FAQ

Frequently Asked Questions

Business Transactions FAQ

Q

What is a trademark?

A

A trademark is any word, phrase, symbol, design, sound, smell, color, product configuration, group of letters or numbers, or combination of these, adopted and used by a company to identify its products or services, and distinguish them from products and services made, sold, or provided by others.

Q

Can a design be trademarked?

A

Yes. A design can be trademarked if the design of the good or packaging is a source indicator for the good.

Q

What does “recast” mean when selling a business?

A

The term “recast” simply means modifying your businesses’ financial information to reflect the actual value you receive from your business.

Q

What types of customized contracts for you offer?

A

We offer all types of customized contracts for our clients. Some of the contracts are Last Will and Testament, Power of Attorney, Health Care Directive, Bill of Sale, Commercial and Residential Lease and others. Contact us for more information.

Q

If I acquire a company do I have to take on their debt?

A

No. However, some acquirers view reasonable debt assumption as an opportunity. You may want to assume some of the other party’s debt as a way to structure and finance the transaction.

Estate Planning FAQ

Q

What is Estate Planning?

A

Estate planning is the preservation and the distribution of your assets, both during your life and upon your death. It is accomplishing your personal and family goals and easing the management of your financial and legal affairs, as well as minimizing taxes if your estate is large enough for taxes to be of concern.

Q

What is a Will?

A

Generally speaking, a will is a legal document that coordinates the distribution of your assets after death and can appoint guardians for minor children.

Q

What is a Trust?

A

A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.

Q

What will happen to my property if I die without a will or trust?

A

If you die without a will or trust, the state determines who will be your ultimate heirs. This distribution plan can be found in the intestacy statute of each state. The applicable state can be either the location of your legal residence (for personal property), or the state in which your assets are located (for real estate).

Q

How can I leave my estate to my spouse tax free?

A

An outright gift at death qualifies for the unlimited marital deduction for estate taxes and, therefore, there will be no tax paid on the amount left to the surviving spouse.

Q

Who can create a living will?

A

Generally, anyone who is at least 18 years old and of "sound mind" can create a living will. In this context, sound mind usually means the ability to understand what the living will is, what it contains, and what it does.

Q

Will my living will ever expire?

A

Your living will remains effective for as long as you live, unless you intentionally revoke it or the courts get involved (e.g., someone challenges whether you had capacity to make the document, or a court questions whether your document meets the state's requirements). Generally, court intervention into these matters is rare and limited. If you named your spouse as your healthcare agent and you get divorced, some states will consider the appointment revoked. If you listed an alternate agent, he or she will take over. In any event, it may be a good idea to create a new living will after your divorce, so there will be no confusion.

Q

When does a living will go into effect?

A

A living will becomes effective when your primary physician decides that you can no longer make your own healthcare decisions. If you are ill or injured and cannot express your healthcare wishes, and your doctor certifies this fact in writing, your living will takes effect.

LLCs Incorporations Partnerships FAQ

Q

Are shareholders in a corporation liable for corporate debts?

A

This is the most important attribute of a corporation. In a sole proprietorship or a partnership, the owners are personally responsible for business debts. If the assets of the sole proprietorship or partnership cannot satisfy the debt, creditors can go after each owner’s personal bank account, house, etc. to make up the difference. On the other hand, if a corporation runs out of funds, its owners are usually not liable.

Q

What is a partnership?

A

A partnership arises whenever two or more people co-own a business and share in the profits and losses of the business.

Q

What is an LLC?

A

LLC stands for Limited Liability Company. Forming your business as a limited liability company helps to protect you against lawsuits, significantly cuts down on paperwork compared to corporations and other legal entity types, prevents your company from being taxed twice, and helps to present your business as more credible.

Q

What is an "S" corporation?

A

An “S” corporation is a corporation that has made an election with the IRS to be treated for tax purposes as a “pass-through entity.” This means that corporate profits and losses are passed through to the shareholders (owners) who report them on their own personal tax returns and pay the tax at the individual level. The corporation pays no federal income tax at the corporate level.

Q

What are the different types of partnerships?

A

There are three types of partnerships -- general partnerships, joint ventures, and limited partnerships. In a general partnership, the partners equally divide management responsibilities, as well as profits. Joint ventures are the same as general partnerships except that the partnership only exists for a specified period of time or for a specific project. Limited partnerships consist of partners who maintain an active role in the management of the business, and those who just invest money and have a very limited role in management. These limited partners are essentially passive investors whose liability is limited to their initial investment. Limited partnerships have more formal requirements than the other two types of partnerships.

Real Estate FAQ

Q

What is a beneficiary deed?

A

A beneficiary deed is commonly associated with real estate and property because it is a document used to determine who will receive real estate property when the original owner dies. Those who receive the property as the result of the beneficiary deed are referred to as beneficiaries.

Q

What is an easement?

A

An easement is an interest in land which is owned by a person who is not the owner of the whole parcel, such as the right to use or control a portion of the parcel, or an area above or below it, for a specific limited purpose (such as to cross it for access to a public road, to share a common drive with a neighboring property, or to install and maintain utility wires or lines).

Q

What is a warranty deed?

A

A Warranty Deed is a real estate document used when a property owner (grantor) transfers land to a buyer (grantee), and wishes to make a guarantee that the property is free and clear of any encumbrances, like a lien or mortgage. Warranty Deeds are used in most real estate deed transfers as they offer more protection than a Quitclaim Deed.

Q

What is an Underwater Mortgage?

A

An underwater mortgage is when a homeowner owes more on a mortgage than your house is worth. For example, your home is worth $250,000, but you owe $300,000 on the mortgage; that means you are underwater, or upside-down on your mortgage. This is also referred to as negative equity.

Q

What are CC&Rs?

A

Covenants, conditions, and restrictions (CC&Rs) consist of the rules and minimum standards required for maintenance of all units in the Association. Created by the developer, CC&Rs are regulations designed to sustain a pleasant aesthetic environment and help to maintain property values.

Probate/Trust Administration FAQ

Q

When is Probate Required in Arizona?

A

Probate is not always required in Arizona, and when it is required is determined by the amount of property being passed. Probate is not required for assets like retirement accounts and life insurance policies that have designated beneficiaries. Beyond that, other items that might otherwise be subject to probate are allowed to pass without probate if they are small enough.

Q

What if there is no Last Will & Testament?

A

If there is no Last Will & Testament (Will), then the assets may pass by what’s called “intestate succession”. Intestate means that there is no Will.

Q

What does an executor do?

A

An executor takes responsibility for dealing with a deceased person’s estate – which can include obtaining Probate, settling unpaid debts or bills, paying inheritance tax and distributing money or assets to beneficiaries.

Q

What’s the best way to reduce inheritance tax?

A

There are many ways to reduce inheritance tax, including making gifts to friends, family or charities and using trusts. It is worth consulting a specialist to ensure that you understand the pros and cons of each option. Knight Law can provide comprehensive advice about reducing your inheritance bill.

Q

How do I contest a Will?

A

If you have grounds to challenge a Will (eg the Will was not valid or you were left out of a Will) there are several options available to you. A caveat can be issued to prevent the Grant of Probate being issued until the Will dispute has been resolved. If the Grant of Probate has already been issued, Inheritance Act claims can be brought against the estate within 6 months.

Small Estate Affidavit

Q

What is a decedent?

A

A decedent is a person who has died. Courts and court papers regularly use this word in place of the name of the person who has died.

Q

What does intestate mean?

A

"Intestate" means that a person has died without a valid will. When someone dies intestate, the law sets out who is entitled to the property in the estate, and in what percentage.

Q

How Do You Transfer Real Estate Using a Small Estate Affidavit?

A

Filing the small estate affidavit involves a two-step process. The first step is to file the affidavit with the county probate court. For purposes of the affidavit, the county of filing is the county where the property is physically located. When the affidavit is filed, it must be accompanied by a certified copy of the death certificate, along with the original will (if there is one). The second step of the small estate affidavit filing process is to record the affidavit in the same county.

Q

What Happens if the Property Has an Outstanding Mortgage?

A

In many cases, the property in question will have an outstanding mortgage. In those cases, the mortgage will probably include a due-on-sale clause. That due-on-sale clause means that the mortgage in question will automatically become due and payable when the property is transferred. This clause may not apply if the surviving relative continues to live in the home. In that case, the surviving relative who assumes the home will be required to continue paying the mortgage. If the designated heir does not plan to live in the home, they will need to contact the lender before making any transfer of property. In cases like this, probate may be better than the small estate affidavit process, since it can make refinancing the mortgage easier.

Q

How Much Does the Typical Small Estate Affidavit Cost?

A

While the price of handling an estate will vary, you can expect to spend anywhere from around a $1000 on an a small estate affidavit, plus any additional expenses. Understanding the asset transfer process is important for Arizona residents and their loved ones. The more you know about the process, the easier it will be transfer assets and avoid unnecessary expenses.

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