San Diego Estate Planning Lawyer Blog

In San Diego, many families are using a legal strategy for estate planning. Attorneys use their education, training and experience to suggest strategies and techniques to assist clients in protecting their legal rights and trying to obtain their legal goals. On our website, you can see many different strategies. We encourage you to make an appointment for a complimentary consultation. You can also e mail our firm with any legal questions regarding estate planning.

One of these strategies is a "family limited partnership," as the name implies, refers to the creation of a partnership business entity among close-knit family members. A family limited partnership does not necessarily have to involve a business. For instance, it can be created for a particular asset, such as real estate or a mutual fund. This structure is a popular estate planning tool because it can provide both tax and non-tax advantages.

Non-Tax Advantages

One obvious non-tax advantage is that when a transfer restriction is made a part of the family limited partnership arrangement, there is assurance that the business will be kept in the family. The structure also allows the operator of the business (presumably a parent) to maintain control of the business assets until retirement or death. This is accomplished by having the parent retain a general partnership interest that includes management control of the business. The children become limited partners. If a particular child were to be groomed to take over the management of the business, the parent could, over time, transfer fractional shares of the general partnership interest to that child.

Another important non-tax advantage is the protection of business assets. Although the personal assets of the general partner can be reached by creditors of the business, the liability of the limited partners is restricted to their interests in the partnership. Also, the assets placed in the partnership by the donor/parent are protected from his personal creditors. His income from the partnership can be reached by creditors, but not the assets.

Federal Income Tax

The primary income tax advantage to be gained from forming a family limited partnership is the deflection of income from the parent, who is typically taxed at higher marginal rates, to the children, who are taxed at lower rates. Where the donor/parent retains control as the managing partner, the strategy is to allocate earned income to the parent at the lowest reasonable level. The unearned income (return from capital investment) is divided among the parent and children as partners in proportion to their capital interests. Our firm does not provide tax advice and we refer to a licensed Certified Public Accountant on tax issues.

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Posted by Roy M. Doppelt | Permalink | Email This Post

Posted In: ESTATE PLANNING

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San Diego, California has over one million residents and most of these are employed. It is important to know what your legal rights are in any disciplinary situation. San Diego, California has different regulations than other states so it is crucial to have each individual case evaluated.

Two employees at a foundation wrote office memoranda stating that their supervisor was not needed on a project and that he had behaved inappropriately and unprofessionally. The foundation's executive director informed one of the employees that she wanted to meet with him and the supervisor. Feeling intimidated at the prospect of the meeting, the employee asked that his fellow complaining employee be present as well. When this request was refused, and the employee declined to attend the meeting alone, he was fired for insubordination.

The fired employee ultimately was found to be entitled to reinstatement to his position, with an award of back pay. The decision by a federal appellate court breaks new ground for non-union employees and employers, because the basis for the ruling is a principle previously associated only with union workers. It is settled law that an employer commits an unfair labor practice under the National Labor Relations Act if it denies a union employee's request to have a union representative present at an investigatory interview that the employee reasonably believes might result in disciplinary action.

The National Labor Relations Board has changed course several times on the question of whether this right also can be asserted by employees who are not in unions. In the case of the foundation employee, it answered that question in the affirmative, and the appeals court agreed.

The impact of the decision could well mean that in most cases a company should either allow an employee to have a co-worker present at a meeting that could be perceived as leading to disciplinary action or not have the meeting at all.

The right to have a co-worker present must be triggered by a request from the employee. Many employees, especially those not in a union, are unaware of this right and are unlikely to assert it. Managers and supervisors do not benefit from the ruling, as they are not "employees" as defined in the National Labor Relations Act. Non-union employees probably can only insist on being accompanied by a co-worker, rather than having a supervisor, manager, or outside representative present. The purpose of the right is to allow employees to engage in "mutual aid and protection." The rule applies only to a meeting that could lead to discipline, not a meeting whose purpose is simply to announce predetermined disciplinary action.

Posted by Roy M. Doppelt | Permalink | Email This Post

Posted In: NEWS AND COMMENTARY

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