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Pennsylvania Law Blog

What to know about the LLC structure

Most Pennsylvania-based businesses can be organized as limited liability companies. Such a company could have as little as one member. In this scenario, the company would automatically be taxed as a disregarded entity. This would mean that the profits and losses that the business incurs would go directly to the owner's personal tax return. If the LLC has two members, it will be taxed as a partnership by default.

However, LLCs can decide to be taxed as a corporation by filing Form 8832. Such a designation cannot take effect more than 75 days before it is made or more than 12 months after it has been made. Companies that do not make an election to change their tax status in a timely manner might be entitled to relief from the IRS.

Taking advantage of the favorable estate tax climate

For people in Philadelphia with significant wealth, the rising estate tax exemption that entered into law with the 2017 tax reform may come as a welcome relief. Many people want to plan their estate to pass as much of their property as possible to their beneficiaries and future generations without losing significant amounts to estate taxation. As of 2020, the individual exemption from estate taxes has reached $11.58 million with increases indexed to inflation, and married couples have double that amount. The exemption was more than doubled from approximately $5 million per person with the implementation of the Tax Cuts and Jobs Act in 2018.

However, the increased estate tax exemption is not necessarily permanent. The increased exemption is slated to sunset in 2025, unless it is explicitly renewed by Congress. If it is not renewed, the exemption would return to its previous $5 million level, with increases indexed to inflation. However, there are ways that people can begin to take advantage of the increased exemption that can provide continued asset protection even in the case the sunset provision goes into effect. Lifetime gifts and irrevocable trusts are one way to do so; gifts made during a person's lifetime count against the exemption at the current amount, while irrevocable trusts permanently remove property from an estate.

The potential pitfalls of buying a short sale

A short sale occurs when a bank agrees to allow a home's current owner to sell the home for its current market value. In some cases, the home will be sold for less than what it is worth. Buyers may believe that purchasing a short sale property may allow them to acquire an asset for less than it is worth. However, there are some pitfalls that Pennsylvania residents and others should know about before inquiring about such a home.

There is a chance that a seller hasn't been approved for a short sale despite the fact that his or her home is listed as one. There is also a chance that the home won't be sold for less than it is worth. Generally speaking, lenders know how much a home is supposed to sell for. They are loathe to take less than a home is worth as doing so could result in larger losses.

Estate planning for different stages of life

Some Pennsylvania residents may be unaware of the different types of issues that estate planning may address. When people think about making an estate plan, they may think only of a simple will, or they may think that it is a matter that they should put off until retirement age. However, there are many options that can benefit people of any age and for different reasons. Any adult can benefit, for example, from creating durable powers of attorney for health care and finances. Few people anticipate an incapacitating accident or injury, but these documents can be of major assistance in case of just such an emergency.

People can create a power of attorney naming a loved one to make medical and financial decisions on their behalf if they are incapable of doing so. Not only can people protect their medical decisions, they can also rest assured that their bills and other financial matters will be handled when they cannot do so. These are documents that people may want to change throughout their lives; while people may designate a parent as their representative as a young adult, they may later wish to designate their spouse.

Responsibilities of being a trustee in Pennsylvania

Philadelphia residents who have been named as trustee in a parent's will may wonder what their responsibilities entail. The successor trustee's powers and authority vary slightly from state to state. Though most trustees don't assume their authority until the settlor has passed away, severe disability may necessitate a trustee taking their position while the settlor is still alive.

In Pennsylvania, a successor trustee must show evidence of authority to act as a trustee with a death certificate of the settlor or a notarized letter from a doctor that says the settlor is incapacitated and unable to handle affairs on their own. These documents must be filed promptly. When it comes to obtaining assets, the trustee must also show estate planning documents, such as the certificate of trust, a living will or power of attorney.

How a driver using a hands-free phone may still be distracted

Drivers in Wilkes-Barre and Philadelphia who are using hands-free cellphones should not assume that this automatically makes them safer drivers. Any kind of multitasking while driving means that a person's attention is diverted from the task and increases the risk of an accident. Furthermore, according to a study conducted by the company Lytx, people often use their free hands for smoking, eating, using another device or engaging in other distracting activities.

Around nine people die on a daily basis in the United States because of distracted driving, and although the incidence of using hands-free phones is up, engaging in other activities continues to be a problem. Lytx also identified certain dangerous behaviors that were correlated with distracted driving: Drivers who ate behind the wheel were also less likely to buckle their seat belts.

How should you divide a business in divorce?

When it comes to dividing marital assets in divorce, most spouses think about assets like the family home, retirement benefits and the money in savings accounts. What spouses may not consider right away is what to do with the family business.

If both spouses have a stake in the business, it will most likely be considered marital property and will need to be divided in divorce. However, it may still be marital property if only one spouse operated the business. This may depend on the source of startup funds, the business’s change in value during the marriage and other details.

Safety systems increase risk of car accidents, AAA reports

Freedom from human error is one driving ambition behind the increasing automation of cars. Paradoxically, the path to this freedom may actually increase the risk of human error for Philadelphia drivers. Safety systems relying on sensors are among the latest widespread uses of automation technology. A study by AAA Foundation for Traffic Safety found that drivers using two of these sensor-reliant systems showed a greater risk of negligence behind the wheel.

Researchers previously found that some touchscreen devices are more distracting to drivers than others, but all contributed to an increased risk of car accidents. Lane assist and adaptive cruise control technologies had the opposite effect on driver safety of that intended. Researchers insisted that the human error, not the safety devices designed to reduce human error, was to blame for the increased risk of crashes.

Making a plan to deal with probate

When people in Pennsylvania pass away, they often leave a will behind to determine how their assets will be disbursed. In some cases, people may die without a will. In many instances, the probate court system is essential to the distribution of that person's property to heirs. In addition, there are some situations in which people can avoid probate and transfer their property directly. While many aim to avoid probate as much as possible, it can be important to make a plan to make this a reality.

In Pennsylvania, small estates below $50,000 in value, excluding real estate, can use a summary procedure to handle probate. This limit only includes those assets that transfer through the probate process. If a person has a bank account with a joint owner or a life insurance plan that has a named beneficiary, those assets are not considered part of the estate for this purpose. They pass directly to the recipient and there is no need to go through probate. There are other types of assets that can pass directly to a named beneficiary, such as retirement accounts and investment funds. Spouses often hold assets as joint property with survivorship rights, and a surviving spouse becomes the sole owner after the other's death.

Five most frequent causes of truck accidents

Drivers in Wilkes-Barre and Philadelphia have good reason to be uneasy around large trucks. While the average passenger vehicle weighs 4,000 pounds, an 18-wheeler may weigh some 80,000 pounds. Most collisions with big rigs end badly for those in the passenger vehicles. Below are just five of the most common reasons why trucks might collide with passenger cars.

The first and most frequent reason is driver error. Studies show that 81% of the time, it's error on the part of passenger vehicle operators. Still, it's not uncommon for truckers to drive drowsy, drunk or distracted. A second cause is bad weather; rain, snow and ice present a challenge for truckers because of the heavy weight and longer braking distance of their truck. In such weather, untrained truckers may wind up hydroplaning or jackknifing.

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