Integrity Law Group PLLC

Understanding Liability: Choosing the Right Business Structure for Your Company

As a business owner, you will have many important decisions to make. All of these decisions will have a significant impact on the company and will largely determine whether it is successful. One of the very first decisions you will have to make is how you want to structure the business. In Texas, there are four main structures to choose from. These are sole proprietorships, partnerships, limited liability companies, and corporations.

There are many factors to consider when choosing a business structure that is right for your company. Liability is one of the most important factors to consider. A Houston business attorney can explain further.

Sole Proprietorships

One of the most straightforward types of business structures is a sole proprietorship. Just as the name suggests, sole proprietorships have just one owner. You are not required to register the business with the Internal Revenue Service (IRS), although you can if you choose to. 

In fact, you do not have to file any government papers after starting a sole proprietorship. Some businesses start as a sole proprietorship and then change into another type of business structure. Others remain sole proprietorships for the life of the business.

As a sole proprietor, you will likely attach Schedule C, a Profit or Loss from Business form, to your personal tax return. This allows you to report any loss or profit from your business on your personal taxes.

Owners of sole proprietorships have unlimited personal liability for the business. This means that if you are a sole proprietor and your business is sued by a creditor, by someone who was injured on your business’ property, or by anyone else, your personal assets, as well as those of the business, are all at risk. 

On the other hand, you also have complete control over the business. It is unlikely that investors would invest in a sole proprietorship.

General Partnerships

General partnerships are owned by two or more people. As with sole proprietorships, you do not need to register a general partnership, and there are no government filings. However, due to the fact that there is more than one owner, drafting a partnership agreement is very important. 

A partnership agreement outlines the rules for sharing profits and losses, outlines the percentages of ownership, describes the rights and responsibilities of each partner, and provides terms of dissolution in the event that one partner passes away, retires, or simply wants to leave the business. A Houston business attorney can ensure a partnership agreement is drafted properly and includes all important terms.

Partnerships report taxes, but they do not pay taxes. Profits, as well as losses, are passed through to the owners. The owners then pay their own share of taxes with their personal tax returns. Like in sole proprietorships, all partners have unlimited personal liability with this type of business structure.

Corporations

There are two types of corporations. These are S-corporations and C-corporations. Corporations are separate legal entities from their owners and operators. Corporations can enter into contracts, but they also have very specific responsibilities, such as paying taxes for the corporation. 

Ownership in corporations is established by issuing stock shares. Corporations are established when a certificate of formation is filed. Once the certificate is filed, the corporation can then determine whether it wants to be covered under Subchapter S or Subchapter C.

Due to the fact that both S-corporations and C-corporations are separate entities from its owners and shareholders, the business files its own tax return. After shareholders receive their distribution of profits from the corporation, they must then report them on their taxes and pay any taxes on them. 

For the purpose of federal taxes, corporations pass losses, income, credits, and deductions on to shareholders. This avoids double taxation when the shareholders report the profits they received.

Also due to the fact that corporations are separate legal entities from the shareholders and owners, the business has all liability. Owners and shareholders cannot be sued, nor are their personal assets at risk if the company is facing a lawsuit.

Limited Liability Corporations (LLCs)

Limited liability corporations, commonly referred to as LLCs, are a combination of sole proprietorships or general partnerships and corporations. The owners of LLCs are referred to as ‘members.’ Individuals, foreign entities, corporations, and other LLCs can all act as members of an LLC.

LLCs are considered as pass-through entities for tax purposes. As such, any income obtained by the business passes through to the members of the business. Members are then required to report losses or profits on their own individual tax returns, as in general partnerships.

To establish an LLC, the person incorporating the business must file a certificate of formation, and a filing fee must be paid. It is also recommended that an LLC agreement be drafted. 

Like in general partnerships, the agreement sets forth the distribution of losses and profits, the rights and responsibilities of the members, buy-sell provisions, how management is structured, and the ownership interests and voting power of each member.

One of the biggest drawbacks of LLCs is that members are sometimes subject to additional state taxes. On the other hand, LLCs are also separate entities from the members. This means that if the LLC is sued, only the business assets are at risk. Members do not have to risk their own personal assets in order to have ownership of the business.

Our Business Attorney in Houston Can Help with Your Structure

Choosing the right business structure for your company is one of the most important decisions you will make, but it is not easy. At Integrity Law Group, PLLC, our Houston business attorney knows how to help you choose the structure that is right for you and your company. 

We will also be by your side as your business grows, shielding you from liability and providing the protection you need when facing a legal battle. Call us now at (832) 280-8874 or fill out our online form to schedule a consultation with our experienced attorney and learn more about how we can help.

Spousal Support Laws and Considerations

If you are going through a divorce in Texas, you may think about pursuing spousal support, commonly known as alimony. Or, you may worry that your spouse is going to make an unfair request for it. Alimony is not automatically awarded during the divorce process. In fact, state law specifically outlines when a person may receive alimony or be ordered to pay it. Below, our Houston family law attorney outlines what you need to know if you are concerned about spousal support.

Qualifying for Spousal Support

Either spouse in a divorce case can ask for alimony in Houston. However, Texas law outlines strict qualifications one must meet before receiving support. The first is that any dependent spouse pursuing support must show that they do not have enough property or resources to provide for their reasonable needs after a divorce. If one spouse meets this requirement, they must then also establish that at least one of the following scenarios exists:

  • The spouses have been married for a minimum of ten years, and the dependent spouse does not have the ability to earn an income that will provide for their basic needs.
  • The dependent spouse is unable to earn an income sufficient to support themselves due to a mental or physical disability.
  • The couple has a child together who requires personal supervision or substantial care due to a physical or mental disability. The dependent spouse must have custody of the child and cannot earn a sufficient income to meet their needs and those of their child because they must care for the child.
  • The spouse who will be ordered to pay alimony has a prior condition of family violence against the dependent spouse or their child. The spouse must have been convicted while the divorce was proceeding or within two years before the divorce papers were filed.

When the above scenarios do not exist, and a spouse in a long-term marriage claims that they cannot earn a sufficient income to meet their minimum needs, there is a presumption under the law that alimony is not warranted. The only exception to this is if the spouse can show that they have diligently tried to earn a sufficient income or to develop the skills required to do so, as the divorce was pending and the couple was separated.

In the event that a spouse pursues alimony due to a child’s disability, they are not required to have sole or even primary physical custody. For example, two parents may share custody of a disabled child, alternating weeks that the child spends with them. If one parent cannot find work to provide an income because they cannot find a job that would allow them to work only on alternate weeks, that spouse may have a case for alimony.

Determining whether you or your spouse is eligible for alimony is complex. Our Houston family law attorney can review the facts of your case to determine eligibility.

Factors Considered When Determining Alimony Amounts

After one spouse has proven they are eligible for alimony, the judge will then determine the duration and the amount of payments. When making the decision, the judge will consider many factors, including:

  • The ability of each spouse to provide for their reasonable needs, considering their finances post-divorce and after child support payments, if applicable
  • The duration of the marriage
  • The age, earning ability, employment history, and physical and emotional health of the dependent spouse
  • The education and employment skills of each spouse, as well as any contribution one spouse made to the training, education, or earning power of the other spouse
  • Any contribution one spouse made as a homemaker during the marriage
  • The amount of training available to help the dependent spouse become independent and the amount of time it will take for that spouse to receive the training or education they need
  • Whether either spouse concealed, wasted, destroyed, or otherwise disposed of marital property
  • The property either spouse brought into the marriage
  • Whether either spouse engaged in marital misconduct, including cruelty to the other spouse and adultery
  • Any history of domestic violence, including child sexual abuse and threats or attempts at violence

Limits on Spousal Support in Texas

While most other states in the country do not place a limit on the amount of spousal support one can receive, Texas does. Monthly alimony payments cannot exceed $5,000 or 20% of the paying spouse’s average monthly gross income. All sources of income are considered when determining a fair amount of support, but exceptions are made for the following:

  • Supplemental Security Income (SSI) benefits
  • Social Security retirement benefits
  • Workers’ compensation and disability benefits, including any disability related to military service 
  • Payments for a child’s foster care
  • Benefits obtained from public assistance programs, including Temporary Assistance for Needy Families
  • Return of principal or capital and accounts receivable

How Long Can a Spouse Receive Spousal Support in Texas?

A judge may order temporary support while a divorce case is proceeding. Temporary support is terminated once the divorce is final. After a divorce is finalized, state law limits the duration of alimony payments. The maximum duration for alimony depends on the length of the marriage and is as follows:

  • Five years: Alimony can be paid for no longer than five years if the couple was married for over 10 years but less than 20, or the marriage lasted for fewer than 10 years, and the dependent spouse qualifies based on domestic violence.
  • Seven years: Support payments cannot exceed seven years if the couple was married for 20 to 30 years.
  • Ten years: Support payments cannot exceed ten years if the couple has been married for 30 years or more.

Our Family Law Attorney in Houston Can Help with Alimony Disputes

When trying to obtain alimony or defend against unfair requests, our Houston family law attorney at Integrity Law Group, PLLC, can help. We can also provide the legal advice you need when trying to enforce or modify alimony payments and on all other matters related to your case. Call us today at (832) 521-4201 or fill out our online form to schedule a consultation with our experienced attorney and to learn more about how we can help with your case.

Estate Planning for Blended Families: Ensuring Fair Inheritance for All

In Texas, estate planning is the process of organizing your assets to ensure they are managed and distributed efficiently if you pass away or become incapacitated. You will have many important decisions to make regarding financial assets, property transfers, and who you will designate to make important decisions on your behalf if you are ever unable to do so.

Today, blended families are more common than they ever have been. While these family situations are a blessing, they can also create some complications when creating your estate plan. Below, our Houston estate planning attorney outlines some of the most important factors to consider when creating your plan to protect your family.

Why is Estate Planning So Important for Blended Families?

The term ‘blended family’ refers to a situation in which two people remarry or live together with children they have from a previous relationship. The spouses in these situations become stepparents to the children they live with but are not biologically related to. Siblings then become step-siblings or half-siblings. If two children are in no way biologically related, they are step-siblings. When two children share one parent but not the other, they are half-siblings.

Many parents in blended families wonder if their stepchildren have any legal inheritance rights. In Texas, the answer is no. The intestacy laws in the Lone Star State make no stipulations for stepchildren. For parents in blended families, this makes estate planning critical to ensure that all of their children are cared for and supported in the future and that people do not receive inheritances that were not intended for them. To ensure that all of your loved ones are protected and that your final wishes are respected, there are some important elements to include in your estate plan.

Openly Communicate

Communication is an important part of estate planning for any family. For blended families, it is even more critical. It is important to discuss your wishes with your spouse, children, stepchildren, and anyone else who has an interest in your estate plan. Making sure everyone is involved in the planning process can help manage expectations, address concerns, and reduce the potential for conflicts in the future.

Updating Beneficiary Designations

You may have retirement accounts, life insurance policies, and bank accounts that have a beneficiary designation or a payable-on-death (POD) or transfer-on-death (TOD) designation. During the estate planning process and at regular intervals afterward, it is critical that you review these designations. Overlooking them can result in unintended consequences, such as leaving an inheritance for your former spouse instead of your children, stepchildren, and current spouse.

Draft a Will

Creating a comprehensive will is one of the first things many do when they start estate planning, as these legal documents often lay the foundation for the rest of the plan. Many people understand that a will allows them to outline how they want their assets distributed after they pass away. However, a will can do so much more than just this. 

In your will, you can designate a personal representative, the person who will manage your estate, while also naming a guardian for any minor biological children and stepchildren. Designating a guardian for minor children is also more complicated in blended families. It is important to consider the dynamics between the biological parent, stepparent, stepchildren, and extended family members. Texas places very strict laws on wills, so it is important to work with a Houston estate planning attorney who can ensure your final wishes are fulfilled.

Establish Trusts

Trusts are one of the most important estate planning tools for blended families. A trust can hold and distribute property for specific beneficiaries while allowing you to retain control of distribution methods and timing. For example, after establishing a trust, you can provide for your current spouse throughout their lifetime while protecting property for distribution to your stepchildren and biological children after your spouse passes away. There are many different types of trusts in Texas, including revocable and irrevocable trusts. 

Plan for Long-Term Care

The cost of long-term care, should you or your spouse ever need it, is very expensive. It can cost $100,000 a year or even more. Long-term care insurance and Medicaid planning should always be a part of your estate plan. Long-term care planning is extremely complex, and there are many rules and regulations associated with it. You should always work with an attorney who can ensure you and your family have the protection you need.

Update Advance Directives

Advance directives such as powers of attorney, do-not-resuscitate orders, and directives to physicians, family, or surrogates are all important for blended families. These directives outline your wishes for the certain types of care you do or do not want to receive. They are particularly important if you become incapacitated and cannot express your wishes yourself. Incapacitation can result from a physical or mental disability, but it can also result in something more minor, such as being put under general anesthesia during surgery. With an advance directive, you appoint someone you trust to make decisions on your behalf in these types of situations.

If you do not already have these important legal documents in place, now is the time to create them. If you have already created them, it is just as important that you review them to ensure they still reflect your wishes. For example, if you drafted an advance directive during a previous marriage, you may have designated your then-spouse as your agent and may no longer want them making decisions for you if you cannot make them yourself.

Our Estate Planning Attorney in Houston Can Help

Estate planning always has the potential to become complex. Those in blended families, however, face even more unique challenges. At Integrity Law Group, PLC, our Houston estate planning attorney can help you overcome any difficulties that arise and ensure you have a plan that protects you and your loved ones. Call us today at (832) 280-9576 or fill out our online form to schedule a meeting with our seasoned attorney and get the legal help you need.

Wills vs. Trusts: Choosing the Right Estate Planning Tool for You

Wills and trusts are both important legal tools used to transfer property to your loved ones after you pass away. If you are thinking about drafting your estate plan, you may have wondered whether you need a will, a trust, or both. Both of these legal documents have many benefits, and it is important to understand their purposes so you can determine which one is right for you. Below, our Houston estate planning lawyer explains more about wills and trusts so you can make the decision right for you.

What is a Will?

A will is a legal document that allows you to express your wishes regarding who should inherit your property upon your death. You are not required to draft a will. If you do not, however, your property will be distributed according to the intestate laws in Texas. Primarily, these laws divide your property between your spouse and your children. While these laws may align with your wishes, that is not always the case. By drafting a will, you can specify a different distribution, including giving to charity, leaving property for friends or other family members, or even disinheriting a child.

After you pass away, your executor is required to submit your will with the probate court. This begins the probate process, during which your estate will be managed and distributed according to your wishes. One of the first steps of the probate process is proving the will, which essentially confirms its validity. This may involve a judge interviewing witnesses and obtaining an understanding of your mental state at the time the will was drafted.

Once the will has been proved, the court will authorize the executor to pay your taxes, expenses, and bills with the proceeds in the estate. After these expenses have been paid, the executor will then distribute your property according to the instructions in your will.

Wills have a larger purpose than just ensuring your property is distributed according to your wishes. In your will, you can also name a guardian for your younger children who will raise them and care for them. Without a will, the court will make a decision regarding guardianship for your child, and the person the court chooses may also not align with your wishes.

What is a Trust?

Trusts are another option that allow you to transfer your property after you pass away. You can draft a testamentary trust or a living trust. A testamentary trust transfers your property through a provision within your will. A living trust allows you to fund the trust by transferring property to it. All trusts are managed by a trustee, who is usually the person who created it. You will then name a successor trustee who will distribute the property within the trust according to your wishes upon your death.

To draft a trust, you must execute a document that contains instructions for how the property within the trust should be transferred. You must also transfer property to the trust properly, which generally requires you to retitle the assets. The property then technically belongs to the trust and not you. While you can still manage the property within a trust during your lifetime, it will not be subject to probate because you are not the legal owner.

As the person who creates the trust, you are known as the ‘grantor’ or the ‘settlor.’ The person who manages the trust is known as the ‘trustee.’ Trustees have certain legal obligations, such as following the instructions within the trust and distributing property to the beneficiaries named in the trust.

You can create either an irrevocable or revocable trust. An irrevocable trust cannot be changed once it is executed, while revocable trusts can be modified at any time. Revocable trusts also allow you to designate yourself as the trustee and beneficiary of the trust throughout your lifetime.

Creating a trust is more complex than drafting a will, and there are also more upfront costs. It is always advised that you work with a Houston estate planning lawyer who can ensure no mistakes are made so your wishes are respected.

A Will or Trust: Which is Right for You?

When you draft a will, you can outline how you want your property distributed without the need to transfer ownership to a trustee. A will may make it easier to control your own property during your lifetime. For example, you can leave half of your estate to your spouse and half to your child after you pass away, but you still legally own the property while you are alive.

When executing a trust, you must transfer property into the trust. Issues can arise if you forget to transfer a title or include an asset. With a will, you are not required to change ownership of the property. Wills are also often less expensive to execute because they are simpler to prepare.

On the other hand, any assets you place into a trust are not subject to the probate process. Your successor trustee can distribute the property automatically according to the instructions contained within the trust. This can help your loved ones avoid the contest to your will and receive their inheritance more quickly.

Additionally, a trust allows your loved ones access to your property if you become disabled or incapacitated. You can arrange a trust so your trustee has the authority to manage the assets if you are unable to do so. You can also include a ‘pour-over’ provision in your will that transfers property into the trust upon your death.

Our Estate Planning Lawyer in Houston Provides Sound Legal Advice

While all adults should draft a will, only a Houston estate planning lawyer can determine if a trust is right for you. At Integrity Law Group, PLLC, our experienced attorney can review your situation, determine what documents you need, and ensure they are executed properly so you are fully protected. Call us now at (832) 263-1828 or fill out our online form to schedule a consultation and learn more about how we can help.

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