BUSINESS SUCCESSION PLANNING 101: YOUR BUSINESS NEEDS YOU!

Posted by on Jan 31, 2013 in asset protection, estate planning, Legal News, Probate, Real Estate, tax, Trusts, Wills |

“Expect the best. Prepare for the worst. Capitalize on what comes.” Zig Ziglar

No one wants to focus on their own mortality but most people still have some kind of an end-of-life plan that includes a will and a burial plot. Unfortunately, small business owners tend to forget that their small business could be the largest asset they leave their family … but only if they plan for their business to live longer than they do.

Birth, death, sickness, marriage, divorce, natural disasters…these are all variables that can change your life and the life of your business. Ignoring them is not the answer. A good business succession plan can protect your small business from all of them.

What are the advantages of creating a business succession plan? First, it ensures an agreeable price for a partner’s share of the business and eliminates the need for valuation upon death because the insured agreed to the price beforehand. Second, any life insurance policy benefits will be immediately available to pay for the deceased’s share of the business, with no liquidity issues or time constraints. This effectively prevents the possibility of an external takeover due to cash flow problems or the need to sell business or other assets to cover the cost of the deceased’s interest. And third, a succession plan can greatly aid in allowing for timely settlement of the deceased’s estate, including avoiding probate and the eliminating the estate tax.

What are the most common questions resolved by implementing a business succession plan?

1. Who will be my successor?

2. How much is my business worth?

3. What will happen to my business partners and their families?

4. How will my business be transferred to my partners or heirs?

5. What happens to my company if I become incapacitated?

6. Can I keep my relatives from inheriting my company?

7. How do I protect my spouse and children?

At Wild, Felice & Partners, PA, we are able to provide a full range of legal services to our business clients. Whether buying a new business, selling an old business, or operating a current business, our lawyers are trained to examine all aspects of business planning and see to it that all possible issues are addressed. We pride ourselves on providing accurate advice for your specific business needs. Our law firm provides the knowledge and experience of a large law firm, while giving our clients the hands-on service and attention to detail that only a smaller firm can truly offer. Our lawyers regularly go beyond the customary services, tailoring their work to the specific needs of each client.

Our attorneys are well versed in a wide variety of legal practice areas which allows us to provide our clients with one-stop shopping for all of their legal needs. Rather than having to seek various individual counsels and having the headache of managing your own legal issues and costs, we provide the convenience of one South Florida location for all of your legal needs. You will receive the quality work product of a large law firm and the low cost and high attention to detail that small law firms are valued for.

We realize that each client’s needs are unique and treat each of our clients as if they are our only client. We hope you will take the time to contact one of our attorneys and truly experience all of the benefits that our South Florida law firm has to offer. We are able to provide the expertise and guidance needed to develop a succession plan specifically tailored to your business. Our lawyers are trained to examine all aspects of business planning and see to it that all possible issues are addressed.

For more information on how to plan for you business’ future, contact our South Florida law firm of Wild, Felice & Partners, PA for a free consultation at (954) 944-2855.

It’s a Wild world. Are you protected?SM

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Don’t Be a Jughead. Think About Business Succession Planning

Posted by on Apr 23, 2012 in asset protection, corporate formation, estate planning, Probate, tax |

We’re all familiar with the ever popular Archie Comic book series. However, it’s a shame that the company is now subjected to bitter legal disputes between co-owners, Ms. Silberkleit and Mr. Goldwater, daughter in law and son of two original founders, respectively. Both have very different plans for the future of Archie and lack of common ground is disintegrating their work relationship. Ms. Silberkleit has an injunction issued against her from speaking publicly about the company and Mr. Goldwater has a defamation lawsuit on his back. Both parties have seemingly irreconcilable differences resulting in costly legal expenses, all which could have been avoided by a Business Succession Plan.

The founders of Archie, Louis H. Silberkleit and John L. Goldwater forgot that their business could well have been the largest asset they left their family. A good succession plan could have avoided the flaming legal contentions between the current CEO’s and safeguarded the future of the comic book empire. A crucial thing to consider is who will be the successor of the business. Two leaders of a company that continuously butt heads is unhealthy for the business. Other important affairs to consider are whether you want to keep certain relatives from inheriting your company, how to protect your children, what will happen to your business partners, and what the worth of your business is.

With a solid business succession plan in place, you can be sure of timely settlement of the estate after you are gone, avoid probate, and eliminate estate tax. Also, a solid plan ensures an agreeable price for a partner’s share of the business and ease of life insurance policy payouts. You can avoid liquidity issues and time constraints. This can prevent cash flow problems and the need to sell the business.

Learn from this Archie crisis. Avoid toxic family disputes and legal battles by preparing your South Florida Business Succession Plan today!

For more information on successful Florida estate planning and probate techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 or via email at info@wfplaw.com to schedule your free consultation.

It’s a Wild world. Are you protected?

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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.

Documentation 

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.

Liquidation 

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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Moving Forward for Small Businesses

Posted by on Jun 23, 2020 in Legal News |

The impact of Coronavirus on small businesses has been devastating. While the Small Business Administration gave out loans to help small business owners make it through, many are still struggling or were unable to secure the loan before the money ran out. 

There’s no doubting that small businesses are truly a cornerstone of the American economy. Businesses with less than five-hundred employees account for nearly half of the American workforce and over 43% of the U.S. GDP (Gross Domestic Product). 

One of the main reasons for the struggle is the uncertainly. How long will this last? Will there be a second wave? A second CARES Act? There are a few things to note if you’re a small business looking to keep moving forward. As things open up, keep the following in mind: 

Contingency Plans 

If you haven’t already, make detailed contingency plans in the event of a second wave. Making plans helps people achieve goals, and writing those concrete plans down increases your chance of success. When creating a contingency plan, make sure that you look ahead—what will you do if things are worse in twenty days? Better? This forward-thinking will help in the long run. You won’t feel blindsided. 

Apply for CARES Act Loans if You Haven’t Already 

Currently, this is the link for more information for businesses and lenders: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses. There is an application that you must fill out, and you will likely have to wait in line. The SBA is swamped, and lending $349 billion is as difficult as it sounds. The money goes through the banks, which then lend the loans directly to local businesses. 

Be Prepared to Wait

Be prepared to wait in line. This means including, in your contingency plans, things that you should do to preserve what you can while you’re waiting for your loan. Help your employees contact the government about their loans (unemployment has been increased), and continuously check in with them. Though the idea of waiting might seem daunting, it is important that you don’t let that discourage you from getting in line for the CARES loans.

Your Customers’ Needs Have Changed 

People are soon going to be able to leave the house. Your business needs to change with customers’ changing needs. Comply with the current regulations, whether that means increasing your drive-through or takeout or taking other, similar measures. Do what you can, and reach out to your customers to see how you can keep your connection to them going. 

Consider Other Sources of Relief

Organizations and companies like Verizon, Amazon, Facebook, and the James Beard Foundation are all examples of the private sector stepping up. These relief programs all have their own specifics, but some of them may be able to help you. Above all, keep abreast of the latest developments in the news regarding relief programs, whether privately- or publicly-funded. You don’t want to be the last to know. 

Business Succession Plan 

Lastly, one thing to think about is making sure you have an iron-clad business succession plan in place if something happens to you. We’re not out of the woods yet. Make sure you have a written estate plan that details what you want to happen to your business if you die. Contact an estate planning attorney to make sure it is done correctly.

Everyone is struggling during the Coronavirus, so you are not alone. The constant uncertainty about the virus and the disagreements on how to handle it can be overwhelming. Set out to accomplish one small thing per day. Overloading yourself will only make the feeling of being overwhelmed worse. Hopefully, things will get back to normal soon. 

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Estate Planning for Small Businesses

Posted by on Oct 15, 2019 in Legal News |

When people think of estate planning (do people who aren’t lawyers think about estate planning?), they generally only consider it in an individual sense. That’s an important area of estate law, but it is not the only area, by far. Estate planning for small businesses is vital to ensuring the long-term success of your business. You’ve worked hard for what you have, and you want it to last. 

Here are some issues affecting small businesses that make it vital for small businesses to engage with an estate planning attorney:

Taxes 

It’s nicknamed the death tax, but the IRS pretends that nickname doesn’t exist and instead calls it the estate tax. The death tax still exists, and it will affect your small business if the business is part of your estate and meets the financial threshold. The death tax is a tax on the decedent’s (dead person’s) right to transfer their property after death. 

That’s right, even your exit from this earth is taxed. Your small business could be affected by this tax, losing some of its value. However, there are exclusions you can claim or potential deferments of which your heirs can take advantage of. Estate planning will help minimize the tax burden that your small business faces when you pass on.

Trusts, Wills, and Avoiding Probate 

Speaking of transferring property, do you know what will happen to your company if you die? Estate planning for small business includes plans for what will come after the death of the owner. A healthy estate plan will allow your business to avoid probate or being picked apart by creditors. That way, your company’s financial future is far more secure.

Buy-Sell Agreements 

If you aren’t the only owner of your business, you should look into a buy-sell agreement, which will likely be necessary in this situation. Simply put, this type of agreement mandates that the shareholders, upon your death or some other condition, sell their stake at fair market value to others. 

Family-Run Business Issues 

Family-run companies might run into different legal issues than other small businesses, particularly when it comes to succession plans. Family businesses keep things in the family, but there also tends to be an informal structure and culture. There might be pressure to hire other family members, a lack of training, high turnover for non-familiar employees, and other issues that come from keeping a business in the family. 

This isn’t to say that family-run businesses aren’t awesome—they are. But, they do experience their fair share of potential pitfalls specific to such a personalized enterprise. Estate planning, especially for family businesses who have an informal structure, will provide a firm plan and minimize disputes that could otherwise be the downfall of your small business.

Insurance

Life insurance is great for a small business owner because, if the owner dies, the business might not provide enough money for the owner’s family to live on. Life insurance is a big-picture policy. Term life insurance will help you provide for your family after you pass on. 

Sole Proprietorship Concerns

Succession plans are especially important for a sole proprietorship. If you are a sole proprietor, estate planning will help you tell your heirs either how to run your business when you’re gone or what to do with it when you pass away (sell, transfer, etc.). Estate planning will help you lay out that information for your heirs and make the succession and transfer of the company as smooth as possible. 

Small business estate planning is no small matter. Whether you own a sole proprietorship or an LLC, there are a lot of ways that estate planning can provide for your business’s future. There is no reason a good business with a solid financial foundation should be brought down by an issue estate planning could fix. Contact an estate planning attorney today.

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