n

Nest Egg Back to Top

When planning to protect your assets from claims of creditors, one theory to consider is the nest-egg theory. This would have you \"salt away\" certain assets as a nest egg, or safety, where they are beyond the reach of creditors.

NIM-CRUT Back to Top

A NIM-CRUT is a "net income make-up" CRUT. A CRUT is a Charitable Remainder Uni-Trust. This is a special form of a CRT which is a charitable remainder trust. This is a type of trust to which you can contribute assts, even highly appreciated assets. The charitable trust, or CRT, can sell those assets and not pay capital gains tax. The proceeds can be reinvested and used to pay you (and your spouse or another designated person, but paying someone other than a spouse raises gift tax issues) for a specified period of years or, more commonly, for life. In a CRUT instead of that annaul (or more frequent) payment being a fixed dollar amount each year, it is based on a percentage of the value of the assets each year. Now for the NIM part. If you transfer appreciated raw land to a CRUT it may not produce any income for years. So the trust is structured so that it doesn't make any payouts to you until the land is sold (FLIP-NIM-CRUT). When the land is sold and the trust is able to invest the proceeds in income producing assets it can then pay you. The NIM part is that the trust can be structured to make up all the annual payments it should have made to you in the years before the propery was sold. This gives you the ability to get even greater payments in later years. If you time the sale of the assets that the CRT holds to your retirement, you can in some sense structure this type of charitable trust to function like a retirement plan.

When properly structured you should qualify for an income tax charitable contribution deductino.

Non-Adverse Party Back to Top

When determining how a trust will be treated for income tax purposes, the definition of "adverse party" is important. If certain prohibited powers are held by someone who is not an adverse party the trust will be treated as a grantor trust for income tax purposes. This means that the trust income will be taxed to the grantor. For purposes of the grantor trust provisions of the Internal Revenue Code, the term "nonadverse party" means any person who is not an adverse party. The term "adverse party" means any person having a substantial beneficial interest in the trust which would be adversely affected by the exercise or nonexercise of the power which he possesses respecting the trust. A person having a general power of appointment over the trust property shall be deemed to have a beneficial interest in the trust.

Non-Compete Back to Top

An agreement in which you commit not to compete with a business or employer is referred to as a non compete agreement. These arrangements are commonly included in employment agreements, shareholder agreements and other arrangements. For example, in exchange for an employer giving you employment, you may be asked to sign an employment agreement that includes a non compete provision. This might, for example, obligate you not to work in a business that is a similar line, within 20 miles of the location of your employer, for two years. The goal of such a provision should be to restrict your ability to take advantage of the contacts and knowledge gained during your employment and fairly protect your employer's business. For the arrangement to be enforceable it may be subjected to reasonableness and other standards. The law governing non compete agreements is extremely complex, and frequently evolving. The law on this also differs significantly from state to state. If the provision is too broad, some courts may cut it back to something reasonable and enforceable, in other circumstances it may be voided.

Non-Recourse Liability Back to Top

A liability for which no person is responsible, only the property securing the debt can be used by the lender to satisfy the debt. For example, if your LLC buys real estate, it may be able to secure non-recourse financing where no Member is personally liable as a guarantor on the debt. If your LLC is taxed as a partnership the partnership tax allocation rules could have important implications to which Members may claim a tax deduction for interest and other items related to this financing.

Notice Back to Top

A formal legal method of informing someone of an event or right. In many contracts (e.g. a shareholders' agreement) provisions are provided for how to give a formal notice that an event has occurred. For example, in a shareholders agreement wherein any shareholder can resign, the shareholders agreement may require that a shareholder who wants to resign to give notification (notice) by sending a certified letter to the corporation at its headquarters and to each shareholder.