decision is final. You must abide by the result just like you would if you stood before a judge. However, unlike court decisions, rulings in binding arbitration typically cannot be appealed.

In non-binding arbitration, the arbitrator’s determination is advisory. However, it is an effective, practical way to resolve many types of disputes. Even if a decision is rejected by one party, it can give you insight into how a case may play out in court.

Do you have a business matter or contract dispute that needs to be settled? Our business lawyers in West Chester are skilled negotiators who work to achieve the best possible outcomes for our clients.

This blog was originally posted at https://carosella.com/blog/how-to-settle-contract-disputes-out-of-court/

Does My Estate Have to Pay My Debts After I Pass Away?

If you hold considerable amounts of debt, you may wonder whether your spouse or other family members will be responsible for paying it after you are gone. Even if you have a substantial estate and little debt, it is beneficial to understand how it may affect the assets you leave to your loved ones. An experienced estate planning attorney can help you address these issues and create an effective plan that protects your family’s financial interests.

How Debts are Paid After Someone Dies

When someone dies, both their assets and debts pass to their estate. This means that generally, the deceased person’s estate must take care of any unpaid debts. If there is not enough property or money, debts may go unpaid. In Pennsylvania, most assets must go through probate unless they are held in a trust. Accounts payable on death and funds from life insurance policies can also skip probate.

One of the first steps an executor or administrator must take is to notify creditors of the person’s death. The executor or personal representative must advertise the decedent’s death in two newspapers in the county where they resided for three weeks. Creditors have one year to submit their claims against the estate to receive payment for any unpaid debts. A lawyer can explain the probate process so the executor and beneficiaries understand how it works.

The executor or personal representative must pay inheritance taxes, medical bills, funeral expenses, court costs, and any other outstanding debts that may be left behind. If necessary, the executor may liquidate and sell assets to cover all debts of the deceased person. Once all debts are paid, any remaining assets will be distributed to beneficiaries according to the will or the laws of intestacy.

However, if the funds are distributed to beneficiaries and the estate does not have enough funds to cover other claims brought within the one-year period, the personal representative or executor can be held personally liable for paying these creditors.

What is an Insolvent Estate?

If an estate does not have enough assets to pay off debts, it is considered insolvent. In Pennsylvania, certain debts and expenses must be paid and prioritized in the following order:

1. The costs of estate administration, such as attorney fees, court costs, and the personal representative’s fees

2. The family exemption, which provides $3,500.00 for each family member who lived with the person at the time of their death

3. Funeral and burial costs, medical expenses, Medicaid costs, and any services performed by employees within the last six months

4. Cost of the grave marker

5. Rent for the deceased person’s home for the six months preceding their death and any claims by the Commonwealth of Pennsylvania

6. All other claims, such as medical bills and rent owed previous to the last six months of the person’s life

While some creditors of an insolvent estate may be paid, some may only receive a portion of what is owned or nothing at all.

Could I Be Held Personally Responsible for a Loved One’s Debt?

Generally, individuals are not required to pay the debts of someone who dies. However, there are rare exceptions to this rule, such as:

• You were a joint account owner with the deceased
• You were a co-signer on a loan
• In certain community property states, a spouse may be responsible for paying their deceased spouse’s debt that was acquired during the marriage.

Even if you were an authorized user on a credit card that belonged to the person who died, you are not responsible for paying their credit card debt. If creditors contact you about someone else’s debt, a family wills and trusts lawyer can advise you on whether you are legally obligated to repay it.

It is important to consider how your debts may affect the distribution of your estate when you pass away. The experienced estate attorneys at our law firm in West Chester can help you create a plan that keeps your loved one’s interests in mind.

This blog was originally posted at https://carosella.com/blog/does-my-estate-have-to-pay-my-debts-after-i-pass-away/