Robert Kapusta, Author at Battaglia, Ross, Dicus & McQuaid, P.A.

What Should You Do if Your Business Is Served with a Lawsuit?

Robert Kapusta — Tue, 25 Mar 2025 20:50:58 +0000

Unexpected legal challenges can disrupt your business operations. Receiving a lawsuit can be stressful for any business owner. Whether it’s from a customer, employee, or another company, legal action can threaten your company’s finances and reputation. As a result, knowing the right steps to take can help protect your business and increase your chances of a favorable outcome.

At Battaglia, Ross, Dicus & McQuaid, P.A., our Florida business attorneys have guided countless businesses through legal disputes. This guide outlines the critical steps to take if your company is served with a lawsuit.

Stay Calm and Review the Lawsuit Carefully

First and foremost, remain calm. Panicking or acting impulsively can lead to mistakes that could hurt your case.

What to Do Immediately:

Read the Complaint Carefully – Understand the claims made against your company.
Check Deadlines – Lawsuits come with strict response deadlines, often within 20 days.
Identify Who Filed the Lawsuit – Determine if it’s from a customer, vendor, employee, or another party.
Do Not Contact the Plaintiff – Avoid discussing the case directly, as anything you say could be used against you.

Understanding the Different Types of Business Lawsuits

Businesses can face various types of lawsuits, each requiring a different legal approach. Therefore, understanding the nature of the claim can help you and your attorney determine the best response strategy.

Common Business Lawsuits:

Breach of Contract – When one party fails to fulfill its contractual obligations.
Employment Disputes – Claims involving wrongful termination, discrimination, or wage disputes.
Intellectual Property Claims – Allegations of copyright or trademark infringement.
Personal Injury Claims – Customers or employees suing due to accidents on business property.
Fraud or Misrepresentation – Accusations of deceptive business practices.

Knowing what type of lawsuit your business is facing will help you work with your attorney to build a strong defense.

Notify Your Attorney Right Away

Contacting a Florida business attorney immediately is one of the most important steps you can take.

Why Legal Help Is Crucial:

Attorneys Understand the Legal Process – They will explain your rights and responsibilities.
They Help Build a Strong Defense – Your lawyer will review the claims and gather evidence to support your case.
They Handle Court Filings and Deadlines – Missing a deadline can result in a default judgment against your company.

Ultimately, having legal representation early on can prevent costly mistakes and improve your chances of a positive outcome.

Preserve All Relevant Documents and Evidence

Evidence is key in any lawsuit. In addition, keeping thorough records can help strengthen your defense.

Important Documents to Gather:

Contracts and Agreements – Any signed documents related to the dispute.
Emails and Correspondence – Communications between your company and the plaintiff.
Employee Records – If the lawsuit is employment-related.
Financial Records – Proof of payments, invoices, or business transactions.

Make copies of all relevant documents and store them in a secure place.

The Role of Insurance in Business Lawsuits

Business insurance can provide financial protection when your company is sued. Having the right coverage in place can significantly reduce legal risks. For more information on business insurance requirements and how they apply to lawsuits, visit the Small Business Administration (SBA) website.

Business insurance can provide financial protection when your company is sued. Having the right coverage in place can significantly reduce legal risks.

Types of Business Insurance That May Help:

General Liability Insurance – Covers injury-related claims and property damage.
Errors and Omissions Insurance – Protects against claims of professional negligence.
Cyber Liability Insurance – Covers legal issues resulting from data breaches and cyberattacks.
Employment Practices Liability Insurance (EPLI) – Helps in cases of wrongful termination or discrimination claims.

Because of potential coverage benefits, if your business has insurance, notify your provider immediately. They may cover legal fees or provide an attorney to assist with your case.

Notify Your Insurance Provider

Many businesses have insurance policies that cover legal claims. Contacting your insurance provider as soon as possible is essential.

Types of Coverage That May Apply:

General Liability Insurance – Covers claims related to injuries, property damage, and advertising issues.
Employment Practices Liability Insurance (EPLI) – Protects against employment-related lawsuits.
Professional Liability Insurance – Covers claims related to professional services or advice.

Your insurer may provide legal assistance or cover some of the costs associated with the lawsuit.

The Lawsuit Timeline: What to Expect

Understanding the legal process can help business owners know what to expect and how to prepare.

Typical Stages of a Business Lawsuit:

Complaint Filing – The plaintiff files the lawsuit, outlining their claims against your company.
Summons Served – Your business is formally notified and given a deadline to respond.
Response Deadline – You must file an answer or a motion to dismiss.
Discovery Process – Both sides exchange evidence, documents, and witness statements.
Mediation or Settlement Talks – Efforts to resolve the case before trial.
Trial and Judgment – If no agreement is reached, the case proceeds to court.

Consequently, working with a Florida business attorney ensures that each step is handled properly to protect your interests.

Determine Your Legal Response Strategy

After reviewing the lawsuit, your attorney will help you decide how to respond.

Possible Responses:

File an Answer – A formal response admitting or denying the allegations.
Motion to Dismiss – If the lawsuit lacks legal grounds, your attorney may seek to have it dismissed.
Negotiate a Settlement – In some cases, settling outside of court can be more cost-effective.
Prepare for Litigation – If the case goes to court, your lawyer will build a strong defense.

Each case is different, so discussing your options with an attorney is critical.

How to Handle Employee Reactions to a Lawsuit

When a business is sued, employees may feel uncertain about the future. Addressing their concerns can help maintain a productive work environment.

Best Practices for Managing Employee Concerns:

Communicate Carefully – Provide only necessary information to avoid rumors and panic.
Reassure Stability – Emphasize that the company is taking the right legal steps.
Avoid Legal Discussions at Work – Employees should not speculate about the case publicly.
Train Staff on Legal Risk Prevention – Educating employees on compliance can help prevent future lawsuits.

Managing the workplace response properly ensures the business remains operational and professional during legal proceedings.

Do Not Ignore the Lawsuit

On the contrary, ignoring a lawsuit will not make it go away. If you fail to respond, the court may rule in favor of the plaintiff by default.

Consequences of Ignoring a Lawsuit:

Default Judgment – The court may award damages to the plaintiff without hearing your side.
Frozen Business Accounts – The plaintiff could seek to collect money directly from your accounts.
Property Seizure – In some cases, business assets may be taken to satisfy a judgment.

Even if you believe the claims are false, responding properly is essential to protect your business.

Avoid Discussing the Case Publicly

More importantly, discussing the lawsuit with employees, customers, or on social media can backfire. Anything you say could be used against you in court. To better understand defamation risks and public statements in business litigation, check out this Federal Trade Commission (FTC) guide.

Discussing the lawsuit with employees, customers, or on social media can backfire. Anything you say could be used against you in court.

Best Practices for Communications:

Limit Discussions to Your Attorney – Keep all case-related conversations confidential.
Train Employees on How to Respond – Ensure staff knows not to discuss the case with outsiders.
Avoid Posting on Social Media – Public comments can be misinterpreted and harm your case.

Maintaining professionalism and discretion is key to protecting your business’s reputation.

Consider Alternative Dispute Resolution (ADR)

Not all lawsuits need to go to trial. Alternative dispute resolution methods, like mediation and arbitration, can save time and money.

Benefits of ADR:

Faster Resolution – Cases can be resolved more quickly than traditional litigation.
Lower Costs – Avoiding court can reduce legal expenses.
More Control Over the Outcome – Negotiated settlements allow both parties to agree on a solution.

A Florida business attorney can help determine if ADR is a viable option for your case.

How to Minimize Business Liability in the Future

Preventing future lawsuits starts with proactive legal strategies. Implementing sound business practices can reduce legal risks.

Steps to Reduce Legal Risks:

Review Contracts Regularly – Ensure all agreements are clear and legally sound.
Conduct HR Compliance Audits – Prevent employment-related disputes by maintaining fair policies.
Improve Documentation Practices – Keep thorough records of all business transactions and communications.
Strengthen Cybersecurity Measures – Protect customer and employee data to avoid legal issues from data breaches.
Consult a Florida Business Attorney for Ongoing Support – Regular legal checkups help identify potential risks before they escalate.

Taking these steps can help your company avoid costly litigation in the future.

Learn from the Experience to Prevent Future Lawsuits

Once the lawsuit is resolved, take steps to protect your company from future legal action.

Proactive Measures to Reduce Legal Risks:

Review Contracts Regularly – Ensure all agreements are clear and legally sound.
Train Employees on Compliance – Prevent workplace disputes with proper training.
Improve Documentation Practices – Keep detailed records of transactions and communications.
Consult an Attorney for Legal Audits – Regular legal checkups can help identify potential risks.

Being proactive can help safeguard your business from costly legal disputes in the future.

Why Expert Guidance from a Florida Business Attorney Matters

Lawsuits can be complex, time-consuming, and costly. Having a skilled attorney on your side ensures you’re taking the right steps from the start.

How an Attorney Can Help:

Assess the Strength of the Case – Your lawyer will evaluate the claims and legal risks.
Handle Legal Filings and Deadlines – Ensuring all responses and motions are submitted correctly.
Negotiate Settlements – If a settlement is in your best interest, a Florida business attorney will advocate for favorable terms.
Represent You in Court – If litigation is necessary, your attorney will fight for your business.

The right legal strategy can make a significant difference in the outcome of your case.

Contact Battaglia, Ross, Dicus & McQuaid, P.A. for a Free Consultation

If your business has been served with a lawsuit, don’t navigate the legal process alone. The experienced Florida business attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. can help protect your company and guide you through every step.

Our firm has a strong track record of successfully defending businesses against legal claims. We understand the complexities of Florida business law and are committed to achieving the best possible outcome for our clients.

Contact us today for a free consultation. Let us provide the legal support you need to safeguard your business and future.

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Florida Real Estate: What Is an “As Is” Residential Contract?

Robert Kapusta — Thu, 27 Feb 2025 21:01:11 +0000

Updated February 27, 2025 by Robert Kapusta

Anyone looking to buy or sell ‘as is’ Florida real estate must use a specific ‘as is’ residential contract. If that’s you, you must be aware of some important information and duties. It’s also advised that you work with an experienced Florida real estate attorney to help you fill out all paperwork correctly and to protect your sale or purchase. So, let’s get to it – what is an ‘as is’ residential contract?

What Is ‘As Is’ in Real Estate?

https://www.youtube.com/shorts/oEMrDJpWJT4 In Florida, real estate sold ‘as is’ means it’s sold in the current condition. If the buyer inspects the property and notices a huge problem or the seller informs them of a potential problem, then the seller need not worry. The seller will not need to make repairs, regardless of their severity. This makes ‘as is’ purchases and sales significantly different from conventional sales, where there are usually negotiations for repairs. An ‘as is’ residential contract is signed by both the buyer and seller.

A Seller’s Duty

In an ‘as is’ residential contract, the seller must make mandated disclosures about the property to the potential buyer if applicable. Put simply, a seller cannot hide problems that may require repair work. This includes:

Any potential or actual claims, complaints or legal proceedings
Any boundary disputes
Any environmental hazards
Any termites or pest damage or infestations
Any damage or potential damage from sinkholes
Any known problems with important components including HVAC, plumbing, electrics, roofing, structural integrity etc.
Any condominium or homeowner association rules

The last thing you want is to be in hot water for missing a necessary disclosure. By working with a Florida real estate attorney, you can ensure you check every box.

How Do Florida ‘As Is’ Residential Contracts Work?

Usually, in Florida real estate contracts, the buyers and sellers can fill out a section that details repair payment agreements. But with an ‘as is’ contract, this section becomes irrelevant because repair payments are irrelevant. That’s why there is a specific ‘as is’ form. This form removes the repair payment section and instead states that the agreement:

Is subject to a satisfactory inspection
Then the buyer is on their own, and the seller has no involvement with any repairs.
If the buyer’s lender requires repairs, the buyer must pay it themselves.

Read ‘How to Fill Out the Far-Bar “AS IS” Residential Contract For Sale And Purchase’

When to Use an ‘As Is’ Residential Contract?

Deciding whether you should use an ‘as is’ residential contract is a big decision. You should always speak to a Florida real estate attorney before making or signing any purchase or sale agreement.

As a Seller

If you’re a seller and don’t want to pay for any repairs, you should use an ‘as is’ contract. This will protect you from having to pay for costly repairs but may lower the interest and value of your property.

As a Buyer

If you’re buying a home, the preferred option would be a conventional real estate contract due to the additional protections over repairs. ‘As Is’ residential contracts give the buyer 15 days to complete an inspection of the property. If the inspection reveals that repairs are necessary, they can usually ask the seller to lower the sale price or give a credit at closing to cover the cost. The seller has the right to refuse the requests. The buyer then has the option to withdraw from the deal within the 15 days period, without losing their deposit.

Quick Sales

‘As Is’ residential contracts can allow sellers to get the property off their hands fast. In most cases, a seller will be desperate for money or need a quick move due to a major life event. It also speeds up the process by bypassing the usual work involved in a home sale, such as repairs and renovations.

How to Get Out of a Florida Real Estate Contract?

There is no easy route to getting out of a Florida residential real estate contract, which may feel necessary if you realize the repair work is too much to handle. As a buyer, you may lose your deposit if you back out of a real estate contract. However, a Florida real estate attorney can put in place contingencies that may protect you. As a buyer, you have very strong rights to back out during the inspection period. As a seller, the best bet is usually to refund the buyer’s expense and try to communicate with them personally. Hopefully, they can empathize with your situation and come to a fair agreement. Regardless of your situation, you should speak with a Florida real estate attorney who will provide expert advice to help you get out of the contract with minimal pain.

What Is a FAR/BAR ‘As Is’ Contract?

A FAR/BAR ‘As Is’ residential contract is used for ‘as is’ sales approved by the Florida Association of Realtors (FAR) and the Florida Bar Association (BAR).

Why Use an Attorney To Help With Florida ‘As Is’ Residential Contracts?

If you are considering using an ‘as is’ residential real estate contract in Florida, the best thing to do is to contract a Florida real estate attorney. With firsthand experience, they’ll ensure you’re protected from breaking rules, missing important repair information or essential paperwork. They’ll also help you answer any important questions and ensure your sale or purchase goes smoothly. Although you can legally write your own real estate contract, it’s not wise. People without legal expertise are prone to making small but costly errors when interpreting the law.

Hire a Residential Real Estate Contract Attorney in Florida

If you’re making a sale or purchase of an ‘as is’ property in Florida then contact us today. Our attorneys, Ross and Kapusta at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience that can help you draft and review your contract and advise you on the next steps to secure your transaction. Contact us today to schedule a free consultation.

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Your Guide to Prorated Taxes in a Real Estate Transaction

Robert Kapusta — Thu, 27 Feb 2025 14:49:00 +0000

Updated February 27, 2025 by Robert Kapusta

In both commercial and residential real estate transactions in Florida, the real estate taxes are prorated as of the date of the closing. This is generally a matter covered in the purchase and sale agreement and sometimes is memorialized in a separate agreement referred to as a tax proration agreement.

What Does Prorated Taxes Mean and Why Is It Necessary?

https://www.youtube.com/shorts/P9SakdtP_vU In Florida, real estate taxes are paid in arrears. That means that you pay your real estate taxes at the end of the year for the prior year. In a real estate transaction that closes prior to the time when real estate taxes are paid for the year, the Seller gives the Buyer a credit for taxes for the period of time when Seller owned the property. The tax proration is generally an estimate based upon the prior year’s taxes for that particular property. For example, assume real estate taxes for Property A were $1,000 in 2019. Buyer and Seller are closing on the sale and purchase of Property A on May 1, 2020. At the closing, Seller will give a credit to Buyer for the period of time that Seller owned Property A (4 months). Therefore, the credit due from Seller to Buyer at the closing of Property A will equal ($1,000/12) * 4 = $333.33. Buyer will then be responsible for paying the entire real estate tax bill when it comes due at the end of 2020, in this example this amount would be $1,000. In Florida, it is important to note that tax amounts are released in November of the year prior to the time that they are officially due. If you pay your taxes by November 30 of each year you will receive a discount on your taxes for the year (there is also a lesser discount if you pay your taxes in December).

Do Real Estate Taxes Change After a Sale?

The answer to this question is what has caused a lot of confusion and problems that arise after a real estate transaction has closed. The short answer to this question is: probably yes. After a sale, the property appraiser has the ability to re-assess the property at its current market value. Typically the Pinellas County Property Appraiser will assess the property at approximately 80% to 90% of the sale price but they are not bound to that range. The property appraiser has the ability to assess the property at market value and apply the millage rate to calculate the taxes due.

Homestead/Save Our Homes (SOH)

In the State of Florida, homestead rights and the save our homes cap accompany a person’s homestead property. The property appraiser is only permitted to raise the assessed value of your homestead property by a maximum of three percent (3%) per year of the change in Consumer Price Index, whichever is lower. The cap and exemption are removed at the end of the year if the property has been sold. The result of this is that parties who have owned their homes for long periods of time have very low taxes because of the save our homes cap. When they sell their homes, the cap is removed and the property is reassessed; this results in the property being assessed at the much higher value which, in turn, equates to much higher taxes.

How Are Taxes Calculated in Florida?

Property taxes in the State of Florida are calculated by applying the “Millage Rate” to the assessed value of the property. A millage rate is the tax rate used to calculate taxes on real property. The millage rate represents the amount of tax per every $1,000 of a property’s assessed value. Assigned millage rates are multiplied by the total taxable value of the property in order to arrive at the property taxes. For example, in St. Petersburg, Florida the millage rate for 2019 is: 21.5570. Assume Property B has an assessed value of $200,000. The real estate taxes for Property B are equal to ($200,000/1000) x 21.5570 = $4,311.40.

The Reassessment Dilemma

The issue that is caused by the Save Our Homes Cap and the maximum annual increase is that Sellers of real estate who have owned their property for a long period of time have a taxable assessed value that is drastically below the market value of the property. Upon the sale, which is presumably at or around market value, the property appraiser re-assesses the property at 80% – 90% of the sales price. This results in the prorated tax credit given at closing that is drastically lower than the entire tax bill that the Buyer is required to pay at the end of the year. The joint committee of the Florida Bar and the Florida Association of Realtors (“FAR-BAR”) has devised the concept of “tax reproration” as a solution to this dilemma. The “tax re-proration” clause is memorialized in FAR-BAR’s AS IS Residential Contract for Sale and Purchase in Paragraph 18 (K) and states: “A tax proration based upon an estimate shall, at either party’s request, be readjusted upon receipt of the current year’s tax bill. This STANDARD K shall survive Closing.” This provision allows either party to a real estate transaction to request a re-proration of the year’s taxes.

Re-Proration Example

Seller has owned a property located in the Old Northeast neighborhood of St. Petersburg, Florida for 50 years. Property C. Seller paid $50,000 for Property C at the time Seller acquired the property. Property C has been Seller’s homestead for the entire time that Seller owned Property C. In 2020, Seller sold Property C to Buyer for $800,000.00, the closing occurred on May 1, 2020.

At closing, Seller provided Buyer with a credit based upon taxes from the prior year (2019). The taxes for 2019 are equal to: Property C’s assessed value (with SOH cap): ($65,000.00/1000) * 21.5570 (2019 millage rate) = $1,401.21. Therefore, Seller provided Buyer with a credit to compensate Buyer for Seller’s period of ownership (4 months). The credit Buyer received at closing was equal to: ($1,401.21/12) * 4 = $467.07.

Following the sale, Property C was re-assessed at 90% of its Market Value, which is the sales price of Property C. The assessed value is equal to $800,000 x .9 = $720,000. Therefore, when the tax bill comes due in November it will be equal to: ($720,000/1000) x 21.5570 = $15,521.04. Buyer will be expected to pay this entire tax bill.

Under the contract Buyer requests a re-proration. The difference between what the credit at closing actually was at closing and what it would have been given the actual taxes will be due to the buyer. The credit at closing “should have been” equal to ($15,521.04/12) * 4 = $5,173.68. The amount that is due to buyer due to the re-proration is equal to: $5,173.68 – $467.07 = $4,706.61.

Hire a Real Estate Contract Attorney in Florida

If you’re making a sale or purchase of a residential or commercial property in Florida then contact us today. Our attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. have extensive experience that can help you draft and review your contract and advise you on the next steps to secure your transaction. Contact us today to schedule a free consultation.

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Corporate Transparency Act: End-of-Year Refresher for Beneficial Ownership Reports

Robert Kapusta — Wed, 19 Feb 2025 17:54:10 +0000

On February 18, 2025, the U.S. District Court for the Eastern District of Texas granted FinCEN a stay order on its previously issued preliminary nationwide injunction on the enforcement of the Corporate Transparency Act (CTA).

As a result, BOI reporting requirements are now mandatory.

FinCEN has just issued guidance that clarified the new filing deadlines:

For most reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025.
Reporting companies previously provided with extended deadlines due to disaster relief should follow the later deadlines.
As Beneficial Ownership filings are now back to mandatory, the potential penalties for non-compliance could be harsh.

As the year draws to a close, businesses across Florida must review their compliance obligations under the Corporate Transparency Act (CTA). If you’re a business owner, understanding the CTA’s requirements is essential to avoid penalties and ensure full compliance with beneficial ownership reporting. This end-of-year refresher will revisit the key aspects of the CTA, remind you of upcoming deadlines, and clarify the steps you need to take to meet all filing requirements.

Whether you’re a small business owner or an experienced corporate officer, understanding the CTA’s requirements can be challenging. As Florida business and corporate attorneys, we aim to simplify this process and help you keep your business on the right track.

What Is the Corporate Transparency Act?

The Corporate Transparency Act (CTA), enacted in 2021, aims to combat illegal activities like money laundering and terrorism financing by increasing transparency around the individuals who own or control certain business entities. The CTA requires companies to report key information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). This data will then be stored in a secure database, accessible only to certain government authorities and financial institutions conducting customer due diligence.

The CTA’s requirements are straightforward for most businesses, but failing to meet them can result in severe penalties. Ensuring your company is fully compliant can protect you from unnecessary fines and legal issues. If you’re unsure whether the CTA applies to your business, a Florida business and corporate attorney can provide the clarity and guidance you need.

Who Needs to Report Under the Corporate Transparency Act?

The CTA applies to a wide range of entities, but not every business must report. Here’s a breakdown of who must comply and who is exempt:

Reporting Entities

The CTA primarily targets small and medium-sized businesses, especially those that may not already be subject to extensive regulatory oversight. If your company is a corporation, limited liability company (LLC), or any similar entity formed under state law, you’ll likely need to comply with the CTA’s reporting requirements.

Exempt Entities

Some entities are exempt from the CTA’s requirements, primarily because they are already subject to substantial regulatory oversight. These include:

Publicly traded companies
Banks and credit unions
Investment companies and advisers
Insurance companies
Certain tax-exempt entities, like charities
Large operating companies (with 20 or more employees, a physical presence in the U.S., and over $5 million in annual revenue)

If your business falls into any of these categories, you may be exempt from the reporting requirements. However, determining whether your company qualifies for an exemption can be tricky. A Florida business and corporate attorney can review your unique situation and help determine if you must report under the CTA.

What Information Must Be Reported?

If your business falls under the CTA’s purview, you will need to report specific information about the company’s “beneficial owners” and “company applicants.”

Beneficial Owners

A beneficial owner is any individual who directly or indirectly owns or controls at least 25% of the company or has substantial control over the company’s operations. This includes those who:

Hold voting power or ownership interests
Exercise significant influence over key management decisions
Own large portions of the company, whether directly or indirectly

For each beneficial owner, you must provide FinCEN with the following information:

Full legal name
Date of birth
Residential or business address
Unique identification number (such as a driver’s license or passport number)

Company Applicants

The CTA also requires information about the company applicant, defined as the individual who filed the paperwork to form the company. While existing businesses will not need to report company applicants, any newly started businesses after January 1, 2024, must provide this information.

Each piece of information provided must be accurate and current, and it’s essential to double-check the details before submission. Reporting incorrect or incomplete information can lead to compliance issues and potential penalties.

Key Deadlines to Remember

The CTA sets clear deadlines for compliance, which vary based on when your business was formed.

Existing Entities: If your company was formed before January 1, 2024, you must file your beneficial ownership report with FinCEN by January 1, 2025.
New Entities: Businesses formed after January 1, 2024, must file their initial report within 90 days of formation if filed in 2024, and 30 days of formation if filed after 2024..
Changes to Ownership or Information: If there are changes in beneficial ownership or other reported information, you have 30 days from the date of the change to update your report with FinCEN.

Meeting these deadlines is essential. Late or missed filings can lead to substantial fines or, in extreme cases, criminal charges. If you’re unsure whether your business is on track to meet these deadlines, a Florida business and corporate attorney can help you create a timeline for compliance.

How to File a Beneficial Ownership Report

The process of filing a beneficial ownership report with FinCEN is straightforward, but it requires accuracy and attention to detail. Here’s a step-by-step guide to help you get it right:

Determine Reporting Obligation: First, confirm whether your business is required to report. A Florida business and corporate attorney can help you determine your specific obligations.
Gather Information: Collect the necessary information about each beneficial owner and, if applicable, the company applicant. Ensure all details are accurate, as errors can lead to fines and rejections.
File with FinCEN: Once all information is compiled, file your report through FinCEN’s secure online portal. You will need to create an account and follow the prompts to submit your information.
Monitor for Changes: After filing, monitor any changes in ownership or control, as these must be reported within 30 days. Keeping an updated record can streamline any future filings.
Seek Guidance as Needed: If you encounter any issues or have questions during the filing process, consider consulting a Florida business and corporate attorney. Legal guidance can make a significant difference in preventing common reporting errors and ensuring compliance.

Avoiding Penalties for Non-Compliance

The penalties for non-compliance with the CTA are strict and can be costly. Businesses that fail to report, submit inaccurate information, or miss the reporting deadlines can face fines of up to $500 per day, with a maximum penalty of $10,000. In severe cases, individuals responsible for filing could face criminal charges, including imprisonment.

To avoid penalties:

Double-Check Your Report: Verify all details for accuracy before submitting your beneficial ownership report to FinCEN.
Meet Deadlines: Be proactive in meeting all CTA deadlines. Mark them on your calendar and set reminders.
Update as Needed: Any changes in ownership or control must be reported within 30 days. Failing to update information can result in penalties, even if you initially complied.

By taking these steps and staying informed, you can keep your business fully compliant and avoid the costly consequences of non-compliance.

Why Expert Guidance from a Florida Business and Corporate Attorney Matters

Navigating the complexities of the Corporate Transparency Act can be challenging, especially if you’re managing a small or mid-sized business. Reporting obligations, exemptions, deadlines, and penalties add layers of legal complexity that are often difficult to interpret without professional guidance. Working with a skilled Florida business and corporate attorney can provide peace of mind and ensure you’re meeting every CTA requirement.

Experienced attorneys can help you verify whether the CTA applies to your business, determine who qualifies as a beneficial owner, gather and review the necessary information for accuracy, and ensure timely filings. They’ll also be there to answer questions, offer ongoing compliance support, and update reports as necessary.

Engaging legal counsel not only helps your business remain compliant but also prevents costly mistakes that could have long-term financial and legal consequences. A knowledgeable attorney can simplify the process and give you the tools you need to handle beneficial ownership reporting with confidence.

Contact Battaglia, Ross, Dicus & McQuaid, P.A. for a Free Consultation

If you’re unsure about your company’s compliance with the Corporate Transparency Act, don’t wait until the last minute. Contact Battaglia, Ross, Dicus & McQuaid, P.A. for a free consultation. Our team of dedicated Florida business and corporate attorneys has decades of experience guiding businesses through complex regulatory landscapes, including CTA compliance.

Founded with a commitment to excellence and backed by a proven track record, our firm has been a trusted legal partner to businesses across Florida for years. Our attorneys combine deep knowledge of corporate law with a practical approach to deliver solutions tailored to your unique needs. We understand the importance of timely compliance and can assist you in meeting all CTA requirements efficiently and effectively.

Reach out today to learn more about how we can help protect your business. Let us handle the complexities of beneficial ownership reporting, so you can focus on what you do best—running your business.

Award-Winning Attorneys at Battaglia, Ross, Dicus & McQuaid, P.A.

We are the law firm that you call when you want the best attorneys at a fair and reasonable price. When you walk into court with one of our attorneys by your side, you will be treated differently. Our lawyers have spent their careers developing connections and insights that will help your case.

For more information please contact us at Battaglia, Ross, Dicus & McQuaid, P.A. to schedule a free consultation with an attorney today. We have three convenient locations in Pinellas County and Hillsborough County to better serve you.

Battaglia, Ross, Dicus & McQuaid, P.A 5858 Central Ave suite St. Petersburg, FL 33707 +(197) 0232-0268

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Guide to Getting Your Business Ready for the 2024 Corporate Transparency Act

Robert Kapusta — Wed, 19 Feb 2025 14:20:30 +0000

On February 18, 2025, the U.S. District Court for the Eastern District of Texas granted FinCEN a stay order on its previously issued preliminary nationwide injunction on the enforcement of the Corporate Transparency Act (CTA).

As a result, BOI reporting requirements are now mandatory.

FinCEN has just issued guidance that clarified the new filing deadlines:

For most reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025.
Reporting companies previously provided with extended deadlines due to disaster relief should follow the later deadlines.
As Beneficial Ownership filings are now back to mandatory, the potential penalties for non-compliance could be harsh.

From January 1, 2024, the Corporate Transparency Act will come into effect, meaning millions of business owners across the country will need to submit additional reporting. Failure to submit these reports may result in penalties and potentially jail time.

We urge you to read this blog carefully, as the steps you take over the next year will be critical in your reporting process.

Disclaimer: This blog should be used for introductory purposes and not as a replacement for professional assistance with compliance and legal advice. Please feel free to contact our Florida business lawyers today to guide you through the process.

What Is the Corporate Transparency Act?

The Corporate Transparency Act (CTA) establishes the reporting requirements for Beneficial Ownership Information (BOI) for qualifying companies (Reporting Companies) in the U.S. It was passed in 2021, requiring companies to file the information with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

It was passed as part of the National Defense Authorization Act, to combat corruption and financial crime. The primary purpose is to reveal any attempts at using shell companies that cover up or fund illicit activities.

Its reporting rule goes into effect as of January 1, 2024. All business owners should take care to ensure they follow all regulatory requirements. It is advised to speak to your Florida business attorney should you have any questions.

When Do I Need to File The Initial Report By?

The due date of your company’s Beneficial Ownership Information report is determined by when your business was formed.

For Reporting companies registered before January 1, 2024:

No later than January 1, 2025. You can begin as early as January 1, 2024.

Formed On or After January 1, 2024:

Within 30 days after receiving notice of an effective formation or registration.

What Are The Penalties for Non-Compliance with the Corporate Transparency Act?

Filing a false BOI and not filing at all result in:

Civil penalties of $500 per day, and/or;
Up to 2 years in prison and $250,000 of criminal penalties.

Who Is Required to Report Under the Corporate Transparency Act?

If you are a small business owner, you can assume your business is a Reporting Company. The following entities must comply with the Corporate Transparency Act:

Any incorporated entity
A limited liability company ‘LLC’
Any entity created via the Secretary of State, or any similar office under the law of a State or Indian tribe.
Any corporation, LLC, or other entity that is formed under the laws of a foreign country and is registered to do business in any State or tribal jurisdiction.
This includes:
- Limited Partnerships
- Business Trusts
- Statutory Trusts

Who Is Exempt from Corporate Transparency Act Reporting?

23 categories of entities are exempt from being classified as reporting companies. These include:

Large operating companies: Companies with 20+ full-time U.S. employees, more than $5 million in U.S.-sourced revenue and a physical operating presence in the U.S.
Issuers registered with the Securities and Exchange Commission;
Banks, bank holding companies, savings and loan holding companies, credit unions, financial market utility entities, and money services businesses registered with FinCEN.
Registered Commodity Exchange Act entities, registered investment companies or investment advisers, broker-dealers and registered venture capital fund advisers.
Insurance companies or state-licensed insurance producers
Accounting firms
Public utilities
Certain pooled investment vehicles
Tax-exempt entities or certain entities that assist tax-exempt entities
Inactive companies.

If you believe your business may be exempt from Corporate Transparency Act Reporting, we urge you to first check with a Florida business lawyer to confirm to avoid the risk of a highly costly mistake. Read Related: Why Should I Get a Corporate Lawyer For My Business in Florida?

How Do I File My Corporate Transparency Act Reports?

Reporting companies can file online using a system accessible here. Your Florida business attorney may be able to provide you with a mock-up based on preliminary information so you can get yourself organized.

What Must I Report Under the Corporate Transparency Act?

Companies created before January 1, 2024, must submit information about their beneficial owners but are not required to report information on their Company Applicants.
Companies created on or after January 1, 2024, must file both the Company Applicants and Beneficial Owners.

Reporting companies must report the following:

Entity Name
Any alternative names, such as trade names.
Business street address
Jurisdiction of Formation
The State or Tribal jurisdiction of registration, for foreign companies.
A unique identification number (such as TIN, EIN, LEI, etc.).
Its beneficial owners

Company Applicants

Some entities will also need to report the ‘Company Applicants’. These are:

The name of who is responsible for filing, directions or controlling the filing of formation documents.
- Full legal name
- Date of birth Current residential or business street address
- A unique identifying number from an acceptable identification document
- An image of the document.

Changes to Previously Reported Information

Any changes to information previously reported concerning a Reporting Company or beneficial owner, must be reported to FinCEN within thirty (30) days.
No updates are required to Company Applicant information.
Any errors must be reported within thirty (30) days of when you became aware.
Any time there is a change in an entity’s ownership, the entity may be required to file beneficial owner information or update an existing report. Please contact your Florida business lawyer to determine what your entity must file.

Beneficial Owners

The Corporate Transparency Act defines a beneficial owners as someone who:

Exercises substantial control over a Reporting Company or;
Owns or controls at least 25% of the ownership interests of a Reporting Company.

The items above apply both directly and/or indirectly.

What Information Must a Beneficial Owner Report?

Beneficial owners must submit personally identifying information to FinCEN. It will be used to confirm their business is legitimate.

Name
Date of birth
Residential street address
A unique identifying number from an ID document
The state or jurisdiction that document was issued by.

Read Related: FinCen’s Beneficial Ownership Information Reporting Final Rule: What You Need To Know

What Is ‘Substantial Control’?

The Corporate Transparency Act defines that anyone has substantial control over a Reporting Company if they:

Serves as a senior officer of the Reporting Company (holding a position or exercising the authority of the president, CEO, CFO, COO, general counsel or any other similar officer)
Has authority to appoint or remove any senior officer or board directors (or similar).
Has substantial influence over important matters of the entity.

How Does the Corporate Transparency Act Affect My Business?

This act’s requirements are new, so the full impact cannot be conveyed just yet. However, you can expect:

Reporting Obligations: Additional compliance tasks, to collect, maintain and report information. You may need to update how you operate, your systems, responsibilities and policies.
Financial Costs: FinCEN estimates that businesses will need to spend from between $85.14 to $2,614.87 to stay compliant. The more simple your entity is, the lower the cost will likely be.
Time Costs: Additional work will be required to remain compliant and file the reports. So ensure that you have scheduled time to complete these obligations. It is wise to hire a Florida business attorney to remove the time cost and ensure compliance.
Enhanced Transparency: The CTA will remove a level of privacy for many entities.
Improved Business Relationships: In theory, the CTA should improve business security in the US and remove illegitimate business entities, making life better for all honest businesses.
Reputational Increase: Compliant companies can inspect an improved standing with customers, partners and investors as compliance shows a commitment to transparency.

Hire a Business Lawyer in Riverview and St. Petersburg, FL

If you need any guidance in any areas of business compliance, our experienced Florida business and corporation lawyers can assist you. We regularly help businesses of all sizes to navigate the stresses of paperwork and help them remain compliant.

Free Assessment

Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate and Business Planning & Probate since 1958. With award-winning experienced business attorneys, they can help you keep the business turning smoothly. Schedule a free assessment today to get started.

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Why Selling a Mobile Home Park or RV Park Can Be Complicated

Robert Kapusta — Sat, 27 Nov 2021 17:16:14 +0000

Selling a mobile home park or RV park has become an increasingly popular trend over the past year, with shifting markets and growing buyer demand. With a U.S. market size valuation of $8.3 billion in 2020, the numbers speak for themselves. But selling a mobile home park is far from easy. There are countless factors to think of, with no two campgrounds offering the same facilities, acreage and valuations. Every sale must be made with a clear head and expert legal advice. Our business and corporate transaction lawyers can provide exactly that while guiding you through the sale process. Here are the key areas you should be aware of:

How to Sell an RV Park or Mobile Home?

Uncovering The True Value of Your Campground

As with all sales, one of the major risks of selling a mobile home park is undervalue or overvaluation. It’s wise to use a professional appraisal service, but this will come at an additional cost. However, that might not factor in the demand for RV parks in the future. A major wave of retiring baby boomers is on the way, which could mean the true value of your campground is more than first expected. It is also easy to forget that you’re selling far more than just land when selling an RV park. Included in the sale will be all the equipment, amenities, branding, advertising, utilities and much more. If you are planning on selling an RV park, then make sure you have the following information available to determine the actual value:

Age of equipment and records of last repairs
Vendor contracts
Advertising partnerships
Amenity types and amounts

Timing is Everything

Timing is crucial when selling a mobile home park. Most campgrounds have busy seasons and off-seasons and starting the process at the wrong time can leave you disappointed. While a potential buyer could make their purchase at any time in the year, sellers should start preparing their business at least a year before the desired sale date. Having everything ready to go can help you cash in on great offers and opportunities without the need to panic into a low-ball offer. Or business transaction lawyers can help analyze your situation, providing expert advice on ownership decisions when selling an RV park.

Making Succession Plans

When selling a mobile home park, one of the most important steps to take is an exit strategy. An exit plan in place will reassure a potential buyer and allow for a smooth transition between you and the new owner. This is easier said than done when it comes to campgrounds. The volatility of RV park markets increases the pressure, so knowing how and what you need to do when the time comes can be extremely helpful. Any succession plan should be over the management of financial, tax or legal issues, human resources and logistics. Our business transactions lawyers can help you make these hard decisions, ensuring you don’t overlook any essential legal issues.

Post-Sale Involvement

Many campground owners prefer to cut their ties to the business entirely. But others may choose to stay involved and help the new owner ease into the role. These plans must be determined ahead of time. Prospective buyers will need to know your vision and the arrangement before closing a sale. These decisions can greatly impact the type of buyer you’re looking for and are one of the main differences between selling a mobile home park and other businesses.

Will you be willing to show the new owner the ropes?
Do you want the new owner to gain control from day one?
What kind of new buyer are you looking for?

Tidying Up Your Finances

Anyone selling a mobile home park must organize and complete their financial records. Potential buyers will need to see yearly tax returns for at least the past three years, alongside profit and loss statements and balance sheets. Marketing data and sale information might also be required, as well as asset valuations, future sales and outstanding liabilities. This may require thorough accounting reviews, appraisals and considerable time to get things sorted.

Choosing the Right Professional Advice

Regardless of your confidence in handling the sale alone, having a professional on your side can make a huge difference. Our business transaction lawyers can help. With a strong knowledge and experience, we can help with selling your mobile home park, business contracts, litigation, closures and much more.

Outshining the Competition

Selling an RV park tends to take far longer than owners think. It’s not as simple as putting up a for-sale sign and waiting for the offer. Aside from all the prior mentioned factors, you’ll also need to take care of on-site enhancements that will attract potential buyers. This may include tidying up your office, shop, dated signage, broken equipment, plants, hedges, flowerbeds, pathways and anything that helps attract, rather than scare off, potential buyers. By doing this, you can also outshine the competition. Florida and the U.S. is riddled with run-down, dead campgrounds. By avoiding this stereotype, you can attract owners looking for a business with potential.

The Importance of Location

Location has a significant impact on selling mobile homes. While your campground may have initially been set up in a tourist hot spot in the 90s, it may now be unfavorable compared to competitors near highways or attractions. By learning about the surrounding area and uncovering what makes it valuable, you may be able to shine unique lights on your business. But location is a stumbling block for many people that can make selling a mobile home park complicated.

Contact a Business and Corporate Transaction Lawyer in Florida

Free Consultations

Contact our Florida business transaction lawyers today if you’re considering selling a mobile home park or RV park or are in the process but have hit a stumbling block. Battaglia, Ross, Dicus & McQuaid, P.A. is a U.S. News and World Reports Tier 1 law firm in Florida and has been helping Florida businesses since 1958. With award-winning experienced attorneys, we provide support in a wide variety of services from business litigation to transactional and ownership decisions. Schedule a free consultation today to get started or to get any questions answered.

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Do I Need a Probate Lawyer in Florida?

Robert Kapusta — Mon, 28 Jun 2021 11:58:53 +0000

Probate lawyers in Florida can resolve various problems that are near impossible to overcome without professional support. From family conflicts to the validity of wills, here’s a guide on why you need a probate lawyer in Florida:

What Is Probate?

Probate is a legal term given to the process of proving a will. Probate ensures that the deceased’s estate is distributed fairly among the heirs by following the wishes planned in their Will. If there was no Will left behind, the process goes through probate court to determine how the estate will be distributed among the deceased’s heirs. While probate can often take a few weeks for smaller estates, it can last years for bigger estates with individuals making claims and petitions in court.

What Is a Probate Lawyer?

A probate lawyer is a Florida state licensed attorney who guides the executors and beneficiaries of a will or estate through the probate process. From identifying estate assets and beneficiaries, to distribution of the inheritances, they ensure everything is done correctly and as planned by the deceased when they were alive. Probate lawyers help avoid conflicts, misunderstandings and ensure a smooth transition of assets outside of court.

Do I Need a Probate Lawyer in Florida?

In almost all circumstances, you are required to hire a Probate lawyer in Florida. There are only rare instances where it is not necessary. These include ‘disposition without administration’, ‘summary administration’ (for very small estates) and any estate where the executor is the sole beneficiary. However, even then it is advised given the technical complexities.

To Overcome The Technical Hurdles

Under Florida probate law, after someone passes away, their assets must be transferred out of their name. Doing so requires complicated technical rules and hurdles that can be highly frustrating for a non-lawyer. In particular, the system in Florida is often too complex to follow without guidance and there is a lack of set-up to provide legal assistance. Judges in Florida require probate documents to meet various specifications and wordings through forms that are mostly unavailable online or even in libraries.

To Avoid Family Conflict

The last thing you want after a family member passes away is a conflict in the family over money or assets. Sadly, it’s a story that repeats itself time and time again. One famous example came following the death of Jimi Hendrix in 1970. With no will to his name, he left behind a $160 million estate. Fifty years later and that battle is still raging on. These battles are not limited to the rich and famous. Thankfully, a probate lawyer can step in and detangle the complexities of managing any estate so family rifts are stopped. They ensure everyone gets the slice of pie that was planned for them.

If a Family Member is Making Threats

If you hear rumors of family members suing over disagreements or you’re beginning to see conflicts arising, then contact a probate lawyer in Florida as soon as possible. Probate lawsuits can tear families apart and cost a lot of money. Acting fast will minimize losses and get everyone a fair resolution faster than without the help of a professional.

Determining Beneficiaries

If there is no will, or if it’s unclear, you may struggle to determine who is getting what and who is involved in the Will. A probate attorney in Florida will take action by petitioning the probate court to determine the identity of the true beneficiaries.

Challenging the Validity of a Will

Our probate lawyers in Florida regularly handle disputes over the validity of wills. These lawsuits can be filed before and after the Will is admitted to probate. Most commonly, a probate lawyer in Florida can help to contest wills for:

A lack of signing formalities.
If the person who made the Will lacked proper mental capacity when it was signed.
Undue influence
Fraud

Creating Estate Plans

Probate lawyers in Florida can also help be proactive. If your loved one has dementia or Alzheimer’s, for example, then a probate attorney can help put in place an estate plan while your loved one is still able to. This ensures their vision and wishes are documented before it’s too late. Perhaps most importantly, a probate attorney in Florida will protect your loved one from outside influences that wish to take advantage of them.

Surviving Spouses

If you’re a surviving spouse, Florida law entitles you to certain benefits. A probate attorney in Florida will assist you in maximizing your entitlements.

Creditor Claims

Often a creditor is owed money by a deceased person through unpaid medical bills or credit card bills. Family members should never voluntarily pay these bills, as there are certain criteria that the creditors must first meet. A probate lawyer in Florida can help provide guidance through creditor claims to ensure you and your loved one’s rights are protected.

Probate Attorney When There Is a Will

If someone in your family has died with a will to their name, then your family is advised to use a probate lawyer to guide all parties through the probate process – from the estate executor to the beneficiaries. This covers all manner of guidance from paperwork and distribution of assets to conflict and ensuring the Will was created in a fair environment – for example, if the decedent suffered from dementia.

Probate Attorney When There Is No Will

If the deceased did not create a will before their passing, then the estate is distributed among the rightful beneficiaries according to Florida law. In these circumstances, a probate attorney in Florida can help the estate administrator with the distribution of the assets in line with Florida state laws. In these situations, conflicts are often frequent and tensions can become high. Without a probate attorney in Florida, you may find yourself caught in disputes that last years.

Should We Use Summary Administration If Available?

Although summary administration may be an option to you if your family is entitled to a small estate, it may not always be the best option. For example, it may be unsuitable if:

The Will leaves property to many beneficiaries, who would each have to sign a contract to sell the property and other related papers.
The beneficiaries include minors, so guardianships may need to be set up until they’re adults. However, with a probate attorney, you may be able to avoid that through the Florida Uniform Transfers to Minors Act.
If a beneficiary is uncontactable, then summary administration cannot work without their presence. Probate, however, can.
If a beneficiary refuses to cooperate, formal administration will likely be required, improperly filing summary administration may actually lengthen the probate process.

Is It Too Late to Start Probate?

No. In Florida, there is no deadline to open a probate. Probate lawyers in Florida often handle estates years and sometimes even decades after a person’s death. However, issues may arise if heirs have also died since their loved one’s passing. Family members also sometimes lose track of each other, so the following generations aren’t aware of estates or know who is entitled. Thankfully, probate can start with minimal information and allow your family to receive the inheritance and assets they’re entitled to. If you have any concerns or fears over complications, it’s advised to speak with a probate lawyer in Florida to see which route is best for your family.

Do I Need to Appear in Florida To Probate an Estate?

These days everything is done by email, mail and phone. So unless a dispute hearing arises, there’s no need to go to a court in Florida.

Hire a Probate Attorney in Florida

If you and your family face difficulties with an estate, will, or trust, contact us today for a free consultation. Battaglia, Ross, Dicus & McQuaid, P.A. attorneys specialize in Estate Planning, Probate and Elder Law. With vast experience in helping families overcome complicated financial circumstances, he can help you today, whether that’s with estate planning, probate or more.

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Trust Formation & Funding

Robert Kapusta — Fri, 05 Jun 2020 14:42:25 +0000

When clients are deciding whether a Will or Trust best suits their estate planning needs, I always explain that Trust Planning involves two key steps: Step 1: Forming the Trust, meaning deciding on its key terms and signing it into existence; and Step 2: Funding the Trust.

What Does It Mean to “Fund” the Trust, and Why Is It So Important?

The main purpose of having any type of trust is to govern the administration of the property that is in the trust (or property that will be in it eventually). Because the trust only governs the assets that are in it, it is only as good as what it owns. An empty trust? Well, it may not do you much good. The most common type of trust in estate planning is called a Revocable Trust (also known as a Living Trust). The main purpose of a Revocable Trust is to avoid probate court proceedings when you die. Most of my clients want to avoid probate court administration because it is time-consuming and expensive. For many families, avoiding probate translates to tens of thousands, if not hundreds of thousands, of dollars saved for your beneficiaries. The truth is that if there is nothing in your Revocable Trust, then it is probably not doing you much good. Your estate planning attorney should ensure that an integral part of her representation is to guide you through the important, although sometimes tedious, process called “trust funding.” Essentially, trust funding means coordinating the majority of your assets with your Revocable Trust. Different categories of assets require different types of action. Here are some “rules of thumb” for funding your trust with some common asset categories:

Real Property – In Florida, attorneys refer to real estate as “real property.” This is probably the easiest type of asset to coordinate with your Revocable Trust, because generally all it takes is a quitclaim deed. However, the deed needs to be prepared correctly and recorded in the official records in the county where the property is located. If you are transferring your Florida homestead (i.e., your primary residence) to your Revocable Trust, then it is recommended that both the quitclaim deed and the trust document contain special verbiage reserving your homestead rights under the Florida Constitution; this ensures that the property appraiser does not disturb your existing homestead exemption and save-our-homes cap benefits when the deed to trust is recorded.

Tangible Personal Property – Your estate planning attorney should prepare an assignment transferring your tangible personal property to your Revocable Trust. Examples of tangible personal property (“TPP”) include motor vehicles, boats and personal watercraft, household goods, appliances, furniture and furnishings, pictures, silverware, china, glass, books, clothing, and jewelry. Following your demise, your Successor Trustee can utilize the assignment of TPP, along with a copy of the trust document and your death certificate, to transfer your motor vehicles and marine vessels at the DMV without the need for probate court or other court order.
Business Interests – Transferring business interests to your Revocable Trust can be accomplished with a relatively simple assignment prepared by your estate planning attorney. However, if your stock or membership units have transfer restrictions, then your attorney should assist you by obtaining permission from the company’s leadership to allow the assignment to the Revocable Trust. This is easy to do and seems to work with every company upon request.

Regular Bank Accounts – When it comes to regular bank accounts, such as checking, savings and money market accounts, you have two options: make your Revocable Trust the owner of the account or the pay-on-death (“POD”) beneficiary of the account. Depending on the internal rules of your financial institution, making the Trust the owner (‘Plan A”) may be simple or complicated. If your bank fits the latter description, then “Plan B” is to make the Trust the POD beneficiary, which is typically just a matter of updating your beneficiary paperwork at the bank.

Taxable Brokerage Accounts – Non-retirement investment accounts containing stocks, bonds, mutual funds and ETFs are also relatively easy to coordinate with your Revocable Trust. Once you execute your Revocable Trust, your estate planning attorney should send instructions that all taxable brokerage accounts should be re-titled into the name of the Trust. After this happens, the Trust is considered the owner of the account and thus avoids probate when you die (which is the whole point of your Revocable Trust in the first place). Additionally, if you become incapacitated, your “Successor Trustee” named in the trust document will have quick and relatively seamless access to the account assets and can communicate with your financial advisor freely on your behalf. All of the income tax attributes of the investment account will continue to flow through to you on your personal income tax return (IRS Form 1040).

Tax-Deferred Accounts – Accounts that are “qualified” (by the IRS) or otherwise tax-deferred are treated differently by the IRS. You cannot make your Revocable Trust the owner of these accounts (by law), because they must be owned by an individual. Common examples of tax-deferred accounts include retirement accounts such as IRAs, 401(k) accounts, and 403(b) accounts. There are special steps that must be followed to properly coordinate these types of accounts with a Revocable Trust. If your beneficiaries are minors (under age 18 in Florida), inexperienced or bad with money, or suffer from an addiction issue, then it may be worth the extra effort to coordinate your tax-deferred accounts with your Revocable Trust. However, after the passage of the SECURE Act, for most clients it now makes more sense to name individual beneficiaries on their IRAs and 401(k)s. This is because most non-spouse beneficiaries are now required to withdraw the account assets over a mandatory 10-year period. If your beneficiaries are well-adjusted adults, this is a simpler option versus making the account payable to the Trust as an intermediary.

Roth IRAs – Similar to Traditional IRAs, Roth IRAs can be made payable to a Revocable Trust provided certain tax requirements are met by including specific verbiage in the trust document. As with IRAs, the pros and cons of naming the Revocable Trust vs. naming individual beneficiaries should be discussed with your estate planning attorney.

Life Insurance – It is simple to make your Revocable Trust the beneficiary of your life insurance policy. When you die, the insurance company will pay the death proceeds to your Successor Trustee, which can provide your Trustee with great flexibility and liquidity to pay any income or estate taxes that are due, property taxes and insurance, and generally to have cash available to meet the needs of your beneficiaries.

What Happens If an Asset Is Inadvertently Left out of Your Revocable Trust?

Clients who use Revocable Trusts as the main vehicle of their estate plans should always have a “Pour-over Will” to supplement the Trust. A Pourover Will supplements the Revocable Trust by instructing the probate court that any assets not transferred to trust or otherwise designated to a beneficiary should be transferred to the Revocable Trust at the conclusion of the probate proceeding. For this reason, it is imperative that every client who has a Revocable Trust also have a Pourover Will to accompany it. For more on Revocable Trusts, please read my blog: Revocable Trusts or contact us for a free consultation.

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Myth #4: Trusts Avoid Taxes

Robert Kapusta — Fri, 01 May 2020 14:10:50 +0000

Part IV “The 4 Most Common Estate Planning Myths”

You probably have heard the adage: “Nothing is certain in life except for death and taxes.” It may be trite, but it’s also true (as so many platitudes are). Before I go any further, I’ll begin in true attorney fashion: I am not a CPA and this article should not be substituted for tax advice. Rather, consider this article a warning – the type of warning the people who trusted Bernie Madoff wish they would have received sooner: “If it sounds too good to be true, it probably is” (my apologies for yet another platitude.) “Trusts avoid taxes” – this statement may be true or false depending on what type of trust and what type of tax you mean. What many people do not realize is that in addition to the federal income tax, there are many other types of tax imposed by the IRS, including, for example:

Business Tax:	Wealth Transfer Tax:
Estimated Tax Employment Tax Self-Employment Tax Excise Tax	Estate Tax Gift Tax Generation Skipping Transfer Tax

This list is not exhaustive by any means. Thus, when someone says, “Trusts avoid taxes,” it is important to realize that both “trusts” and “taxes” are loaded terms that can have different meanings, depending on the context. In estate planning, mainly we are concerned about two categories of federal tax: wealth transfer tax and income tax. The “wealth transfer tax” category includes the estate tax, gift tax, and generation skipping transfer tax. Many Florida residents are surprised to learn that, as a result of the 2017 Tax Cuts & Jobs Act, they may no longer need to worry about the imposition of estate tax. This is because: (1) Florida does not impose a state-level estate, death, or inheritance tax, and (2) the federal estate tax laws provide an exemption of approximately $11.6 million per person in 2020. The “per person” part is important, because under current law, married couples basically can double the federal estate tax exemption, meaning unless the couple’s assets are worth more than $23 million combined, the federal estate tax likely will not apply to them. This is a simplified explanation of how the federal estate tax works, and the amount of exemption you personally have may need to be reduced by any taxable gifts you have made during your lifetime. The interplay of the federal estate and gift tax is beyond the scope of this article and will be addressed in future articles, but a good overview is available here: Federal Gift Tax Overview.

What If the Federal Estate Tax Laws Change?

The tax laws inevitably will change; this is certain. This is why it is so important to meet with your estate planning attorney on at least an annual basis. First, it gives you the opportunity to alert your attorney to changes in your family dynamic, asset holdings, and overall net worth. For example, did you buy a second home in the mountains of North Carolina last year? You need to make sure your estate planning attorney knows about the purchase so she can incorporate the same into your existing estate plan (actually, you should have told her about it before you bought it). Second, meeting with your attorney on a periodic basis gives her the opportunity to alert you to changes in not only federal tax laws, but also applicable state law updates relevant to probate, wills, powers of attorney, advance health care directives, and, yes, local tax laws. For this very reason, about seven years ago, I started offering “Complimentary Annual Reviews” to my estate planning clients to meet and review their estate plans on an annual basis. This keeps the lines of communication open, and my clients don’t have to worry about any “surprise” bills or charges for simply staying in touch with me.

Can Trusts Avoid or at Least Minimize Taxes?

With the assistance of an estate planning attorney, your trust can take advantage of existing “safe harbors” within the Internal Revenue Code to reduce or even eliminate certain types of taxes, including wealth transfer tax.

For example, the IRS allows you to leave unlimited assets at death to your spouse, who will not have to pay any estate tax otherwise due until she dies. In other words, her estate will be responsible for the estate tax due, but only to the extent the remaining assets exceed her available estate tax exemption when she dies. This concept is known as the unlimited marital deduction, and estate planners frequently take advantage of it, especially for larger estates. Essentially, the unlimited marital deduction allows you to delay the imposition of the estate tax until your surviving spouse dies; the estate tax may even be avoided entirely if your surviving spouse spends down the assets below her exemption amount.

For example, did you know that the IRS wants to tax your grandchildren’s inheritance in addition to the federal estate tax? A seasoned estate planning attorney can advise you on how the generation skipping transfer tax (also known as “GST” or “GSTT” tax) may apply to your estate plan, and, better yet, include the necessary provisions in your trust to minimize or even avoid the GSTT tax altogether.

Do Trusts Pay Income Tax?

The answer to this question generally is yes: income generated within a trust is taxable. If the answer were no, everyone in the United States would transfer their assets to trust immediately and avoid income tax for eternity – you didn’t think the IRS would allow that, right? In fact, trusts have their own type of tax return known as an IRS Form 1041. It is important to distinguish the taxation of revocable trusts vs. irrevocable trusts.

The most common type of trust in estate planning is a revocable trust. Revocable trusts generally are pass-through entities for federal income tax purposes. This means that the trust will not interfere with how you currently report your federal income tax to the IRS: all items of income, deduction, depreciation, and credit will continue to flow through to you on your personal Form 1040, and the trust will not be required to file its own income tax return during your lifetime. Many clients simply assign their social security number to their revocable trust during their lifetime. The general rule is that when you die, your revocable trust becomes irrevocable (because you are no longer alive to modify or revoke it), at which time the taxation of the trust will change.

The income taxation of irrevocable trusts is more nuanced (as compared to revocable trusts). Essentially, an irrevocable trust can be designed to be taxed as its own entity (like a corporation), but there are also ways to have an irrevocable trust taxed to a particular person, such as the person who created it (the “settlor” or “grantor”). Your estate planning attorney should discuss these options with you before the irrevocable trust is established.

If income is accumulated within an irrevocable trust that is taxed as its own entity, the trust may be taxed on ordinary income at the highest marginal rate. For this reason, many irrevocable trusts allow, or even mandate, that the Trustee distribute net income to the trust beneficiaries on at least an annual basis. In most cases, this has the effect of reducing overall income tax since many trust beneficiaries are taxed in a lower tax bracket than the highest marginal rate applicable to trusts. It is important that your estate planning attorney discuss with you the income tax effect of any trusts the attorney is recommending.

Can Trusts Avoid Tax Altogether?

Only if the Internal Revenue Code permits. The Code contains specific safe harbors that allow tax to be delayed or even avoided entirely if precise rules are followed. I recommend taking the conservative approach and following established rules sanctioned by the IRS. For example, payment of federal estate tax can be delayed or even eliminated by taking advantage of the unlimited marital deduction, discussed above. Another example is that a properly structured dynasty trust can eliminate wealth transfer tax for future generations. With respect to income tax, a common technique to defer payment of taxable gain on the sale of real estate is a so-called 1031 Exchange, and the use of Opportunity Zones to defer taxable gain is becoming more prevalent. All of these techniques have already been “blessed” by the IRS. However, if you are looking for a tax “loophole” or heard about a technique that sounds “too good be true,” my advice is: either be prepared to pay a pretty penny for a Private Letter Ruling, or stick with tried-and-true techniques that are respected by the IRS. I hope you gathered from this article that trusts serve many important purposes and, perhaps more importantly, the IRS will tax anything it can get its hands on (yet another platitude). A seasoned estate planning attorney not only will be well-versed in wealth transfer tax, but she also will examine the income tax ramifications of any proposed transaction involving revocable or irrevocable trusts.

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Myth #3: Assets in Trust are Protected from Creditors

Robert Kapusta — Fri, 01 May 2020 02:14:31 +0000

PART III “The 4 Most Common Estate Planning Myths”

There are many different types of trusts. There are trusts designed to minimize taxes. There are trusts designed for beneficiaries with special needs. There are even trusts specifically designed to own vacation residences and second homes. In estate planning, the most common type of trust is called a revocable trust, and its primary purpose is to avoid probate court proceedings when the person who created it dies. Because there are so many different types of trusts, and because trust law varies from state to state, it is no wonder so many people misunderstand the extent to which trusts protect their assets from creditors.

What is a Revocable Trust?

A revocable trust is a trust you establish during your lifetime to hold the bulk of your assets. It is “revocable” because you reserve the right to modify it or even revoke it entirely, as long as you are alive and have the mental capacity to do so. There is no limitation on how many times you can modify your revocable trust: the terms can be changed as your family dynamics, asset holdings, and overall net worth change, as well as in response to changes in the law. When you die, because the revocable trust (and not you individually) owns your assets, your assets bypass probate and pass to your intended beneficiaries free of court interference. For a $1 million estate, avoiding probate translates to a savings of more than $60,000.00 in attorneys’ fees, executor fees, and court costs. For larger estates, the savings can be in the hundreds of thousands. It is easy to see why so many clients choose to establish revocable trusts to avoid probate (and the hefty price tag that goes with it).

What is an Irrevocable Trust?

Irrevocable trusts, on the other hand, generally do not allow the creator (known as the “settlor” or “grantor”) to modify the trust after formation. Thus, irrevocable trusts tend to be less flexible compared to revocable trusts, but they do serve other important purposes that are beyond the scope of this article.

Do Revocable Trusts and Irrevocable Trusts Protect You Against Creditors?

For both revocable and irrevocable trusts created under Florida law, the rule of thumb is simple: assets you place in trust for your own benefit during your lifetime are not protected from your creditors; on the other hand, assets you place in trust for the benefit of someone else generally are protected from their creditors.

Application to Revocable Trusts: Recall that the main benefit of establishing a revocable trust during your lifetime is probate avoidance; your revocable trust does nothing for you from an asset protection standpoint. However, when you die, your revocable trust becomes irrevocable (because you are no longer alive to modify it). When this happens and trust assets are held in further trust for the benefit of your beneficiaries (for example, your children), such assets will be protected from your children’s creditors, as long as the trusts are considered “spendthrift” trusts under Florida law.

Application to Irrevocable Trusts: Similarly, Florida law does not allow you to place assets in an irrevocable trust for your own benefit and circumvent your own creditors, whether such creditors exist now or arise in the future. However, when you fund an irrevocable trust during your lifetime with assets for the benefit of a third party beneficiary, such assets will be protected from the beneficiary’s creditors, as long as the trust is considered a “spendthrift” trust under Florida law.

What Is a Spendthrift Trust?

A spendthrift trust is a trust established by one party as “settlor” (e.g., a parent or grandparent as “settlor”) for the benefit of a third party as “beneficiary” (e.g., children or grandchildren) and is protected from the third-party beneficiary’s creditors and predators. Potential creditors include not only judgment creditors, but also predators such as a divorcing spouse. For this reason, many of my clients devise their children’s inheritance in further trust, as opposed to outright, to ensure that a divorcing spouse does not assert that they are entitled to half (or more!) of the child’s inheritance in a divorce proceeding. Over the past several years, I have noticed a trend in my practice where parents are requiring that their children sign marital agreements in order to receive trust distributions from their spendthrift trusts. This means that if the child is not already married but intends to be married when the trust is funded (typically shortly after the parent dies), she will have to sign a prenuptial agreement with her intended spouse in order to enjoy distributions from her spendthrift trust. If the child already is married when her trust is funded, then a postnuptial agreement can solve the problem. If the child sees the benefit of having a prenuptial agreement to protect her separate property in a divorce, but she is too timid to raise the issue with her intended spouse, in some cases having the terms of the parent’s trust require a prenuptial agreement can help shift the burden (and the blame).

How Do You Create a Spendthrift Trust Under Florida Law?

At minimum, the trust should use the word “spendthrift” in the title. But the best practice is to include a detailed provision in the trust document that restrains both voluntary and involuntary transfer of the beneficiary’s interest. Specifically, Florida Statute 736.0502(2) provides, “A term of a trust providing that the interest of a beneficiary is held subject to a spendthrift trust, or words of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary’s interest.” Section 736.0502(3) further provides: A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision and, except as otherwise provided in this part [of the Florida Trust Code], a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before receipt of the interest or distribution by the beneficiary. Put another way, the assets in a beneficiary’s spendthrift trust cannot be reached by the beneficiary’s creditors even if the beneficiary tries to pledge, promise, or sign the assets away, because the beneficiary has no legal right to do so. Only the Trustee has control over the trust assets. There are other important factors to consider in designing the terms of a beneficiary’s spendthrift trust. For example, who will be the Trustee? The Trustee is in charge of managing the trust assets and making distributions to or for the benefit of the beneficiary. While the beneficiary is allowed to be her own Co-Trustee, there must be at least one Independent Trustee to serve alongside the beneficiary – otherwise a creditor may be able to set aside the trust by arguing that the beneficiary has unfettered access to trust assets.

Should the Beneficiary’s Trust Last for Her Lifetime? or Should It Terminate at a Certain Age?

Some clients choose to terminate a child’s spendthrift trust at age 35 or 40, while others feel the trust term should be for life and give the Independent Trustee broad discretion regarding how trust assets are utilized over the course of the beneficiary’s lifetime. A qualified estate planning attorney will guide you through your options for designing the distribution provisions of a beneficiary’s spendthrift trust in accordance with your personal goals and values. Spendthrift trusts are an effective way to safeguard your beneficiaries’ inheritance upon your demise; however, under Florida law, you cannot “spendthrift” assets for your own benefit during your lifetime. Still, a revocable trust serves an important purpose by avoiding time-consuming and expensive probate proceedings, and by setting forth the terms of your beneficiaries’ spendthrift trusts. To read about permissible ways to protect your assets from your creditors during your lifetime, please read my asset protection blog: Safeguarding Your Assets.

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