Nonprofit Bylaws – What to Include & Common Mistakes

Nonprofit organizations exist to meet the needs of the public and address critical issues in our society. While every nonprofit has its own unique mission, all nonprofits need a comprehensive set of bylaws to guide how their organization is governed. Not only do nonprofit bylaws serve to meet legal and regulatory requirements, but they also promote accountability and transparency in the organization, thereby establishing trust with donors and the public. If you need assistance with creating nonprofit bylaws or have any questions relating to your nonprofit, contact the Jennifer V. Abelaj Law Firm at 212-328-9568 to learn how an experienced attorney can help you.

What Are Nonprofit Bylaws?

Nonprofit bylaws are the main governing document for a nonprofit corporation. They are created when the organization is established to guide the decisions and actions of the board of directors. They can also help the organization avoid issues and resolve conflicts by clearly defining rules related to authority and governance. Furthermore, bylaws are a means for holding board members accountable for their actions. Board members that fail to follow a nonprofit’s bylaws are in breach of their duty to the organization and may be held liable for their actions.

In addition to being used internally, nonprofit bylaws are used by third parties to the organization, such as investors, landlords, and financial institutions. By reviewing a nonprofit’s bylaws, third parties can assess how responsibly the organization is being managed and whether or not they are willing to do business with them.  

Nonprofit Bylaws –State and Federal Requirements

Nonprofit organizations are governed by state law. A nonprofit organization’s bylaws should be created as a supplement to the rules defined under its state’s corporation code. When a nonprofit’s bylaws do not address a specific issue, it is assumed that the nonprofit follows the applicable rules of the state. 

Federal law does not require specific provisions or language to be included in nonprofit bylaws. A nonprofit organization applying for 501(c)(3) tax-exempt status is required to submit its bylaws for review to the IRS, however, as part of the application process.

A skilled nonprofit attorney can assist you in creating your nonprofit bylaws in compliance with all applicable state laws. They can also help you address specific provisions in your bylaws to improve your chances of being granted 501(c)(3) tax-exempt status by the IRS. Contact The Jennifer V. Abelaj Law Firm to discuss your needs with an experienced nonprofit attorney today.

What Do Nonprofit Bylaws Include?

The specific details of a nonprofit’s bylaws are determined by the organization’s unique mission and purpose. In general, however, nonprofit bylaws include:

• Name of the organization
• Location of the organization’s principal office
• Mission and purpose of the organization
• Details about the board of directors, including the number of members, their roles, and compensation
• Rules and procedures relating to electing board members as well as their term lengths and limits
• Details about board meetings, including frequency and procedures
• Quorum requirements, including the number of votes needed to make a decision
• Policies related to maintaining corporate records
• Policies relating to conflicts of interest among board members
• Limitations on the activities of the nonprofit
• Rules and procedures for amending bylaws

Updating Nonprofit Bylaws

Nonprofit bylaws should be updated if the organization goes through any major change, such as merging with another organization or making changes to the management structure. The rules related to amending bylaws, as defined in the existing bylaws, must be followed before any changes can be made. Nonprofit bylaws should also be reviewed at least once per year by the board of directors to ensure they are up-to-date, and all procedures are being followed correctly. 

As outlined in the Compliance Guide for 501(c)(3) organizations, bylaw amendments must be reported to the IRS. Some states also require that bylaw amendments are reported.

Common Mistakes Related to Nonprofit Bylaws

Common mistakes with bylaws that nonprofit organizations make are related to:

Operational Policies and Procedures

Bylaws exist to provide an overview of how an organization is governed. Specific details related to day-to-day operations can change frequently and, therefore, should be included in a policy manual written for management purposes.

Provisions for Making Amendments

Many nonprofits make the mistake of including stringent rules around making amendments to existing bylaws, such as requiring an unattainable number of votes to make a change. The needs and realities of a nonprofit organization can change over time. If it is difficult for the board of directors to make changes to the organization’s governance rules and management structure in line with the current needs of the organization, the bylaws will likely become outdated and the organization may develop a culture that is resistant to change. 

Reviewing Bylaws

Many nonprofits fail to review their bylaws regularly. By reviewing its bylaws at least annually, a nonprofit and its board members can protect themselves from making mistakes and being held liable for their actions. All board members should review their organization’s bylaws at least once a year to ensure their decisions and actions are aligned with all of its provisions. New board members should be provided with the organization’s bylaws as soon as they are appointed to their position and should be required to familiarize themselves with all of its provisions.

Learn How an Experienced Attorney Can Assist with Your Nonprofit Bylaws 

Nonprofit bylaws are an essential component of an organization’s success. Creating provisions that serve to enhance the effectiveness of your organization requires an in-depth understanding of nonprofit organization governance. State-specific nonprofit bylaw requirements, as well as federal requirements relating to 501(c)(3) organizations, must also be considered. At Jennifer V. Abelaj Law Firm, we are committed to assisting nonprofit organizations with all of their legal needs so they can focus on achieving their mission and purpose. Contact our experienced legal team today for a free consultation to learn more.

Non-Profit Employee Handbook

Non-profit organizations are subject to the same employment laws as any other employer, from paying withholding taxes on employee wages to termination and unemployment compensation. Therefore, it is a good idea to have a non-profit employee handbook that outlines that organization’s policies, employee responsibilities and benefits, and other information that a new or existing employee would need to know about working there. At the same time, a non-profit organization may have unique policies and procedures that a for-profit employer may not have. Creating a comprehensive and effective employee handbook requires significant planning as well as understanding state and federal employment laws and other rules and regulations. Jennifer V. Abelaj Law Firm may be able to help you create your non-profit employee handbook. Speak with one of their experienced attorneys at 212-328-9568 to find out more.

What Should You Include in Your Non-Profit Employee Handbook?

One mistake that some employers make when creating an employee handbook is trying to create a policy for every possible thing that could ever happen. This creates an overly complicated, unwieldy, and enormous handbook that employees do not read. If they do not read it, there is a much greater chance they will unknowingly violate a policy or not follow a procedure, creating more work for management unnecessarily.

Instead, non-profits should include the basics that are common to most places of employment. Examples of what employers should consider including are:

• Notice & Disclaimer/Acknowledgement of Receipt
• Policy about employment at-will
• A statement regarding equal opportunity and anti-harassment
• Work authorization
• Employment classification policy
• Policy on unemployment compensation
• Overtime
• Leaves of absence, including parental leave
• Workplace violence/safety
• Conflict of interest
• Code of conduct
• Holidays and other time off
• Health, welfare, insurance benefits, payroll deductions, direct deposit,
• Programs for employee assistance

These are basic sections for an employee handbook. Some of them may not apply to every non-profit and some organizations may need other sections that are not mentioned here.

What Should You Not Include in a Non-Profit Employee Handbook?

When attempting to be comprehensive, employers can unintentionally include phrases, words, or concepts that can later become a problem. While non-profit employers should try to be thorough, there are some things they should not include in a non-profit employee handbook. A few examples include:

• Language that implies if the employee gets through an introductory period, they are less likely to be fired or that there are any other circumstances that make them less likely to be fired.
• The words “permanent employee.” The use of the word permanent would be language implying an employee cannot be fired. Instead, use terms such as “regular employee” to differentiate from temporary staff members and volunteers.
• Burying the disclaimer about at-will employment. This should be prominently placed at the beginning of the handbook to ensure it is seen, read, and understood.
• A narrowly defined list of reasons for termination or statements that imply or specifically state that termination can only be for cause.
• A list of disciplinary actions that can be interpreted as requiring that all or some steps must be followed before termination can occur. While you may need a list of disciplinary actions, it should be clear that offenses are handled individually and may or may not require the use of all disciplinary actions before termination.

This is not a full list. When creating your handbook, the experienced nonprofit attorneys at Jennifer V. Abelaj Law Firm may be able to help you determine which things to include and which to avoid so your handbook is comprehensive yet effective.

Why You Cannot Find and Use a Template As-Is

It is easy to search online and find many templates for employee handbooks. However, while a template can be a good starting point, it is not enough as it is. One reason not to use a template as it is, is that it may not be up to date. In addition, it may also:

• Not consider the non-profit’s state and local laws or use laws from another state that do not apply.
• Not be specific to the organization’s specific needs and therefore, be too general to be effective.
• May use overly complicated legal language that confuses employees instead of clarifying policies.

Non-profits can use a template to save themselves some time and work. This sample employee handbook from the National Council of Nonprofits may be a good beginning. Employers should go through the template they choose carefully and make sure to tailor the sections to their specific needs. They should also consider consulting with a lawyer to ensure they are including all the information they should and not including anything that may cause a problem in the future.

Tips to Ensure Your Handbook’s Effectiveness

Once employers have created a finished non-profit employee handbook, the work is not done. There are a few more things to do that will ensure the handbook’s effectiveness. Consider implementing the following:

• Have employees sign an acknowledgement of receipt and reading upon hire and each update.
• Review the handbook every 1-3 years and update when needed.
• Have standing personnel or a committee to review and revise so updates are consistent.
• Compare current practices to handbook policies and determine which should change. For example, if your dress code is business casual in the handbook, but everyone dresses casually, decide if you need to enforce the dress code or revise it to reflect the way everyone dresses.
• Remove or do not include irrelevant or rare policies that will not be used often. There may be issues that arise only once or twice in the lifetime of the organization if ever and therefore, do not need to be addressed in the handbook.
• Make sure it is not overly verbose or complicated.
• Do not combine policies for different groups. Give regular employees, independent contractors, and volunteers each their own handbooks.
• Offer training or team meetings to go over new and updated policies so employees have a chance to ask questions and gain a better understanding.

Is Your Non-Profit Employee Handbook Effective and Legally Compliant?

Whether you have an existing non-profit employee handbook that you would like to update or need to create one from scratch, an updated and clear handbook is a crucial component of a stable, productive work environment. If you need guidance to create or update your handbook, or you would simply like an experienced attorney to look it over for any legal issues that may arise, consider contacting the Jennifer V. Abelaj Law Firm at 212-328-9568 to find out how one of our experienced attorneys may be able to help.

Millennials and Estate Planning

Millennials and estate planning might not sound like two terms that can go together. However, many members of this generation understand the importance of planning for the future. In the past, younger individuals did not put much thought into their wills and estate plans. Today, millennials are creating a plan to protect their loved ones and assets. If you are a millennial and want to learn more about an estate plan, schedule a consultation with Jennifer V. Abelaj Law Firm by calling 212-328-9568.

What Is Estate Planning?

According to the American Bar Association, estate planning covers the legal and financial matters that relate to the handling of assets and care in the event of a disability or death. Over the past years, millennials and estate planning has become a hot topic. While some individuals in this generation have taken their estate plans seriously, many still do not have a plan in place. An estate plan is much more than a Last Will and Testament (Will). Estate planning does not require having great wealth or a large estate. Anyone with any type of assets, even a small bank account, should consider creating an estate plan.  An estate plan ensures that all your wishes are met in the event of your death or incapacity. When it comes time to create an estate plan for you, schedule a consultation with the experienced estate planning attorneys at Jennifer V. Abelaj Law Firm.

Millennials Need an Estate Plan

According to the United States Government Accountability Office, millennials have less assets than previous generations, however, they still need to think about estate planning. Here are a few points to take into consideration.

Designates Beneficiaries

While many younger millennials might not have a lot of money, most have a bank account. Those who have been in the workforce for a few years could have a 401k retirement plan and/or a life insurance policy. When that person passes away, who will inherit all those assets? With an estate plan, the beneficiaries are clearly designated. Unfortunately, some people die without a will, trust, or an estate plan. In that case, the assets may have to be divided between the living relatives, leading to lengthy court proceedings. Having relatives fight for assets is the last thing anyone wants to happen after they die. 

Medical Power of Attorney

What happens if you become incapacitated or seriously ill? With a medical power of attorney, a designated party can make medical decisions according to your wishes in the estate plan. If a person cannot communicate or make decisions, a power of attorney gives the designated person the right to make any health decisions, including withdrawing life-sustaining medical care. Along with a power of attorney, an estate plan will often include all the burial arrangements and specifies whether the individual wants to donate their organs. Many millennials do not realize that these documents are very important, especially if someone wants to have unique end-of-life wishes. This part of the estate plan allows an individual to appoint someone to act on their behalf regarding any financial or medical decisions. 

Durable Power of Attorney

Power of attorney is centered around more than just medical decisions. If a person becomes incapacitated or seriously ill, then that same person can also make decisions about other affairs in the person’s life, such as paying bills or caring for pets. With a durable power of attorney document, an individual can choose someone to handle depositing checks, dealing with health insurance, or paying rent. The durable power of attorney will remain in effect until the individual withdraws it. Without a durable power of attorney document, then the issue is handled by the probate court. In those cases, a judge will appoint someone to take care of those duties. Creating a comprehensive estate plan provides peace of mind and ensures that all major decisions will be handled by a person you trust. 

Guardianship for Children and Pets

Unfortunately, parents can pass away, leaving custody issues in doubt. The other parent will often raise the children, but there are times when that person is not capable or unwilling to take on the responsibilities. In that case, millennials will want to specify someone to be a guardian to the children. These issues are crucial because if no guardians are appointed, the courts designate someone to care for the children. Choosing a person to provide for your children should not be taken lightly. This individual should have a bond with the kids and be willing to take on this difficult task. Also, only name someone as a guardian after discussing it with them first. Sometimes, people may not want to take on the responsibility of being a “parent” for someone else’s children. 

Many millennials also have pets. Usually, when a person passes away, a friend or relative will take the pets. There have been horror stories about beloved pets being left at shelters with no place to live. For anyone who loves their pets, outlining end-of-life arrangements for them is essential. Like child custody, these arrangements will allow you to choose someone who will uphold your wishes and give your pet a great home in the event of your death. 

Let a New York Estate Planning Attorney Help with Your Estate Plan

Millennials and estate planning might not seem like an expected combination, but most members of this generation realize the importance of these documents. Millennials need to think about what could help in the future with their assets, children, and pets. An estate planning attorney can help ensure the proper distribution of assets while protecting your wishes if you become ill or pass away. If you want to set up a trust, will, or need other estate planning assistance, contact the Jennifer V. Abelaj Law Firm at 212-328-9568.

How To Dissolve A Nonprofit Organization

Whether the plan is to merge with another organization or shut its doors permanently, dissolving a nonprofit organization can be an emotionally charged process. The legal process of terminating a nonprofit and distributing its assets can also be complex. Nonprofits must go through a process with the Internal Revenue Service (IRS) to dissolve legally according to the agency’s rules that govern how to dissolve a nonprofit organization. To learn more about how to dissolve a 501c3, consider reaching out to the Jennifer V. Abelaj Law Firm at 212-328-9568.

Reasons Why Nonprofits Dissolve

Nonprofit organizations dissolve for many reasons, but mergers are one of the most common reasons why nonprofits dissolve. When an individual 501c3 organization becomes part of another organization, it must dissolve. Nonprofits also dissolve when the organization no longer functions or when the Board of Directors votes to end the operation. According to the National Council of Nonprofits, an increase in dissolutions of small and mid-sized nonprofits occurred in recent years because of the coronavirus pandemic. Regardless of what causes the end of a nonprofit, dissolving a 501c3 organization is a significant decision, and the organization’s leaders should understand how to dissolve a nonprofit legally.

How To Dissolve a 501c3

When a nonprofit has performed its mission or would better serve its purposes by merging with another organization, the Board of Directors can decide to dissolve the organization. The Board must take an official vote. However, in cases where no voting members remain, the Board may dissolve the charity corporation on its own motion. That only begins the process. Nonprofit leaders must first make a plan of dissolution, which covers how to take care of the charity’s outstanding liabilities and assets. Then, the organization must resolve the remaining debts, distribute the organization’s assets, and file the appropriate forms with the IRS.

What Happens to the Money When a Nonprofit Dissolves?

In many cases, when a nonprofit terminates, the organization has assets. When a nonprofit terminates, the organization must first take care of its liabilities and pay off its debts. If there is money or other assets left over after paying the debts, the organization must distribute those assets legally. Board members and nonprofit leaders cannot distribute the organization’s money to themselves, their family members, or others. The only legal way to transfer a charity’s assets is to move them to other tax-exempt organizations.

How Will Nonprofit Assets Be Distributed if It Dissolves?

When a nonprofit dissolves, there are two options. The organization can distribute its assets to other nonprofits, or it can sell its assets. The nonprofit cannot give its assets away or transfer them to the leaders in the organization because of the nonprofit’s tax-exempt status.

Transferring Assets

In many cases, it may be desirable to transfer assets. If one organization terminates in order to merge with another organization, it may transfer its assets to the organization with which it intends to merge. When a charity closes without merging, however, it can choose another tax-exempt organization to which to donate its assets. In many cases, organizations elect to give their assets to organizations with similar themes, missions, or objectives. Tax-exempt organizations that are dissolving can choose to donate their funds to any tax-exempt organization, regardless of the existence of similar objectives.

Transferring Trademarks

Many organizations approaching dissolution will have trademarks. As trademarks are valuable assets, charities can transfer them to other tax-exempt groups. Often, nonprofit organizations may choose a recipient organization with a like mission that can benefit from owning existing trademark. When merging one nonprofit organization into another, the registered trademarks will generally transfer to the new organization.

Selling Assets

Although many organizations may see transferring assets as the more desirable choice, selling assets is another legal way to distribute assets when a 501c3 organization closes its doors. When a tax-exempt organization chooses to sell its assets, it must receive fair market value from the buyer. This rule exists to prevent organization leaders from circumventing the rule prohibiting personal asset transfers.

If the Board of Directors of a nonprofit votes to shut down an operation that owns many valuable assets, the temptation may be to suggest selling the assets at a loss to family and friends. However, selling assets at a loss would violate the law, as those assets would be considered gifts. A nonprofit’s tax-exempt status prevents it from being able to distribute assets as gifts. However, selling the assets at fair market value is permissible if transferring to another organization is not the best option.

How To Sell Assets

When an organization chooses to sell—rather than transfer—its assets, there are several steps to remember, including:

• Having assets appraised to ensure that the organization sells the assets for fair market value.
• Keeping a record of all the sales as physical assets become financial assets and must be distributed accordingly

IRS Forms

Terminating a nonprofit organization requires filing the appropriate forms with the IRS to officially end the organization. These forms include:

• Form 990—the form that tells the IRS that the organization is no longer operational. Three versions of Form 990 exist—the general form, 990-N, and 990-EZ—and the organization must choose the correct form based on its gross receipts
• Articles of dissolution or merger
• Plans to end or merge the nonprofit

If a charity fails to submit this paperwork correctly, it may run into problems. A lawyer experienced in non-profit dissolution can help an organization’s leaders avoid some of these issues when dissolving a nonprofit.

State-Specific Rules

In addition to complying with federal law, the dissolution of a nonprofit must also comply with state law. If you have nonprofit dissolution questions specific to New York and New Jersey, the experienced attorney at the Jennifer V. Abelaj Law Firm may be able to help.

Contact a Nonprofit Attorney for Help with Understanding How to Dissolve a Nonprofit

Navigating the end of an established nonprofit organization, whether for merger or other reasons, can be complex. If you are ready to end or merge a nonprofit organization and would like help from a knowledgeable nonprofit attorney, consider contacting the Jennifer V. Abelaj Law Firm by calling 212-328-9568 to schedule a consultation today and learn more about how to dissolve a nonprofit.

The Steps To Take For Effective Intergenerational Wealth

There is a lot more to effective intergenerational wealth planning than estate planning. However, estate planning is an essential component. Intergenerational wealth planning means taking the critical steps to plan for preserving, using, and transferring your wealth to future generations. Estate planning involves a sound and up-to-date will and often requires working with an attorney and financial advisor. Both include preparing and planning to ensure you remain financially independent while distributing your assets according to your preferred time frame and structure. Family and legacy are innate portions of effective intergenerational wealth and estate planning, and there are critical steps to take to preserve your family’s foundation and wealth throughout generations. If you would like to learn more about intergenerational wealth with estate planning, call the Jennifer V. Abelaj Law Firm at 212-328-9568. An experienced estate planning attorney could help protect your legacy and future generations. 

Effective Intergenerational Wealth Planning 

Effective intergenerational wealth planning requires getting together with the family and agreeing to discuss the future of the family’s assets, including real estate, tangible and intangible assets, and businesses. A successful and smooth transition requires open conversation and careful planning and preparation. The planning means minimizing the impact of inheritance tax when it passes to heirs and keeping them from dealing with stress from years of costly probate. Intergenerational wealth planning and management allow the estate owners to control where the money goes after they are gone. It is satisfying for many to get a clear picture of how their wealth will positively impact future generations to come. Passing on wealth to heirs also means handling the process as tax-efficiently as possible. 

The Benefits of Estate Planning 

Estate planning involves carefully structuring an estate to save family members from the unnecessary financial and emotional strain of probate in the future. People often mistakenly believe that estate planning is something that wealthy families do and not something they should waste their time and worry considering. However, there are many things that everyone can benefit from, and every legal adult should begin to prepare and plan. An estate plan ensures a strategic plan for the estate holder’s future healthcare, home, and finances. Individuals can provide for their families and future generations by organizing and estate planning, even when they are gone. Other benefits of estate planning include: 

• Estate planning allows the holder of the estate to distribute assets to family members according to their wishes and the time frame they desire 
• Allows the individual to talk to their family members about opportunities and various options involving finances and assets 
• Estate planning means discussing the advantages and disadvantages of lifetime gifting or leaving family members an inheritance
• They can evaluate whether they would like to set up trusts for heirs 
• Planning means determining how the heritage priorities will impact their family’s future generations
• Organizing and estate planning reduces estate taxes 

Effective generational wealth with estate planning is all the valuable assets a person passes down to their heirs. Arranging the smooth and seamless transfer of wealth is critical in preserving the family’s legacy, ensuring heirs inherit the assets to intend to receive, and minimizing taxes.

The Steps to Take for Effective Intergenerational Wealth and Estate Planning 

It is not uncommon for families to plan to transfer wealth without considering how vital passing on the family legacy is to them. That is especially true concerning details about passing on their philanthropic, social, and economic values. Building a fierce legacy is admirable, making it essential to pass on to future generations. Careful planning and preparation will play a pivotal role in effectively facilitating these considerations in transferring family wealth and estate planning. The first and most vital step for estate planning is determining net worth. They can do this by adding all tangible and intangible assets and then subtracting all liabilities and debt. 

The Tangible Assets 

• Home, real estate, and property 
• Vehicles 
• Collectables 

The Intangible Assets  

Intangible assets are not physical and include: 

• Checking and savings accounts 
• Life insurance policies 
• Stocks and bonds 
• Retirement accounts, including 401k

You have the knowledge and experience to build wealth successfully, and you can pass that knowledge down to your heirs and future generations. It is vital to plan effectively, create a solid estate plan, and review it regularly to make updates. After taking stock of all assets and subtracting liabilities, meet with the family to discuss their desires and needs. Finally, establish the beneficiaries and directives. A seasoned attorney at Jennifer V. Abelaj Law Firm can go over the steps and benefits of addressing intergenerational wealth with estate planning. 

The Common Concerns of Estate Planning  

While there are numerous benefits to intergenerational wealth and estate planning, there are also common concerns to keep in mind. 

Avoiding Probate 

Probate is stressful and costly for family members after losing a loved one. There are executor fees, attorney expenses, administrative fees, and more. The costs can accumulate quickly. Making matters worse, going through probate is almost always an extensive and lengthy process.

Family Disputes 

It is not uncommon for estate planning individuals to believe that family members and heirs can work out disputes and peacefully split assets. Carefully organizing a solid plan can provide unity among the family for years to come. Trusting heirs to divide an inheritance amongst themselves can leave a family in disarray. 

Call an Experienced Estate Lawyer Today to Start Planning  

Effective planning is about taking control of your life and health and planning the passing of your wealth to future generations to ensure intergenerational wealth. The planning will allow you to make essential proactive decisions so your loved ones will not have to make them for you if that time comes. If you are ready to begin your intergenerational wealth with estate planning, call Jennifer V. Abelaj Law Firm at 212-328-9568. You can trust an experienced estate lawyer to help protect your legacy for future generations. 

Should I Start A Nonprofit?

Starting a nonprofit can be an excellent opportunity for entrepreneurs looking to open a new business while helping people and making positive changes in the world around them. Strategizing and building a successful nonprofit requires a particular set of skills. Yet, from a company owner’s perspective, the experience is not significantly different from owning any other small business. Exploring the potential benefits and risks of starting a nonprofit organization can help you decide whether it is the right choice or if starting a traditional business would be the best option. When gathering information and determining if a nonprofit organization is the right path, you must consider various aspects. The essential factors include how you plan to fundraise and fund the business, your mission, and your proposed budget. When prospective business owners are thinking about a new business venture, they commonly wonder, should I start a nonprofit? For more information, call the Jennifer V. Abelaj Law Firm at 212-328-9568 to discuss your options.

The Benefits of Starting a Nonprofit Organization

The mission of nonprofit organizations is to work towards bettering the community and citizens who live there. Opening one is excellent for credibility because it demonstrates philanthropy, trustworthiness, and a desire to do good. Opening a nonprofit can mean helping others while also accommodating a comfortable life for the organization’s leaders and their families. There are many other benefits of starting a nonprofit organization, including:

Running a Nonprofit is a Rewarding Experience

Starting a nonprofit organization allows business owners to see first-hand how the company positively affects the community. For example, opening the doors of an education nonprofit enables business owners to share knowledge, educate others, and bring positive change. 

Nonprofits are Eligible for Separate Entity Status

Nonprofit organizations are increasingly intersecting with LLCs and forming hybrid organizations. Traditional fundraising methods are the cornerstone of nonprofits. Yet, many struggle to raise sufficient funding they need to help their cause. Therefore, organizations are strategically restructuring to include for-profit ventures to raise additional financing without losing their nonprofit status and tax exemptions. When businesses structure correctly, the Internal Revenue Service allows them to operate under both statutes. A knowledgeable attorney at the Jennifer V. Abelaj Law Firm is available to answer questions and help you answer the question: Should I start a nonprofit?

Nonprofits have Limited Liability Protection (LLC)

Nonprofits have the same liability protections as other LLCs and corporations. The protection means that tax laws cannot hold organization leaders or team members personally liable for the nonprofit’s debt.

There are Many Tax-Exemptions and Deductions

The nonprofit association could qualify for tax-exempt status if the business meets specific requirements. Further, there are various other tax exemptions the federal government offers. Under the Internal Revenue Code Section 501(c)(3), the nonprofit is exempt from paying federal income taxes, and donations are tax-deductible for the donors. The requirements for this exemption include being an organization that benefits a charitable, religious, scientific, literary, or educational cause.

Nonprofit Organizations are Eligible for Public and Private Grants 

Public and private grantmakers typically fund nonprofit organizations that qualify for public charity status with the internal revenue service. Nonprofit organizations are eligible for many grants when many other businesses are not eligible to apply. Even for the grants open to for-profit and nonprofit organizations, the latter will take preference in most cases.

Incorporated Nonprofits can Offer Benefits to Employees 

When nonprofit organizations choose to incorporate, they can offer benefits to employees, including health insurance, retirement, and pensions. Nonprofit organization team members typically love their work and dedicate themselves to the cause. They realize the work will not make them wealthy but appreciate helping others and the community. Offering them the benefits means showing them gratitude and appreciation. 

A Successful Nonprofit Could Mean Leaving Behind a Lasting Legacy 

Opening a successful nonprofit business can mean that you are a successful business owner and an important person in history. A nonprofit organization can have a meaningful and lasting impact on people’s lives that they remember for years to come. 

The Disadvantages of Opening a Nonprofit

People commonly see a community’s needs and decide they would like to start a nonprofit organization. Yet, it is essential to note that creating and successfully sustaining a nonprofit business are challenging tasks. It can take years of determination to get the organization running effectively. According to the nonprofit and grant information knowledge base from Candid Learning, the cost of opening a nonprofit organization is often steep. Organizing the business takes plenty of time, money, and effort. Business owners will also need to pay fees to apply for the tax exemption and incorporation. Many also find that hiring an accountant, attorney, or other consultants is also necessary for ensuring they navigate the process correctly. Other disadvantages of starting a nonprofit include: 

• Significant paperwork and detailed record-keeping, more so than with for-profit businesses  
• Articles of incorporation and bylaws limit personal control of individual owners 
• Nonprofit organizations always face public scrutiny 

The most significant disadvantage is the funding limitations typical for nonprofit organizations. Fundraising problems can often be a nonprofit’s most considerable setback and challenge. It is not uncommon for them to find it necessary to discontinue services and support they provide to those in need when they cannot meet fundraising requirements to keep the business running successfully. Grant writer services are also expensive but crucial for obtaining the grants needed to keep the doors open. 

Call an Experienced Nonprofit Lawyer Today

Tax-exempt status and legal liability elimination sound like the right way to go when starting a new organization. However, prospective business owners must consider many crucial elements of running a nonprofit, including raising funds and attracting the right talent with competitive wages and benefits. Running a successful nonprofit organization comes with many challenges. Yet, it can be the most rewarding business venture you can experience with the proper planning and preparation. For more information on, should I start a nonprofit? Call the Jennifer V. Abelaj Law Firm at 212-328-9568. A knowledgeable nonprofit lawyer can help go over the benefits and disadvantages to help you figure out the best option for your new business.

Jennifer V. Abelaj, Esq., CPA was named as a Rising Leader of the Private Client Global Elite Directory for 2023-2024, for second year in a row.

We are pleased to share that Jennifer V. Abelaj, Esq., CPA was named as a Rising Leader of the Private Client Global Elite Directory for 2023-2024. This is the second consecutive year that Jennifer V. Abelaj, Esq., CPA was included in this distinguished list of global advisors.

The Private Client Global Elite Directory was created with the awareness that referrals and recommendations are absolutely key to the private client sector. To know that someone is an excellent technical practitioner is not enough, it is integral for the maintenance of client relationships that the advisors you refer to your clients are good personality fits and masters of communication.

As such, rather than a listing of private client lawyers as chosen by a third party, these are the best Rising Leaders as chosen by their peers in the industry.

Her bio can be found in the following link => Jennifer V. Abelaj | Private Client Global Elite

Top 5 Excuses For Avoiding Estate Planning

It is vital to understand that every adult needs estate planning. While people make many excuses for putting it off, the cost of failing to plan can lead to many negative consequences. Many people neglect estate planning for many reasons, from being too young to worry about estate planning to not having the time. Yet, without an estate plan, you cannot protect your loved ones and beneficiaries from turmoil, conflict, and the stress of spending time in court after your death. Solid estate planning entails careful decision-making and organization, including healthcare directives, beneficiary designation, drafting and execution of legal contracts, and regular review and revisions. To avoid these popular excuses for avoiding estate planning, contact the experienced and compassionate estate planning attorney at Jennifer V. Abelaj Law Firm at 212-328-9568. 

The Top 5 Excuses People Use To Avoid Estate Planning 

There are many reasons that people avoid, delay, or fail to plan an estate altogether.

1. You Think You Are Too Young for an Estate Plan

The most common reason people avoid estate planning is believing they are too young, and that estate planning is only for the elderly. However, everyone needs to prepare for their future and what will happen after they are gone. The best time to prepare and begin estate planning is when a person becomes a legal adult. Many are familiar with the portion of estate planning that involves deciding what will happen to a person’s assets after they are deceased. Yet, an efficient estate plan also means preparing for how loved ones will handle assets if an accident or illness leads to incapacitation.  

The deterioration of mental health can impair a person’s ability to communicate desires with healthcare professionals. In other cases, an unexpected accident can leave a person without the ability to make their own financial or medical decisions. When individuals designate a person to handle tough decisions with their best interest in mind, they know they will receive the quality and type of care they wish to receive. An attorney at Jennifer V. Abelaj Law Firm could help prepare an appropriate estate plan for a younger person, and help them avoid making this specific excuse for avoiding estate planning. 

2. You Think You Do Not Have Enough Assets

A Last Will and Testament (will) may not be necessary for single young adults who do not have children or many assets. However, selecting beneficiaries for life insurance and other intangible assets is crucial. It is also wise for everyone to have a durable and medical power of attorney to designate decision-making authority in the event of an accident or event that limits mental capacity. A living will is also an important estate planning tool for selecting preferences in the case of incapacitation. Finally, establishing solid HIPAA directives will allow those you choose immediate access to private medical records. 

3. You Think Estate Planning is Too Expensive

Many are under the impression that estate planning is expensive and only for the wealthy. Contrary to that belief, a will or other legal contracts and documents are relatively inexpensive. Moreover, fewer assets often mean planning the estate will be less complex, and the expenses to plan will be much lower than those with multiple properties and wealth. 

Estate planning is not too expensive, and ultimately, it should save money in the long run through tax deductions and avoiding the high cost of probate. While there are some fees, the estate holder will need to cover, the benefits of estate planning significantly outweigh the adverse consequences. 

4. You Think Your Heirs Will Handle Everything Peacefully

Everyone likes to believe their family will peacefully handle the distribution of all assets when they are gone. Unfortunately, leaving the heirs to deal with splitting assets and probate often leads to disagreements, fighting amongst family members, and even some losing their inheritance altogether. 

Sadly, this often leads to many internal family problems. When one person ends up controlling  all assets, the money is theirs, and there is no way for other heirs to enforce how they share or spend it legally. There are also issues when the individual with total control has debt. When the assets are in one person’s name, creditors could freeze or take them to pay off outstanding balances. The sound decision is setting up the estate with explicit instructions on splitting the money between heirs and desires on how they spend it in the future. This also gives a person full authority and control in the decision-making process, and peace knowing that their wishes will be followed after their death. 

5. You Think Estate Planning Takes Too Long

Taking the time to plan and prepare now will save time for your loved ones after you pass away. A comprehensive estate plan involves simplifying the legal work now so beneficiaries do not have to in the event of an untimely injury, illness, or death. Preparing an estate plan will save them from enduring a lengthy and costly probate process while they are grieving.

Contact an Experienced Estate Planning Lawyer Today 

A diligent estate planning attorney can help you strategize and prepare an effective plan that protects your legacy and the future of your loved ones. While it is common to put estate planning off or avoid it together, every legal adult should plan and prepare for the future. Carefully planning your estate is the only way to ensure you receive the healthcare you wish to receive if you cannot make important decisions and choose what happens to your assets. For more information on the excuses for avoiding estate planning, and how to overcome them effectively, contact the Jennifer V. Abelaj Law Firm at 212-328-9568. An experienced estate planning lawyer can help answer your questions and work with you to prepare an appropriate and comprehensive estate plan. 

Does Your Organization Meet The Criteria For An Educational 501(c)(3)?

Section 501(c)(3) is a part of the United States Internal Revenue Code that allows nonprofit organizations to apply for tax exemption if they meet certain requirements. The organization must meet one of the exempt purposes designated by the Internal Revenue Code, including educational purposes. Educational purposes can be defined broadly and may apply to organizations other than traditional schools. In addition, not all educational organizations necessarily qualify for tax-exempt status. For an organization to apply for tax-exempt status based on educational purposes, its leaders should make sure that it meets the criteria for an educational 501(c)(3). While obtaining tax-exempt status for your nonprofit can be complex, an experienced nonprofit lawyer can provide useful guidance throughout the process. If you want to learn more about educational 501(c)(3)s or are ready to file for your nonprofit to receive this status, consider contacting the Jennifer V. Abelaj Law Firm by calling 212-328-9568 to schedule a consultation.

What Qualifies as an Educational Organization?

The term “educational purposes” is not specifically defined in the Internal Revenue Code. Rather, the Internal Revenue Service (IRS) refers to Section 1.501 (3)-1(d)(3)(i) of the Code of Federal Regulations for their definition, according to the United States Government Publishing Office, which states that an organization must meet one of the following two requirements to qualify:

• Provide instruction and training of individuals to improve or develop their capabilities or
• Instruct the public regarding subjects useful to the individual that benefit the community

This idea is further elaborated in the same statute’s definition of “charitable,” which includes advancing education as one qualifier. These broadly defined terms allow some organizations that do not directly work in education to claim tax-exempt status based on educational purposes, such as providing a support service to educational organizations. However, educational organizations and other 501(c)(3) organizations will not qualify for exemption if a substantial part of their activities is related to non-exempt purposes.

IRS Restrictions for All 501(c)(3) Organizations

In addition to meeting the criteria for “educational purposes,” educational 501(c)(3) organizations are required to meet the same requirements, according to the Internal Revenue Service (IRS), as all other types of tax-exempt non-profits, including that:

• The nonprofit may not be organized or operated for the benefit of private interests
• None of the organization’s earnings may be distributed to private shareholders or individuals
• The organization may not dedicate a substantial amount of its activities toward influencing legislation, nor participate in any political campaign activities

In addition to meeting these requirements when applying for tax-exempt status, nonprofit organizations must maintain these standards at all times in order to maintain their status. Those who violate the IRS requirements may have their tax-exempt status revoked and could face serious financial penalties. If you have questions about meeting the criteria for an educational 501(c)(3) organization, an experienced nonprofit lawyer at the Jennifer V. Abelaj Law Firm may be able to help.

Is the Organization a Public Charity or Private Foundation?

The IRS classifies each Section 501(c)(3) organization as either a public charity or a private foundation. Educational organizations should be aware of the distinction between these two categories, as each carries its own rules and regulations. The central distinction is the organization’s source of funding. Private foundations are typically under the control of an individual, family, or corporation, and most of their funding comes from a handful of donors and investments. Conversely, public charities generally receive their financial support from a large network of public donators and fundraising.

The vast majority of educational and other Section 501(c)(3) organizations are public charities. Schools automatically qualify as public charities, while certain other types of educational organizations may need to prove that they are publicly supported. In most cases, demonstrating this proof involves showing that at least one third of the organization’s support comes from donations, membership fees, or gross receipts from activities directly related to educational purposes. Those who provide this proof and meet all other criteria may qualify as tax-exempt public charities.

 

What Types of Educational Organizations Qualify?

Schools are the most obvious example of an educational organization, but there are several types of educational activities that could qualify an organization for tax-exempt status under Section 501(c)(3). To qualify, the organization must serve the public good by providing educational activities related to instruction and training. For example, a coding boot camp would be obligated to help its students acquire new skills and become more proficient at coding. If the camp is operated to educate the community without any focus on private interests and meets all other requirements, it could qualify as an educational 501(c)(3) organization.

There are just a few common examples of nonprofit educational organizations. IRS evaluations of exempt purposes are subjective, but several types of organizations could qualify as long as they are dedicated to providing instruction and training without seeking profits. Some of the other types of nonprofit businesses that could qualify for tax-exempt status under Section 501(c)(3) include:

• Trade schools
• Kindergartens and daycares
• Public and private universities
• Museums
• Planetariums
• Public libraries
• Science centers

Applying for 501(c)(3) Classification as an Educational Nonprofit

Those who are in the beginning stages of forming an educational nonprofit will need to meet several requirements before applying for 501(c)(3) tax-exempt status. Extensive paperwork must be filed to incorporate the organization with federal and state governments, and regulations may vary from state to state. Once incorporated, the organization must meet all requirements for 501(c)(3) and provide thorough documentation proving that it meets these requirements. These documents must be submitted along with the IRS Form 1023-series application.

Contact an Experienced Nonprofit Lawyer To Learn More

Applying for tax-exempt status under Section 501(c)(3) of the Internal Revenue Code is a complicated and lengthy process that requires strict adherence to all guidelines. Filing this application is critical to the formation of nonprofits. While organizations may be able to handle the steps internally, many seek help from experienced nonprofit attorneys who understand what is required to successfully obtain tax-exempt status for their clients. If you have questions regarding the criteria for an educational 501(c)(3) or another nonprofit matter, consider contacting a knowledgeable nonprofit lawyer at the Jennifer V. Abelaj Law Firm by calling 212-328-9568 to schedule a consultation today.

What Are The Types Of Trusts?

Creating an estate plan allows a person to better manage his or her assets and wealth. While a Last Will and Testament (will) is commonly associated with estate plans, many individuals choose trusts to transfer their assets to their loved ones. Trusts can provide many advantages, including protecting assets from tax complications. To learn what types of trusts are most suitable for your financial situation and for help with New York estate planning, consider contacting the Jennifer V. Abelaj Law Firm by calling 212-328-9568 to schedule a consultation today.

What Is a Trust?

All trusts are legal agreements between a trustee and a grantor. According to the Internal Revenue Service (IRS), state law dictates how a trust is formed. First, a grantor establishes the trust and transfers assets into it. The grantor can name himself or herself and another individual as the trustees of the trust. The trustee has the responsibility of managing the assets for the grantor. Like a will, a trust can have beneficiaries. Often, the beneficiaries include the spouse, children, other family members, or close friends. Some grantors will name a favorite charity or organization as a beneficiary. After the grantor’s death, the trustee will distribute the assets according to the grantor’s wishes.

What Is Included in a Trust

A trust may include several types of assets, including:

• Life insurance policies
• Real estate property
• Deposit accounts
• Stocks, bonds, and money market accounts
• Antiques
• Business assets and interests

Once an asset transfers into the trust, it belongs to the trust, not the grantor. However, the grantor continues to hold the title of the trust property. At this stage, the grantor and trustee must handle those assets according to the terms of the trust.

Different Types of Trusts

While different trusts accomplish various other goals, they share the common goal of minimizing or eliminating estate taxes while transferring assets to beneficiaries after the death of a loved one. The various types of trusts, though there are many, include two broad categories:

• Revocable trusts
• Irrevocable trusts

Revocable Trusts

Revocable trusts are often called revocable living trusts. This type of trust allows the grantor to maintain complete control of his or her assets while still living. Revocable trusts can be changed or dissolved at any time, hence the name. This type of trust offers more flexibility to the grantor by not making the transfer of assets permanent until his or her death. All the assets remain in the trust until the time of death. At that time, the assets may be distributed immediately. Unlike wills, revocable trusts do not have to go through probate. Therefore, a person’s beneficiaries can receive the assets without the often-lengthy process and with more privacy than probate.

Revocable trusts do, however, come with a few drawbacks. These trusts do not offer asset protection. All assets remain available to the grantor’s creditors. In addition, a revocable trust could interfere with the grantor’s ability to access Medicare or Social Security benefits, which may become an issue if long-term care is needed.

Irrevocable Trusts

Irrevocable trusts are different than revocable trusts. Most significantly, a grantor cannot make changes or modifications to an irrevocable trust after it has been created. Once an asset moves into the control of the trust, the grantor cannot undo that action. These trusts do not offer the same flexibility as revocable trusts, but many individuals choose irrevocable trusts as a safeguard for their assets.

However, like revocable trusts, assets held in irrevocable trusts avoid the probate process by being immediately distributed to the beneficiaries. The grantor has control over when and how the beneficiaries will receive the assets. One significant advantage is that grantors place their assets into irrevocable trusts to protect them from the claims of other beneficiaries or creditors. Placing these assets into an irrevocable trust shelters them from estate and gift taxes. An irrevocable trust appeals to those who want to minimize the tax liability to beneficiaries on a large estate.

Unfortunately, once assets transfer into an irrevocable trust, neither the grantor nor the trustee can access them. The trust terms remain the same, even if the grantor experiences a life change, such as divorce. Creating these trusts costs more than establishing a living trust and could benefit from legal help. Finding the right trust for your specific situation can be complicated. Consider contacting an experienced estate planning attorney at the Jennifer V. Abelaj Law Firm for help with choosing the best option for your estate.

Specialty Trusts

Specialty trusts apply to very specific situations. The most common include:

• Joint trusts
• Testamentary trusts
• Charitable trusts
• Special needs trusts

Joint Trusts

Often, two individuals will want to establish a trust together. This is called a joint trust. Many married couples choose this option. During their lifetime, the two grantors can control their assets. When one of the grantors passes away, the surviving grantor becomes the trustee.

Testamentary Trusts

Another type of trust is called a testamentary trust or will trust. A person’s will sets the guidelines for creating this trust. While these trusts might seem similar to living trusts, they will not go into effect until the person dies. These trusts will go through the probate process and lose some of the privacy protections offered by other options.

Charitable Trusts

Charitable trusts are a common option for many grantors. When setting up a charitable trust, the grantor appoints an organization as a trustee. These trusts fall into the irrevocable trust category.

Special Needs Trusts

Special needs trusts are created for the benefit of mentally or physically disabled individuals under age 65 who require lifelong care. These trusts help provide financial assistance without jeopardizing the person’s Medicaid or Supplemental Security Income (SSI) eligibility. These trusts may also be called Supplemental Needs Trusts (SNT), according to the New York City Human Resources Administration.

Other Specialty Trusts

A few other common trusts include the following:

• Asset Protection Trusts—Offer protection from creditors
• AB Trusts—Like joint trusts but minimize estate taxes for married couples
• Blind Trusts—Beneficiaries have no prior knowledge of the assets in the trust
• Insurance Trusts—Established with an insurance policy

Talk to an Estate Planning Lawyer Today

Trusts are not just for the extremely wealthy. They offer protection of a person’s assets when sharing his or her legacy with loved ones. Having a trust can help a person make sure that the distribution of assets will meet his or her wishes. The types of trusts can vary, but there are plenty of options for your specific situation. Consider contacting a knowledgeable attorney at the Jennifer V. Abelaj Law Firm by calling 212-328-9568 to learn more about your New York estate planning options.