Succession Planning for Your Business

Posted by on Mar 19, 2020 in Business Plan, Legal News |

Your business is important to you. You have worked hard to achieve the success your company has, and you want to make sure that your business is protected even after you are long gone. Succession planning is part of a well-rounded estate plan. Business owners use succession planning to determine who will take over their company—if anyone—after they die. Here are the things to know about succession planning. 

Life Insurance 

It might seem odd to start a succession planning discussion with life insurance, but, if you die with life insurance, you should direct the life insurance payout to your business. That way, your company gets a cash boost during a tumultuous time. There will be enough money in the bank to satisfy the payroll, and the cash influx will prove instrumental in ensuring a smooth succession—if there is to be one.


Have you thought about what you want to happen to your business if you die? If so, it is important to document this in writing. Only you can make this decision, though it is wise to confer with your management team as to what they think should happen. Once you feel comfortable, document it in writing. Contact an estate planning attorney to ensure that your documentation is properly done. Otherwise, your business may be put in the middle of an acrimonious succession.


Perhaps you want your business to be liquidated and sold after you die. An M&A transaction stands for “Mergers and Acquisitions.” M&A transactions are complicated. During these transactions, ownership of the business (or the cash from the liquidation) is transferred to another entity or the company is consolidated with another entity. If you decide that this is what you want to have happen after you die, that also needs to be documented.

During an M&A transaction, some of your management team will need to stay on to see the process through. Give some consideration to how you want to incentivize them to stay through the process, even though it means that they will be losing their jobs. 

Other Considerations 

You might also want to keep your business in the family. Only you can determine whether your children are the best ones to take over your business, but note that, in terms of family transfers, a business is gifted to your kids, not sold. 

This is actually a good thing because it helps avoid certain taxes if you still want income from the business. If your kid has to buy your business, they will first have to make the money and pay taxes on it. After that, you will be paid a dividend on which you will have to pay a capital gains tax. Though gifting means you won’t get anything in return for the ownership you gift your kids, this could pay off in the long run, if you are being kept financially secure by your old company.

Buy-Sell Agreements 

If you’re not gifting your business and your company has multiple owners, you will likely run into one of these buy-sell arrangements: an entity plan or a cross purchase agreement. 

In an entity plan, each owner of the business has their own private agreement with the business as an entity. This agreement states that the entity will buy the dead owner’s interest after his/her death. 

In a cross purchase agreement, there are usually two or three people who own the business. the cross purchase agreement is established between the owners. When one dies, the surviving owners each purchase a proportionate share of the dead owner’s interest. 

All of this is a little confusing, and that isn’t a bad thing. You want a succession plan to be detailed and comprehensive. Hire an estate planning attorney to ensure that your succession plan is done properly and documented correctly.

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Most Common Questions About Wills and Probate (And Answers)

Posted by on Mar 13, 2020 in Wills |

The subjects of wills and probate are very detailed. There could be pages and pages about each of them, and the majority of it would be complicated legal jargon that almost no one understands. In this article, we’ll simplify answers to the most commonly-asked questions about wills and probate. 

What is a Will?

A will (also known as a last will and testament) is a legal document. A person writes a will when they want to express their last wishes as to how they want their property to be distributed after they die. The will also will name someone to manage their estate until it is wound up (i.e. until the final distribution is made). 

The person who writes the will is called a testator. The person who manages the estate after the testator dies is called an executor. The people the testator leaves assets to in the will are known as beneficiaries.

What is Probate? 

Just because someone has written a last will and testament does not mean that the document will automatically go into effect without a court stepping in. Probate is not a legal document—it is a judicial process. During the probate process, the last will and testament is proven valid. There must be no undue influence (people manipulating the testator), all the assets must be present and accounted for, and the will must be properly executed. If the will checks out, it will be accepted by the court as a valid public document.

Is there a Minimum Asset Requirement? 

There is no minimum asset requirement for writing a will. Whether you have $1 or $1 million, you can still write a will. Many people (especially young people) think that because they do not have many assets or are a renter, they do not need a will. However, even people just starting out have at least some assets to their name and should write a will.

What Happens if I Don’t Have a Will?

If you don’t have a will, things get messy. People who die without a will are said to die intestate. In that case, the laws of your state govern how your assets are distributed. Generally, creditors are paid off first from your assets. Assets can include bank accounts, real estate, securities, stocks, houses, and possessions you own. After creditors are paid and your debts cleared, the court will organize the distribution of your assets itself.

As you can see, this is not an individualized process. A court’s goal is to clear your debts and wind up your estate quickly and efficiently. This means that your family will likely not get the assets you would want them to receive after you died. It also means your family will be tangled up in court for a long time.

Living Will vs. Last Will

A living will, also known as a healthcare directive, applies when you are still alive. It spells out your healthcare decisions in the event that you are too sick to tell a doctor what you want. For example, if you do not want to be resuscitated if your heart stops, this is something you would specify in a living will. 

Should I Write My Will Myself? 

Tempting though it may be to go on LegalZoom and write your will yourself, that is not a good idea. Though wills are overly complex, there are finicky details that are easy to miss if you do not have legal training. Missing one tiny detail can lead to a costly mistake that burdens your family after you’re gone. It is best to seek out an attorney for help.

Hopefully, this has helped you gain at least a basic knowledge of the will process and probate process. If you have more questions or want to write a will, you should contact an estate planning attorney. 

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Estate Planning and Retirement

Posted by on Mar 13, 2020 in asset protection |

When it comes to retirement, you want to feel secure. You’ve put in a good few decades of work, and you want to be able to ensure that you’re able to live out the rest of your life comfortable. Estate planning can help you do so. There are several things to consider when you are working retirement into your estate plan. This article will cover the basics when it comes to planning for retirement, but you’ll want to contact an estate planning attorney for more detailed information on your particular situation. 

The Relation Between the Two 

Technically, a retirement plan should include a good estate plan (as opposed to the other way around). The period during which you are retired is likely to be the one where your estate plan comes into effect. When it comes to retirement, you can plan out your finances through a few tools. The IRA, Roth IRA, and 401(K) are three of the most common—and the most often-conflated. 

What is an IRA?

“IRA” stands for “Individual Retirement Account.” The IRA lets you save money for your retirement in a way that is tax advantaged. The IRS wants to encourage responsible money-saving for retirement, and tax-advantaged plans are one way of incentivizing that. A traditional IRA is pretty straightforward. You make contributions to your IRA with money that the IRS will allow you to deduct on your tax return. The earnings on the money in your IRA are then tax-deferred until you withdraw them in retirement. Then, once withdrawn, they are taxed. 

What is a Roth IRA?

The Roth IRA differs from a traditional IRA in the taxation. With a traditional IRA, the tax payments are deferred until you withdraw your funds. However, the Roth IRA switches that. You are taxed on the contributions you make into your Roth IRA. Then, when you make withdrawals, those withdrawals are not taxed. 

You might want to choose a Roth IRA if you think your taxes will be higher when you are retired than they are now, while you are working (and not spending your IRA). However, there are income limits. You might be barred from opening a Roth IRA if you make too much income. You can only put in $5,500 a year if you’re under 50. People over 50 are capped at $6,500 per year. There is no minimum requirement for either age bracket. 

What is a 401(k)?

The 401(k) is another retirement plan that you’re likely to hear a lot of. The 401(k) is qualified, and it allows employees to save and invest their earnings into a retirement plan. Employers sponsor this 401(k). Only employers can sponsor their employees, which makes the plan different from an IRA/Roth IRA, where people sponsor themselves. 

The 401(k) is given that name because it is the section of the tax code that sets the plan up. The payments are tax-deferred, and employees contribute untaxed portions of their wages into the plan. When they make a withdrawal, the withdrawals are subject to taxation.

Listing Financial Information

When you’re considering these retirement plans, it’s important to think of the big picture with estate planning. You should make a comprehensive, detailed list of all of your financial tools and beneficiaries when you are creating your estate plan. This not only makes it easier for you to be organized, it helps your family get a clear picture of your finances after you pass on.

Again, these are just the basic definitions of tools for retirement. Consulting with an estate planning attorney will allow you to get a better handle on your estate plan and how the two relate.


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Ways to Protect Your Loved Ones This Valentine’s Day

Posted by on Feb 23, 2020 in Legal News |

Valentine’s Day is the season of cards, flowers, roses, and chocolate. This romantic holiday has been around for centuries, ever since 496 A.D. Back then, the Romans hosted the holiday, which they called Lupercalia. Lupercalia was celebrated as the beginning of springtime, but, over the years, it has been changed both in name and in purpose. 

Valentine’s Day is all about showing love. While cards and chocolate are nice gifts, they are somewhat fleeting. If you want a gift that will last, consider how you can use estate planning to achieve that goal. 

Your Spouse (Or Spouse-to-Be)

Your Estate 

If you are married, about to be married, or are in a civil union, estate planning is important to ensure that your spouse has some protection in the event that you die or fall ill. Even if you and your partner are not married, failure to plan will cause you to have issues with inheritance and end-of-life medical care. 

A typical estate planning tool that can provide for a spouse/long-term partner after your death is a revocable trust. A revocable trust arrangement can take many forms, but the most common is the continual income trust. This legal document is devised by the grantee (you) for the grantor’s (your spouse’s) remaining life. Your estate will pay out a distribution to your spouse after you die for the rest of their life. Other grantors can include your children, grandchildren, or other relatives. 

An example of this is Frances Bean Cobain, the daughter of Nirvana frontman Kurt Cobain. After her father’s tragic death, Frances Bean Cobain revealed that Cobain left a huge chunk of his estate. She gets over $100,000 per month from his estate to this day.

Medical Care

Another important aspect of this type of planning for spouses/partners is end-of-life medical care. If you make your spouse your power of attorney, that will allow him or her to have a say in your financial and medical decisions when you are unable to make them for yourself. Assumedly, you trust your spouse and find them responsible. Giving the person closest to you control over such important, personal decisions is an important aspect of an estate plan. This works both ways. 

Your Kids

If something were to happen to you and your spouse, who would you want to take care of your children? Part of your estate plan should involve your kids. This includes not only estate distributions, such as in the case of Kurt Cobain’s daughter, but also guardianship. Guardianship refers to the person who will take care of your kids until they reach the age of majority (18).

Discuss these plans with your proposed guardian to make sure they are on board and consider themselves fit to assume the role of guardian, should anything happen. Most common choices include grandparents and aunts and uncles. 

Your Parents/Grandparents 

This one applies to those of us who have aging parents. If your parents or grandparents have not put together an estate plan, it is important that they do so. For example, if you know your elderly relatives have very specific medical wishes (such as a DNR), they should include those in an estate plan. That way, the hospital and end-of-life caregivers will honor these wishes even when your elderly relatives cannot communicate them.

Other Loved Ones 

Estate plans can include anyone. If you have assets that you want to leave to specific relatives, that is something that estate planning can handle. If you don’t make these arrangements before death, your chosen relatives might not get what you want them to. Instead, your assets will be divvied up and sold off by probate court.

As you can see, there is more than one way to show your loved ones how much you care about them. Estate planning provides a useful way to give a gift that will last long after you’re gone. 

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Making the Most of Tax Exemptions

Posted by on Feb 23, 2020 in Legal News |

I think we can all agree that one of the highlights of paying taxes (since we all have to pay them) is seeing how much we can avoid having to pay. In this article, we’ll talk about how to make the most of exemptions for which you might qualify. Don’t forget—tax day is April 15th, and you should start working on your taxes now to avoid possible penalties for lateness or inaccuracy. 

What is a Tax Exemption? 

Getting the vocabulary correct is essential to accurate taxes. A tax exemption is the removal of a liability to pay. A tax exemption reduces or removes a compulsory payment that you (or your estate) would have to pay. Tax-exempt status, as it’s known, can provide complete or partial relief from taxes. An example of an entity with tax-exempt status is a church. 

What is a Tax Deduction? 

A tax deduction is a little different. This income is the result of expenses you incur, usually for a business. A tax deduction reduces your income, and they are a form of tax incentive. Exemptions and credits are the other two tax incentives available. 

What is a Tax Credit? 

Thirdly, a tax credit is a tax incentive that allows taxpayers to reduce the payment they owe to the IRS. They subtract the amount of the credit accrued from the total payment owed to the IRS. This credit can be granted as a form of state support or as a recognition of taxes that you have already paid. 

Each of these incentives is unique in their own way, but the bottom line is the same. These incentives allow you to pay less money to the government, if you know how to take advantage of them.

Standard v. Itemized Deductions

With standard and itemized deductions, you pick one or the other. A standard deduction is a flat dollar amount that you can subtract from your income before the income tax is levied. The standard deduction changes based on your filing status (Married, Single, etc.). For example, in 2019, people who were filing as Head of Household over the age of 65 in 2019 could take a standard deduction of $1,650. 

Itemized deductions, by contrast, require their own form. These are eligible expenses that you can claim on your tax form. These expenses are deducted from your final, taxable income. They decrease your taxable income, and you can claim itemized deductions if you are not taking the standard deduction. Making the decision as to which to take—itemized or standard—is easy. Pick the one that saves you the most money. If your standard deduction would be (for example) $2,000 and your itemized deduction $1,850, take the standard deduction.

Most Overlooked Itemized Deductions 

Should you choose itemized deductions, make sure that you aren’t overlooking some common ones. The most commonly-itemized deductions include charitable payments, medical expenses, dental expenses, home mortgage points, work-related education expenses, state/local income tax, sales/property tax, personal casualty losses, business use of your home, and more. All of these have their own caps and requirements to take them. 

Note that several deductions will be unavailable through 2025. The IRS took them off the list in 2018, and they will remain that way for five more years. Items like home equity lines of credit, loans, alimony, moving expenses, certain types of casualty losses, and other miscellaneous deductions are not available. 

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