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    Joshua and Laura Meier Newport Beach Trust and Estate Planning Attorneys Focused on Helping Families with Young Kids
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    Category Archives: Business Succession

    How to Protect Your Real Estate Assets

    If you own real estate, chances are you have purchased insurance to protect your assets against damage or loss.  But have you taken the necessary steps to protect your assets against lawsuits or probate?

    If you own rental properties, there is likely a nagging fear in the back of your mind about being sued by one of your tenants.  And if there isn’t, there probably should be.  It’s a major risk.Real estate

    And while it may be heartbreaking to think about, there is always a chance your death could trigger a family feud over your home, vacation home or other real estate investments.

    Two common estate planning tools for real estate asset protection are limited liability companies (LLCs) and trusts:


    If you have income-producing property, then an LLC probably makes sense for you, since it protects your personal assets from lawsuits or claims that result from your ownership of the real estate.  LLCs may also offer owners privacy since the property can be listed in a company name, not in your name directly.  However, you must be sure you maintain the LLC properly so the planned for protections remain intact.  It’s not too difficult though, especially with counsel.


    If you own vacation home property that you do not rent out on a regular basis, then a trust may be a better choice for you.  There are several options:  a Qualified Personal Residence Trust (QRPT) is an irrevocable trust (meaning it cannot be changed without the consent of the beneficiaries) that allows an owner to use the property for a fixed term, and then pass the property on to heirs.  This is a commonly used structure to reduce the size of your estate for estate tax purposes.

    A revocable trust (which can be changed without consent of the beneficiaries) is more flexible and, if you choose a dynasty trust, can last for multiple generations.  The major benefit of the revocable trust, besides control of what happens to the assets after the death of the grantors, is that it keeps your assets out of the hands of the Court after your death, and totally within the control of your family.

    You can also use a combination of LLCs and trusts to protect real estate assets if you have a combination of primary residence and rental properties.  We can help you decide on the best course of action for your individual circumstances.

    Call our office today at 949.718.0420
    to schedule a time for us to sit down and talk about an Achieve Your Dreams Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

    Rules Can Keep Your Family Business and Family Together

    Can you imagine spending half of your working life in a family business, beside your mother, father, and brother, and all getting along? And then spending the next half of your work life with your brother, your spouse, your four sons, and three nephews, and still all getting along?  I pinch myself. We have been able to create an environment of mutual respect and trust, one where we can function as a team that shares the emotional and intellectual challenges of business along with its financial rewards.

    How do you successfully transfer your family business within your family? It can be a tricky situation. One successful trick that CNNMoney recently highlighted is the power of rules.

    The article, titled “Family business: How to pass the baton,” is a story about the Mitchell family and the rules they developed to keep their family, as well as their business, intact. As the article illustrates, rules are a way of promising to yourself and future generations that you’ll maintain a strong shareholder’s agreement, operating agreement, or other founding document of the business itself.

    So, what guidelines will help keep your family together and in business at the same time? For some practical ideas, consult the original article for the “Mitchell” rules and consider how they might work for you family business.

    Contact Meier Law Firm to discuss creating a business succession plan for your business.

    Reference: CNNMoney (July 9, 2012) “Family business: How to pass the baton

    Family Limited Partnerships – Worth Another Look (Especially This Year)?

    A FAMILY limited partnership was once a rather esoteric way for wealthy families to centralize the management of real estate and various pots of money. But this is not a normal tax year.

    Sometimes managing family assets is like, well, running a business. Then again, some families actually do run their families like businesses and have enjoyed significant tax advantages by doing so through the use of the Family Limited Partnership.

    A recent article in The New York Times titled “In an Unusual Tax Year, the Wealthy Turn to Partnerships” explores the power of the Family Limited Partnership (FLP). Properly structured, the FLP binds the family into a business arrangement (which is not always a good thing for a family) and, in doing so, allows for the longevity of a business entity, the decreased valuation allowable to private companies, and the simple ability to pool resources for higher investments.

    When used correctly, there is much to be said about the FLP structure. On the other hand, there also are limitations and even outright warnings. For one, no business can safely exist without a purpose, and to form your FLP without a discernible purpose beyond avoiding estate taxes will certainly raise the ire of the IRS. Furthermore, as already intimated, it means the family must act with the swiftness and assurance of a business in their investments. Unfortunately, not all families are capable of acting like a “business.”

    In the end, we face an uncertain and unpromising future in estate and gift laws (and a veritable “fiscal cliff” as a nation for related reasons). Nevertheless, at present we have extremely favorable lifetime gift tax exemptions ($5.12 million) for the remainder of 2012.

    This may be the perfect storm to consider harnessing this powerful tool to generate some security for your family and family investments.

    Contact Meier Law Firm to discuss a Family Limited Partnership and any of you other estate planning needs.

    Reference: The New York Times (July 6, 2012) “In an Unusual Tax Year, the Wealthy Turn to Partnerships

    Shark Attack Nearly Foils Succession Planning

    Briggs never imagined he would need another succession plan so quickly. If the shark had killed him, his clients and employees would have been left out in the cold. His wife would likely not have realized any of the value of the practice he had built up over 15 years, he says.

    Sometimes it takes a shark attack to get someone’s attention. For the rest of us, however, the threat threshold shouldn’t be so high. This is especially true when planning for your business succession.

    So even if you never get much closer to sharks than a screening of Jaws, there’s something to learn from the story of someone who survived the attack and went on to ensure the survival of his business. This tale was recounted in a recent issue of Financial Advisor Magazine titled “Succession Survival Guide.”

    Meet Max Briggs, CEO of FLC Capital Advisors and a business owner with a penchant for skin diving in dangerous waters. Nine months before his shark encounter, Briggs set up a succession plan with his business partner. Thereafter, his partner passed away at age of 42 and the buy/sell agreement provision in the succession plan kicked in. Not only did the arrangement save the business, but the plans also had not been reset before Briggs took his ill-fated dive. As a result, had he not survived the shark attack, the business would have fallen apart.

    Even if you don’t spear fish or run an investment firm like Briggs, the need to make proper succession plans is universal. Without proper planning, your business (and any personal family wealth) could collapse.

    What proper succession planning will mean for you and your business will vary given your unique circumstance, however, it is worth dedicating some time and energy into building a viable plan.

    Contact Meier Law Firm to discuss business succession planning for your business.

    Reference: Financial Advisor Magazine (June 2012) “Succession Survival Guide

    Is Retiring from the Farm Harder than Leaving the Mob?

    So, you are ready to retire. You’ve worked hard for many years and you now look forward to spending time with grandchildren, fishing, golf, or taking that long-delayed trip to Hawaii. But there are just a couple problems that may need to be resolved. First, who will take over the farm?

    If you or someone you love is a farmer, then you know the special challenges that generally come with estate planning and, more specifically, the succession of the farm. Planning for your estate and for your family is a difficult concept, but it’s ever more difficult when it means planning for the land itself.

    A recent article from Drovers Cattle Network titled, “Commentary: Can you retire?” offers an interesting perspective on the farmer’s estate planning challenges. In the end, whether bovine, equine, or straight up agricultural, the problems are the same. Farms are living places in every sense of the word; any overseen gap in a farm is like a missed heartbeat.

    Will there be a missed beat or two between yourself and the next land cultivator? If yes, it may be more than either you or the land (the herd, the flock, or what have you) can bear. Planning for the farm succession is no easy feat in these generations, especially with youth more and more concentrated in urban locations/lifestyles and the farm a perennial casualty to the estate tax.

    It’s important to remember that any successful farm transfer is one that will have to begin early, with a well thought-out plan. How to transfer the farm is another matter, and a complicated one depending on your potential heirs, or buyers, and the farm itself.

    You owe it to yourself and to the land to appreciate these difficulties and form a full-fledged plan to deal with them.

    Contact Meier Law Firm to discuss how you can have a plan in place to leave your business in good hands and retire on your terms.

    Reference: Drovers Cattle Network (May 28, 2012) “Commentary: Can you retire?

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