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The Queen of Soul Died Without a Will: What It Means to Die Intestate

Aretha Franklin, an unparalleled, unprecedented icon and known as the Queen of Soul, passed away on Thursday, August 16, 2018 from advanced pancreatic cancer. She left behind family members, friends, and generations of admirers who will be forever touched by her presence.

As the world mourns the loss of Ms. Franklin, another important discussion has come to light. According to reports referencing recently acquired court documents, it has been revealed that Aretha Franklin did not leave a will behind at the time of her passing.

What will happen to her estate?

When a person dies intestate (without a will, or, without a valid will), State law dictates the administration of the deceased’s estate. Assets are distributed to heirs through a probate court in accordance with intestate law.

Because Aretha Franklin has surviving children and had no spouse at the time of her death, Michigan intestate succession law orders the inheritance to be split equally between her children (four sons).

Intestate succession laws vary from state to state

One widely agreed-upon implication, however, is that dying intestate complicates the administration of one’s estate. In many cases, it may raise disputes among family members and loved ones who disagree with intestate law procedure.

When someone dies intestate, the executor, who is usually named in the will, is appointed by the court. The executor (also called a personal representative) is tasked with overseeing and managing the administration of the estate. This also includes ensuring that estate taxes and debts are paid.

In Aretha Franklin’s case, her surviving sons have come to an agreement to assign executor responsibility to Ms. Franklin’s niece, Sabrina Owens. With an estimated net worth of $80 million (Source: BusinessInsider.com), there is liable to be contention about what happens with these assets, but the prompt and mutual agreement displayed by Ms. Franklin’s family is a positive sign that they are working toward a peaceful resolution.

In the case of Prince, who died in April of 2016, the distribution of his estate has yet to be resolved. Like Ms. Franklin, Prince died without a will and did not leave documentation of what he wanted to be done with his estate.

The administration of Prince’s estate has seen numerous complications, from beneficiaries disagreeing with the court-appointed executor, Comerica Bank and Trust, to an ongoing delay in assessing the value of Prince’s estate, which is required before his heirs can receive their share of the estate. Additionally, the fees collected by lawyers, the IRS, and the executor have greatly decreased the amount that will ultimately be split among Prince’s heirs.

How to Avoid Dying Intestate

The passing of Aretha Franklin is a reminder that estate planning is crucial to providing yourself and your loved ones with peace of mind in the event of your death or incapacitation. Whether you leave behind a spouse, a family, or have no heirs, having a succession plan is essential.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

Having your documents prepared by an attorney experienced in Maryland estate planning will provide you with the guidance and reassurance you need to plan ahead. If you would like assistance with estate planning in Maryland or have questions regarding your situation, contact the Law Offices of Elsa W. Smith, LLC today.

 

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GETTING ORGANIZED: FOUR COMMON BUSINESS STRUCTURES

A business may be operated under one of several available business structures. Choosing the right structure for your company is one of the most important decisions you will make because it impacts how the entity is taxed, an owner’s personal exposure to liability and the ability to raise investment capital or loans. It also affects the level of government oversight along with reporting and paperwork requirements. Maryland state law defines and regulates each type of business model making it important that the business know and understand the legal rules that apply.

The four most popular business structures in Maryland and nationwide are the Sole Proprietorship, General Partnership, Limited Liability Company (LLC) and the Corporation. There are other structures that are also available. Because the business must comply with governmental requirements, organizational imperatives and tax procedures, the best place for a new or growing company to evaluate and select its best business model is at the office of an experienced business law attorney.

 

THE SOLE PROPRIETORSHIP

Sole Proprietorship

The simplest and most common form of business structure is the sole proprietorship.  This comprises one individual in business as the sole owner. There is no legal separation between the owner and the business, meaning that the proprietor is the business for legal purposes. A sole proprietor enjoys total control over the management, development, marketing, and daily functioning of the business. This model offers ease of operation, few regulations, less reporting, and an easy method of taxation.

With all of that apparent business simplicity, one might question why a small business owner would not choose to operate under a proprietorship. The answer is that there are critical disadvantages, including that the owner is personally liable for business debts. This means that the owner’s personal assets may be attached and seized to satisfy business debts that are reduced to a judgment. Notably, this applies to all kinds of debts including personal injury or wrongful death awards, which can sometimes be huge. It is also difficult for the sole proprietorship to grow because investors will generally not consider this structure for assistance.

THE PARTNERSHIP

Partnership

A General Partnership consists of two or more persons operating a business together for profit. Each partner contributes money, expertise, working labor, or a combination thereof, to the company. Each partner shares in the profits, losses, and business debts according to his or her percentage of ownership.   Partnerships are easy to form, they do not require many formalities, and there is generally simple taxation. Their informality makes this a viable choice in some cases where the partners want to first see whether the business concept will be successful.

The biggest drawback is that the partners are not given limited liability. Maryland, however, provides partnership models that do provide limited liability. The Limited Partnership (LP) is a more complex structure that usually has one general partner and several limited partners. The general partner has unlimited liability, whereas the limited partners risk only up to the amount of their investment. Limited partners do not usually join in the company’s management.

Maryland also provides for a Limited Liability Partnership (LLP), which provides limited liability to all of the partners. This structure is available for professional practices, such as lawyers, accountants and doctors who practice together.

THE LIMITED LIABILITY COMPANY (LLC)

An LLC combines features of both a partnership and a corporation.  Unlike the sole proprietorship or the general partnership, the owner of an interest in an LLC, called a member, enjoys limited liability and is protected personally from the debts of the business. Additionally, the LLC offers “pass-through” taxation, fewer regulations and broad flexibility.  The LLC, which has become popular in recent years, is governed by an operating agreement.

Flexibility of an LLC includes optional forms of taxation, various management models, and creation of hybrids that mix qualities of different business structures together. For example, the operating agreement can specify that the business will be run by a manager or it may be set up as a member-run organization.  The LLC is disadvantaged in that it is not suitable for raising large amounts of venture capital or attracting investors for a public offering.

THE CORPORATION

A corporation is owned by the shareholders, operated by the board of directors, and managed by the officers. It must have meetings and must follow strict procedures for taking corporate action. A corporation’s stock shares may be sold to the public if all of the considerable legal hurdles are satisfied. Most corporations, however, are privately owned.  These smaller private companies usually have a shareholder agreement restricting share transfers to outsiders.

A corporation exists perpetually and enjoys limited liability for its shareholders. A smaller business can elect a special “S” status which simplifies taxation. Also, Maryland law provides for a “close corporation,” which is designed for smaller companies limited to a certain number of shareholders. This model has reduced formalities and may be set up without a board of directors. Maryland also allows certain non-stock corporations, usually for charitable and non-profit organizations.

A corporation is the choice of large companies that operate nationally and internationally, and that can attract large investors to finance rapid growth and a public offering. A disadvantage is that it suffers from an overabundance of paperwork and government regulations. It is the costliest structure to start and to maintain. The disadvantages, however, are accepted as a cost of business success.

In the final analysis, choosing a business structure here in Maryland is a complex process involving several competing factors. The personalities, aspirations, experiences and goals of the owners may color the ultimate choice of business structure. When a business structure has to be changed, the business attorney will guide you through the process. Sometimes, that is a cost of growing the business, which makes it a pleasant transformation more than an unwanted expense.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

For guidance in selecting the appropriate structure for your business, contact Maryland  business law attorney Elsa W. Smith at the Law Offices of Elsa W. Smith, LLC.  We have two offices to serve you – Annapolis (410) 995-7719 and Laurel (301) 358-4340.  You can also contact us through this website.

PAGO DE HONORARIOS LEGALES: CERRANDO LA BRECHA ENTRE EL CLIENTE Y LA ABOGADA

En Maryland y en todo el país, el costo de los servicios legales a menudo es muy caro. Esto es normal para un clima financiero donde el costo de armamentos de alta tecnología, software, recursos de investigación, seguros, personal experimentado y capacitado, impuestos y otros gastos operativos están en constante aumento. Pero el cliente y la abogada están entrando en una relación de confianza y juntos pueden asegurarse de que el tema de los honorarios legales no interfiera en la obtención de un resultado efectivo.

Para entender el acuerdo de honorarios de una abogada, es necesario un breve resumen. En general, hay cuatro formas en que se pagan los honorarios de una abogada. Son:

Cada hora: este es un método común; las tasas pueden variar, dependiendo de varios factores. Puede haber un pago inicial y las facturas por hora enviadas periódicamente al cliente.
Retenedor: la abogada acepta una suma inicial para sellar el trato. Puede ser totalmente ganado y no reembolsable, o puede ser devengado y reducido por facturación por hora en su contra. Cuando este fondo comienza a escasear, la abogada puede pedirle al cliente que lo reponga.
Tarifa fija: se aplica a una tarea estándar para una representación particular. El pago por adelantado generalmente es requerido.
Contingencia: la abogada no recibe nada a menos que haya una recuperación, en cuyo momento la abogada recibe un porcentaje de la recuperación. Esto se aplica en casos de lesiones personales, por ejemplo.

Con respecto a contratos, planificación patrimonial, sucesiones, administración de propiedades y leyes comerciales y comerciales, las tarifas pueden no ser tan imponentes como en asuntos complejos de litigios, pero pueden representar un obstáculo. Dejando de lado las complicadas herramientas de financiamiento que a veces se usan en litigios complejos, este artículo analiza las opciones que los clientes tienen para pagar sus honorarios legales.

FINANCIACIÓN DE HONORARIOS LEGALES

Cuando el cliente de una pequeña empresa tiene suficiente capital operativo o una línea de crédito sustancial existente, el cliente puede usar sus propios fondos para pagar las tarifas solicitadas. Muchos abogados aceptan tarjetas de crédito. Este es un método conveniente y apropiado para pagar sus honorarios legales. Cuando una persona no tiene tarjeta de crédito o crédito insuficiente, una opción es un préstamo personal. El éxito en la obtención de un préstamo personal dependerá de su puntaje de crédito. También puede considerar un préstamo con garantía hipotecaria en su casa. Existe una gran cantidad de información disponible en Internet sobre préstamos para este fin.

Cuando se cuestiona el flujo de efectivo de un cliente de negocios, el propietario puede solicitarle un plan de pago, si está disponible. Los mismos arreglos pueden aplicarse a individuos. Un ejemplo de un plan de pago es donde el 50 por ciento se paga por adelantado, seguido del pago completo 30 a 60 días después. Los abogados que son dueños de negocios tienen presiones presupuestarias, y los planes de pago pueden no ser factibles a veces. Cada caso, sin embargo, se evalúa individualmente al observar diferentes factores y las opciones variarán según la empresa. Las conclusiones son que: 1) los clientes tienen varias opciones de financiamiento y 2) la comunicación honesta puede salvar la brecha entre el cliente y la abogada en lo que respecta al pago de honorarios legales.

La información de este artículo se ofrece solo con fines educativos y no constituye asesoramiento jurídico. Para obtener ayuda específica, consulte con un abogado autorizado en su jurisdicción.

Si usted o su empresa necesitan representación legal en Maryland, las Oficinas Legales de Elsa W. Smith, LLC están listas para ayudarlo. Le invitamos a que revise las áreas de práctica de la firma y se comunique con nosotros para solicitar una consulta hoy.