William Penn Life, 1997 (32. évfolyam, 1-11. szám)
1997-01-01 / 1. szám
Page 2, William Penn Life, January 1997 William Penn LIFE Official Publication of the William Penn Association Published Monthly Office of Publication: 709 Brighton Road Pittsburgh, PA 15233 Phone: 412/231-2979 Third Class U.S. Postage Paid Pittsburgh, PA Permit No. 2724 George S. Charles, Jr. Editor-in-chief Richard W. Toth Diane M. Torma Associate Editors John E. Lovász Managing Editor NATIONAL OFFICERS George S. Charles, Jr. National President Richard W. Toth National V.P.-Secretary Diane M. Torma National V.P .-Treasurer BOARD OF DIRECTORS Michael J. Hrabar Chairman Roger G. Nagy Vice Cfiairman Elmer A. Furedy Vice Chairman Anthony C. Beke Louis A. Fodor Barbara A. House Michael R. Kara Andrew W. McNelis George F. Mirkovich Michael F. Tomcsak Elmer W. Toth Frank J. Wukovits, Jr. Frank J. Radvany Secretary of the Board AUDITING COMMITTEE Robert A. Ivancso Chairman Margaret H. Boso Secretary Dennis A. Chobody Charles J. Furedy Joseph Hamari Ernest J. Mozer, Sr. CONSULTANTS Bruce &. Bruce Company Actuary Horovitz, Rudoy 6c Roteman C.P.A. Rothman Gordon Foreman &. Groudine, P.C. General Counsel Dr. Julius Kesseru Medical Director Unsolicited articles, letters, manuscripts, pictures and other material submitted to the WILLIAM PENN LIFE are forwarded at the owner's risk, and the WILLIAM PENN LIFE expressly denies any responsibility tor their safekeeping or return. The WILLIAM PENN LIFE reserves the right to edit, revise or reject any article submitted for publication Postmaster: If undelivered, please send form 3579 to: William Penn Association 709 Brighton Road Pittsburgh, PA 15233 Insurance & You By George S. Charles Jr., Nat’l President We at the William Penn Association extend best wishes for a truly happy, healthy new year to all our members and friends. May God’s continued blessings be showered upon each of you, your families and your friends. We would also like to take this opportunity to thank all our members, branch officers and sales representatives who have helped in increasing our membership in 1996 and ask for your continued support in 1997. As we enter the new year, it is our hope that our Association and all of our members will continue to prosper in 1997 and the years to follow. It is necessary, from time to time, to reexamine what life insurance is and why all of us should know its many benefits. From a practical standpoint, life insurance is protection against financial loss resulting from death. Legally, a life insurance certificate (policy) is a contract which promises to pay a specific amount of money to a named beneficiary when death occurs. Who needs life insurance? First and foremost, families need it. A well-planned life insurance program can provide financial security for the family’s present needs and at the same time, build funds for the future. When you buy life insurance, you want coverage that fits your needs. You must first decide how much you need, for how long, and what you can afford to pay. You should then find out what plans of insurance are available to meet your needs and pick the one that best suits you. Our Association offers Ordinary Life, 20 Pay Life, the Provider and Single Premium Whole Life plans of insurance. We also offer Term plans which include the Yearly Renewable Term, 10 Year Renewable Term and our Special Juvenile Term to 25. If you would like a brochure or any information on the insurance plans that we offer, feel free to contact your local branch representative or call us toll-free at the Home Office and we will be more than happy to send you information on these plans. Feel free to call us Monday through Friday between 8:15 a.m. and 4:00 p.m. at 1-800- 848-PENN (7366). Think about how life insurance can help you and your family provide a better future for all! Members’ idea sheds new light on old tool Continued from Page 1 carpenters who often work in dark places and can’t squeeze a flashlight into a tight working area. At least one major tool manufacturer has shown interest in the Hrabar family invention. Adam Milligan, a brand manager for Cooper Tools, a North Carolinebased company, said about 200 of the 20,000 tools his company produces are inventions from people like Hrabar. Although he hasn’t seen the Hrabars’ nut driver, and a final decision is still a long way off, Milligan said it sounds like something his company would make. "We like anything like this that is an obvious betterment to a product line,” he said. Inventors like the Hrabars— father and daughter are listed as co-inventors on the patent—can be compensated in one of two ways: they can either sell their patents outright for a one-time fee, or take a percentage—usually three to five percent—of each piece sold. Milligan said most inventors take a percentage. Even though his is not aware of any inventors associated with Cooper Tools that have become millionaires, he said it could happen if the right tool comes along. The Hrabars would be happy indeed, but even if they don’t strike it rich, the experience has been worthwhile. The illuminated nut driver idea got Kristin to the state finals of a nationwide competition for student inventors. Even though she didn’t win (a three-bladed scissor took first prize), the once C-average student has gained confidence in herself and claimed family bragging rights from her older sister— 13-year-old Kim, the former, one-and-only "brain” in the family. "It just shows you don’t have to be a straight-A student to come up with a good idea,” said the girl’s mother, Donna. Interest rate for annuities set at 6*25% PITTSBURGH — The interest rate for all William Penn flexible premium and single premium deferred annuity contracts will be 6.25% effective Jan. 1, 1997. To learn more about William Penn annuity plans, contact your local William Penn representative, or call the Home Office toll-free at: 1-800-848-PENN (7366). Limited liability companies By Emil W. Herman, Esq., General Counsel The owner of a small business generally has three overall concerns when deciding on the business format: how to shield his or her personal assets from liability for debts of the business, how to shield the business assets from claims against the owner personally, and how to minimize federal, state and local taxes. A concern which later develops for many family operated businesses is how to pass ownership of the business to the younger generation with minimal federal and state estate and/or inheritance taxes. Each of these factors needs to be weighed in deciding on what type of entity to use to conduct a business. Last month, we discussed corporations, and in previous months, the sole proprietorship, general partnership and limited partnership. Today’s discussion is about limited liability companies (LLC), a relatively new form of business entity. W isconsin was the first state to pass legislation recognizing the LLC form of business entity. An LLC is a hybrid, which can be structured to provide the limited liability benefits of a corporation, while achieving the tax benefits of a partnership. Wisconsin was permitting businesses within its borders to use the LLC form of ownership, but it was not until 1988 that the Internal Revenue Service first acknowledged that an entity called an LLC could be taxed as a partnership in its governing documents. Since that IRS ruling, 46 more states have passed legislation permitting LLC’s. An LLC is formed by registration with the appropriate state agency for the state which will be the "home state” of the LLC, and with any other state in which the LLC will do business. Failure to properly register in each location will cause the LLC to be treated as a general partnership in those states in which it is not registered. If you will be registering an LLC in more than one state, you need to determine if the state(s) in which you will register recognize LLC’s as a business entity, or provide the same tax treatment as in the home state. At least five states tax LLC’s as corporations at the state level, although for federal purposes, the LLC is afforded partnership tax treatment. If you will be doing business in one of those five states, you need to be aware of, and plan for, this difference in treatment. Rather than shareholders or partners, LLC owners are called members. There should be at least two members, but the maximum number of members is generally unlimited. If that number is too high, however, the LLC may be required to register under state and/or federal securities law. Members have the same limited liability for debts of the LLC as do shareholders of a corporation, although LLC members can elect, but only in writing, to share responsibility for all or some of the debts of the LLC. Rather than By-laws and a Shareholders Agreement, the LLC has an Operating Agreement as its governing document. That Operating Agreement has to be carefully structured to assure that the LLC is not treated as a corporation by the IRS, and subject to double taxation. The Operating Agreement should also address how management of the LLC will be accomplished. Members can themselves elect to manage the LLC, or they can elect instead to hire a manager or managers to perform those duties. How the profits of the LLC will be distributed to members, and in what proportions, should also be addressed in the Operating Agreement. If the members wish to restrict their right to transfer their ownership interest, those restrictions should be contained in the Operating Agreement. For instance, the Operating Agreement can provide that if a member transfers his membership interest in violation of the Operating Agreement, or if the membership interest is transferred by operation of law (for example, in a divorce settlement or pursuant to bankruptcy proceeding), the new member only has a right to share in the profits of the LLC, and not a right to participate in management of the LLC. From an estate planning standpoint, the LLC format allows a member to transfer a portion of his membership interest (if permitted under the Operating Agreement) to his heirs on a yearly basis, and those heirs will not be subject to liability for the debts of the LLC as a result of that transfer. Whether LLC’s will become the business entity of choice remains to be seen. Recent tax law changes have removed some of the restrictions on ownership of shares in an S-corporation, so that that business form has become more attractive. In those states which have adopted LLC statutes, and which allow LLC’s to be treated as partnerships for tax purposes, the LLC form of business entity has become quite common. If you have any topics you would like us to consider for this column, please send them to: Emil W. Herman, Esq., Rothman Gordon, Third Floor, Grant Building, Pittsburgh, PA 15219. Topics will be considered based on space considerations, interest to all readers, and appropriateness for general legal discussion.
