Living Trust

Yesterday we had nine earthquakes in the Reno area, with magnitudes ranging from 0.6 to 4.2. These are just the latest in a series of quakes that began way back at the end of February, all clustered a little north of town. And while things rocked and rolled, there was no damage and no-one was hurt. Naturally the news last night was full of earthquake information and planning/survival tips, etc. One seismologist talked about the potential for a “big one” in our area and what that would look like if it happened.

All this talk about the “big one” got me thinking about mortality and planning in general. Some of you know that I’ve added Estate Planning to the line-up of services my company offers, through my new associate, who is an estate planning paralegal. We were talking today about some of the problems she’s seen in her career, and how they could easily have been avoided.

All corporations start off as C Corporations. If you want to change to an S Corporation, you file a Form 2553 with the IRS to make the election. So far, so good.

The IRS has certain requirements on who can own the shares of an S Corporation. For example, there is a limit on how many shareholders you can have and the owners have to be individuals. Your LLC can’t own shares in an S Corporation, for example. That’s where a do-it-yourselfer got in trouble. Read on to learn how you can avoid this simple mistake.