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 comfortably. 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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