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Employer Notary Requirements for New York State

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The State of New York requires a number of personal legal documents be notarized. In light of the current global pandemic, the state of New York has relaxed notary laws to allow notary acts to be performed electronically. Under the relaxed regulations, notaries may witness a signature via a live video feed, notarize an electronic form of the document and return it electronically, and accept and return the original signed document by mail for final execution. The following a summary of the new requirements:

  • The person seeking the Notary’s services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
  • The video conference must allow for direct interaction between the person and the Notary (e.g., no pre-recorded videos of the person signing);
  • The person must affirmatively represent that he or she is physically situated in the State of New York;
  • The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
  • The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and
  • The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.

Now more than ever, it is important to ensure that Wills, Powers of Attorney, and other important legal documents are up to date and reflect your wishes. The attorneys and support staff at Scolaro Fetter Grizanti & McGough, P.C. are available to assist with notarial acts, as well as the preparation of important legal and estate planning documents which may require notarization. If you need legal assistance reach out to your normal contact at the firm, or contact Melissa Green ([email protected]) for further assistance.

 

How Are Your Accounts Titled?

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There is no question we are facing issues unlike any we have seen before.　 As a result, it is important to ensure not only that your estate planning and power of attorney documents are up to date, but that your bank and other accounts are properly titled for ensuring access to them now and so your family and others have access to them in the event of your death.　 Banks are open – courts are not.　 One of the courts closed here in New York is the Surrogate Court – the equivalent of our probate court.　 Why is this relevant to how your accounts are titled?　　When someone passes away, any accounts that are titled solely in the account holder’s name are immediately “frozen” under the law.　 There can be no access to those accounts until a legal representative or executor of the estate has been appointed by the Surrogate Court.　 Even in the best of times, this is a process that can take a few weeks if not more to get through the paperwork of probating a person’s estate.

In many cases, having accounts titled in one person’s name rather than jointly or in some other form is for estate planning purposes, asset protection or for other personal reasons.　 But, if the court is closed, these accounts will remain frozen until the estate’s legal representative is appointed and even if the courts reopen soon, the backlog could be significant leading to additional delays in having the legal representative appointed.

If you establish a joint account with right of survivorship (JTWROS) with a co-owner upon your death, the account immediately belongs to the joint account owner – there is immediate access to that account by your co-owner.　 If an account is established so it is Payable on Death (POD), Transferable on Death (TOD) or “In Trust For” another individual (ITF), there is the immediate ability to have those accounts available to the party named.　 Again, there is no need to go through the probate process.　 It is important to remember that although you may have a Power of Attorney or POA for someone, that POA terminates upon the Principal’s death – there is no ability to utilize a POA for someone after their death for any purposes.

If you are operating your business as a sole proprietorship or under a “dba” as opposed to a corporation or limited liability company, the accounts for that business are your individual accounts and if you die, those accounts are also frozen in the same manner as an individual account.　 You should consider having another trusted person on those accounts who will ensure that the business can continue to operate, bills can be paid, receipts processed, etc.　 This is one of the many reasons businesses operate as Limited Liability Companies or Corporations.　 Unlike a person, those entities do not die and if properly structured business operations can continue rather than having all the assets of the business go through probate.

The banks are open now – take advantage of it!　 You can take these steps now without any legal technicalities.　 Talk to your banker or brokerage advisor as to how you can best set up your accounts so there can be immediate access to those accounts in the event of your death – especially if you see that there is a need for your family.　 If you have any questions, please do not hesitate to contact us.

 

What is a Family Business Succession Plan?

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It is not simply having a will that leaves assets to family members and it is not simply a buy-sell agreement that provides that if Dad dies, Uncle Bob buys him out and vice versa. Succession planning involves many components of a well-coordinated plan that are based on the particular circumstances that exist within the business or farm and most importantly it must be in writing and kept up-to-date. These components include:

Estate Planning – Family business-based wills and trusts that do not simply divide assets among heirs. What entities are involved and who is to own and manage them needs to be carefully thought out and set forth.

Asset Protection Planning – Utilization of limited liability entities and trusts to protect assets for not only the current generation, but future generations, is critical to succession planning to protect assets not only from third parties but from “non-business” heirs.

Management and Knowledge Transfer – Establish a plan today that allows the junior generation to benefit from the years of experience of the senior generation and the many relationships that have been established by the senior generation over the years. For example, the time for the next generation of owners/managers to meet the banker for the first time should not be at Dad’s funeral.

Succession Planning Agreements – Planning for expected and unexpected events that will arise in the future such as death, disability, divorce, departure etc. with proper agreements such as buy-sell agreements among the owners of the operation and employment and long-term incentive arrangements with key employees who may not be owners, but are critical to the continued success of the business operations.

Lifetime Planning – Implementing the appropriate lifetime strategies to protect assets from plaintiffs in lawsuits, minimize or eliminate estate taxes including spouses in matrimonial matters and possibly to protect assets from being improperly managed by owners who should no longer be in controlling positions.

Opportunities for succession planning today are greater than ever. Federal estate and gift exemptions are nine times what they were twenty years ago. In 2017, there is a federal estate and gift exemption of $5,490,000.00 for each individual. With a properly structured plan a married couple can benefit from almost an $11,000,000.00 exemption. Proposed legislation in Congress nearly doubles the present exemptions. This affords opportunities not only for transfers at death, but utilizing long-standing and accepted planning strategies to remove significant assets from a taxable estate during life – and this can be done in a manner that benefits both the senior and junior generations. State laws such as New York must be taken into consideration as well, but many states have followed the federal lead in lessening the impact of estate taxes on closely-held business owners. In New York, our present exemption is at $5,250,000 and the present laws provide that New York’s exemption will match the federal exemption in 2019. So, does that mean that if the federal exemption increases to almost $11,000,000 New York’s will as well? – – – We’ll see.

Your Succession Plan Audit

Questions to Ask

  1. Are wills up to date? Do they reflect current tax laws, provide for family business and nonbusiness heirs in an equitable, but not necessarily equal manner?
  2. Are financial powers of attorney, living wills and health care powers of attorney in place to ensure that the proper agents are in place for principals who cannot act on their own?
  3. Review and update Operating, Partnership and Shareholders Agreements. Are management, operational and tax-related provisions up to date and reflective of the business’s operations?
  4. Are there the proper entities such as corporations and limited liability companies established to protect assets from liability? Is there a need for multiple entities to shield assets from the liabilities arising in other entities? E.g. having real estate in a separate entity, preferably an LLC?
  5. Are written leases in place to substantiate tax positions being taken on the tax return – including leases between related parties?
  6. Are key employees being properly respected by having long-term incentive arrangements in place to ensure their future participation in the operation?
  7. Is there a buy-sell agreement in place that addresses death, disability, divorce, departure, and other events which lead to the termination of an owner’s involvement in the operation?
    • Is the agreement up to date with all owners as parties?
    • Does the agreement reflect the need to ensure perpetuation of the business to the next generation?
    • Are the buy-out terms manageable from a cash flow perspective upon the occurrence of a triggering event? Is the agreement properly funded with insurance?
    • Is the valuation provision relevant to the operation and is it up to date?

Regardless of when a plan was put into place, it needs to be periodically reviewed and maintained just like any equipment utilized in a business. If changes are needed, they should be made while everyone is alive, well and in agreement on issues rather than after a death or another difficult situation has arisen. It is also critical to review your plan with your advisory team – your attorney, accountant, financial consultant and other advisors.

If we can be of any assistance in working with you on the creation of your own family business succession plan or to review your present plan with you, please do not hesitate to contact us.
 

 
To view this article in PDF format, please click here [Family Business Succession Plan].

Does Your Business Have a Buy/Sell Agreement in Place?

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By:  Thomas Bezigian, Jr.

The Basics

Buy-Sell agreements are designed to protect the interests of business owners, their families, and the business itself. These agreements are critical for privately-held businesses with multiple owners, and/or where inter-generational business succession is anticipated. They can be used whether the business is a limited liability company, corporation, or partnership.

The main objective of Buy/Sell agreements is to minimize uncertainty, and corresponding disruption to the business, in the event that an owner’s interest becomes transferrable to other owners — such as the event of a shareholder’s death, disability, divorce or termination of that holder’s employment with the business, whether voluntary or involuntary.

A well-crafted Buy/Sell agreement is customized to address the owners’ unique objectives. Among other conditions, it should contain clear business valuation provisions and specific direction as to whom the outgoing owner’s interests will be offered and under what terms.

However well-intentioned, a “handshake” understanding between owners welcomes uncertainty and potential conflicts among family members and co-owners. Accordingly, having this type of legally enforceable, written agreement in place, setting forth a transition plan is highly recommended. Once in place, Buy/Sell agreements can, and should, be periodically updated as the situations of both the business and its owners change over time.

Buy/Sell agreements must be considered in conjunction with not only a business owner’s business plan, but also that individual’s overall financial and estate plan to ensure advantageous tax treatment, creditor protection and other benefits.

If your business does not have a buy/sell agreement in place, or has one that has not been reviewed recently, please contact the attorney at our firm with whom you work.

To view this article in PDF format, please click here [Does Your Business Have a Buy-Sell Agreement in Place?].

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