Trusts

A “trust” is a legal entity someone will set up to protect and manage their assets. A third party called the “trustee” manages any assets that are placed inside the trust. Once the owner of the trust passes away, the trustee will then distribute the assets. However, this must be done according to the guidelines they were given for the trust. Now that we have covered what a trust is, let’s take a look at the differences between a revocable trust vs. irrevocable trust.

Revocable

Also known as “living trust”, a revocable trust means the terms of the trust can be changed at any time. For example, new beneficiaries may be added, or old ones removed. Essentially, their flexibility is valuable and makes these a very common type of trust. 

However, revocable trusts do have other areas to keep in mind. The assets in a revocable trust will be subjected to federal and state taxes when the owner passes. These types of trusts also do not offer the same type of protection from creditors that irrevocable trusts do. If they are sued, the assets may be used for settlement.

Irrevocable

On the other hand, the terms of irrevocable trusts cannot be changed. In a nutshell, that means they lack the flexibility of revocable trusts. Instead, irrevocable trusts offer their own set of benefits. Their biggest advantage is for tax purposes. Irrevocable trusts are not vulnerable to estate taxes once the owner passes away. Even more, the assets can generate additional income without being taxed. 

In conclusion, irrevocable trusts sacrifice flexibility for protection from taxes. Both a revocable trust vs. irrevocable trust have their own advantages and can be beneficial in different situations. Choosing which trust is best for you depends on your own specific circumstances.

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How To Tell The Difference

When it comes to shareholder and partnership agreements, these terms often get used interchangeably. However, these are referring to two different things. In order to clear up any confusion, we here at DaMore Law have created a quick guide to help. With that said, here is the difference between shareholder and partnership agreements.

Partnership Agreements

First off, let’s take a look at partnerships. A partnership is a group of people who have come together to achieve a business goal together. This is done for each individual’s mutual benefit. Essentially, they have to share both the profits and the losses together. A “Partnership Agreement” lays out all the vital information they will share together. This includes each partner’s responsibilities, management, funding, objectives, and more. In a nutshell, this is an agreement between the partners themselves. 

Shareholder Agreements

Next, we will dive into shareholders. A shareholder is someone who owns shares in the company. However, they are not required to be involved with the operations of the company itself like partnerships. With that said, shareholders do have certain rights within the company. These include the right to vote at shareholder meetings, receiving reports, and receiving dividends. Basically, this type of agreement is between the shareholders of the company itself.

Summary

In conclusion, there is one major difference that separates these two ideas. As stated previously, a shareholders agreement is with the company and its shareholders. Moreover, a company is a separate legal entity, unlike the partners in a partnership agreement. Because of this, partners remain much more liable for the company’s debts. Shareholders do not retain nearly as much responsibility and reliability in this area. To conclude, this difference in liability is what separates the two types of agreements.

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Massachusetts Corporations

A corporation is a legal entity created by individuals, stockholders, or shareholders – usually with the intention of operating for profit. Creating a Massachusetts corporation can be a great way to operate a business in your area. However, there are a number of requirements you need to be aware of before getting started. With that said, here are the steps to forming a Massachusetts corporation.

Decide What Type Of Corporation To Form

First off, you will need to choose between forming a Massachusetts S-Corp or C-Corp. These two are quite similar in terms of liability, management, and structure. However, the main difference lies in ownership rules. A C-Corp is taxed separately from its shareholders, whereas an S-Corp is treated much like a partnership in its taxes. The S-Corp usually does not have to pay federal corporate income taxes.

Meet Personnel Requirements

Another one of the steps to forming a Massachusetts corporation is to meet personnel requirements. These differ from state to state. Primarily, Massachusetts personnel requirements focus on directors and officer positions. If there are three or more shareholders, there must also be three or more directors. Oftentimes, the number of directors and shareholders is the same. Additionally, Massachusetts law states that the names and addresses of officers and directors must be listed in the Articles Of Organization.

Fulfill Articles Of Organization Requirements

When forming your corporation, you are required to designate a “registered agent.” Essentially, this is a person or business who will receive important tax, government, and legal documents. This needs to be a physical mailing address, not just a post office box, in order to receive these documents. 

Moreover, you will need to include several other bits of information for your Articles of Organization. Next, you will be asked to provide a brief description of your business. Then, include the number of shares that will be issued. You will also need to include the par value of these shares, or include a statement clarifying there is none. Finally, you will need to include the street address of your corporation.

Moreover, an annual report must be filed with the Massachusetts Secretary of State two and a half months after the close of your fiscal year. If you do not file this report, you are in danger of being unable to do business in Massachusetts. 

Name Your Corporation

Next, you are onto choosing a name that meets the legal requirements. Your corporation’s name must end with “Company,” “Incorporated,” “Corporation,” “Limited,” or an abbreviation of one of these terms. Also, it must be distinct from all other corporations. Finally, it cannot be deceptive in any way, such as advertising for goods or services you do not offer.

Employer Identification Number

Before you start your corporation, you must apply to the IRS for an Employer Identification Number or EIN. Essentially, you can think of this as a social security number for your corporation. You will need it to open a corporate bank account. 

Keep Ongoing Records

This mostly comes down to adopting bylaws and keeping minutes. Bylaws are your corporation’s rules, responsibilities, share info, and more. These prove to banks that your corporation is legitimate. “Keeping minutes” refers to creating records for your corporation’s business decisions. Essentially, they protect liability status. 

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Having work completed on your house can be a stressful endeavor. In addition to the decision of hiring a contractor, there are other things you should consider regarding the actual contract to complete the work. It is essential for both you and your contractor to ensure that you are on the same page. Below is overview of written contracts for MA property renovations.

Preliminary Contract Provisions

Most agreements will have at least some basic provisions. This usually includes:

• Contractor Contact Information
• Customer Name, Address, and Phone Number
• Agreed Price
• Overview of the Tasks to Be Completed
• Payment Terms

When it comes to these terms, more details are generally an added a benefit. Instead of generic descriptions, request detailed ones. For instance, if you are having many tasks performed, list each one with its associated cost. This will be useful if you want to drop or change particular ones and will minimize mis-communication over pricing. Also mention the brands or type of products if applicable. Everything that you negotiated with the contractor can be mentioned in the written contracts.

Other Things to Consider

Scheduling

Scheduling are a common misunderstanding among homeowners and contractors. To reduce the likelihood of any confusion, document planned deadlines in the paperwork. If timing is a major factor, that should be prominently mentioned as well.

Responsibilities of Each Party

Written contracts can also summarize additional responsibilities of the contractor and the property owner. It can restrict how early workers may arrive or how late they may continue at the property, what areas of the property may be accessed, and any other similar instructions. As the customer, you may also be required to perform some tasks such as relocating personal property. The only way to ensure that everyone agrees to these conditions is to write it in the contract.

Written Contracts For MA Property Renovations

You may meet with several potential contractors prior to hiring one, have multiple conversations with the same one, or have more than one contractor completing separate things at the same time. There are many opportunities for mis-communication and expensive mistakes. Having a detailed agreement can help you stay organized and protect your interests. The overview of written contracts for MA property renovations in this blog are merely a some general tips and should not be considered legal advice. Speak to an attorney on questions relating to a specific contract or dispute.