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    Category Archives: Succession Planning

    The Talk You Need to Have With Your Parents

    grandparent and parentWhen you were a kid, your parents probably dreaded the talk they had to have with you.  You know the one.  Well, now that you are an adult, there’s a talk you need to have with your parents that is likely to be just as awkward – which is why so many of us put it off.

    It’s about money.  Specifically, your parent’s money.  The money that may become yours one day. Or may not.

    Whether you or your parents think it’s none of your business, it is.  You are most likely the one(s) who will need to deal with all the financial issues your parents leave behind when they become incapacitated or after they die.

    Not knowing anything about their finances will place you at an immediate disadvantage, making what will be a hard job almost impossible.

    So how do you get the conversation started?  Here are some tips from a recent New York Times column on the subject:

    Think about what you need to know.  You need to know more than where to find the will, you need to know if parents have executed powers of attorney, advance health care directives or a trust as well.  You need to know if they have life insurance or other assets and, if so, where the policy is located.  You need to know if they keep a list of all their debts and, if they bank and pay bills online, you need their log-in information for each account.

    Bring in a support team.  Your parents may feel more comfortable discussing financial issues with their attorney or financial planner present to facilitate the conversation. They may also feel more comfortable talking with all their children at once, or to only one – take family dynamics into consideration.  And call us in at the beginning of the process.  We can help ease the way tremendously.

    Make a plan.  Chances are you will need immediate access to cash in order to pay expenses related to a parent’s passing.  Since probate can be a lengthy process, you may want to plan for this eventuality by having parents establish a revocable living trust, which allows assets to pass outside probate.

    Document storage.  Be sure your parents do NOT store their important documents in a bank safe deposit box because getting at them could require you to obtain a court order.  Use a strongbox or safe that is kept in the home instead. Or make sure you are a signer (and there are back-ups besides you) on the safe deposit box.

    If you would like to have a talk about estate planning for your family, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Planning Session, but because this planning is so important, we’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call Meier Law Firm today at 949.718.0420 and mention this article.

    Family Business Non-Succession?

    The problems founders face when an heir
    announces he/she refuses to reign are significant and extend far beyond the
    hassle of hunting for a replacement in a 
    poor quality applicant pool.  The
    real damage done in this circumstance comes from what happens after the founder
    aborts his retirement plans and attempts to change the mind of his/her child.

    Succession of the family
    business can be a fairly difficult transition for just about everyone involved.
    This can be especially true for the heir apparent. What happens when the heir
    pulls away or even outright rejects the business? Well, the transition gets
    tougher still.

    If you are a family business
    owner, are you intending to keep the business in the family even as you step
    down from control? Have you considered the possibility of designating an heir
    who does not want the family business and do you have a “Plan B” to adjust your
    succession plans accordingly? The reasons why an heir may resist taking up the
    reins to the family business are many facetted, but that doesn’t necessarily
    mean they are making a final, informed decision. No, it may take time, talk,
    and some understanding, and there are lessons to be gleaned from a recent Forbes article on the subject titled “5 Ways Family Business Founders Can Change A
    "Made Up" Mind
    .

    Perhaps it’s best to think of it
    this way: when it comes to succession, your estate planning is simply no longer
    just about your wishes, your hopes, or your dreams. Even if they are selfless,
    everyone else has to do his or her own thinking and planning. This can take
    patience, time and understanding.

    Reference: Forbes
    (September 10, 2012) “5 Ways Family Business Founders Can Change A
    "Made Up" Mind

    Naming Your Business Matters

    There are a number of reasons you might want
    to put your name on your business.

    But before you launch your eponymous company,
    project yourself into the future—the very reason you’ve chosen to name your
    company after yourself may be the reason you shouldn’t.

    When it comes to forming and
    operating your business, sometimes thinking about where to begin means thinking
    about where you will end. For the family business, or the succession-minded
    businessperson, the stumbling block is often the basic question: what do you
    name the business? Should your business bear your name, or should the family
    business bear the family name?

    While some may consider the
    decision a matter of personal or family pride, or even a matter of vanity, that
    doesn’t mean there aren’t important issues in play. The consequences of naming
    your business was tackled recently by Forbes in an article titled “How Having Your Name On Your Business Limits
    Your Options
    .”

    The essential point, however, is
    that putting your name on the company forges an inextricable link. On the plus
    side, this can be a boon if your business and brand do well, especially if your
    heirs carry on the business. On the down side, doing so may not be in the best
    interests of the business, or even your heirs.

    The original article is a quick
    read for a review of some practical considerations and problems. In the end,
    this decision is a tough one.

    Reference: Forbes
    (August 17, 2012) “How Having Your Name On Your Business Limits
    Your Options

    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 Meetings = Family Succession Success

    Succession plans are not one size fits all. Entrepreneurship is always about personal freedom and personal choices, and every entrepreneur has a different mix of goals, values, skills, and circumstances. The succession plan might in fact be the grand finale of these choices.

    Are you the head of a family business and perhaps the head of your family, too? Consider including your family when deciding the fate of your business. In short, a family meeting may be in order.

    Whether a family meeting is an emotional conversation or a very business-like exchange will vary from family to family and business to business. A New York Times article titled “Is My Family Business Going to Be an Orphan?” provides some firsthand wisdom and a practical template to follow.

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

    Reference: The New York Times – You’re The Boss (April 25, 2012) “Is My Family Business Going to Be an Orphan?

    Estate Planning for the Family Farm

    Farmers and ranchers are typically strapped for cash so when one of them dies leaving an estate large enough to be exposed to the federal estate tax the family can expect to have to sell something to cover the tax. That does not have to be the case. The estate tax has been described as a “voluntary” tax. Voluntary, that is, if you are willing and able to take advantage of the planning opportunities that are in the law. If not, life insurance can be a very appealing alternative to having to sell the family farm.

    Living and working on a farm oftentimes means taking a different position toward land itself. If you also own the land, then it means you need to take a different stance toward your assets and your family wealth.

    Farmers are in need of a proper and exhaustive estate plan more than anyone else. Fortunately, Hoosier Ag Today provided some helpful pointers in an article titled “Estate Planning for Family Farms and Ranches.”

    While there are consistently bumper harvests, the land keeps on giving. Unfortunately, the land also is an incredibly valuable thing due to this potential giving. As a result, that value makes it fall prey to estate taxes if you try to pass it on to the next generation.

    To truly own and understand the ownership of your land, it is necessary for a farm owner to make proper estate plans and to prepare for succession of the farm. For small farms that might be a simpler process, even modest planning can help preserve the family and the farm alike.

    In the end, many farms will need far more than modest planning. The key is to select and implement the appropriate strategies for your unique circumstances. I recommend reading the original article, even if you aren’t a Hoosier (or don't even own a farm as the same issues hold true for most businesses).

    Contact Meier Law Firm to discussion the bussiness succession options you can implement in your business.

    Reference: Hoosier Ag Today (June 4, 2012) “Estate Planning for Family Farms and Ranches

    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?

    Business Owners – Exiting Gracefully

    The wealth of many boomers is tied up in businesses they own. And that can be a problem when it comes time to retire.

    If you’re a small business owner, then you probably speak of your business and your life in the same breath. There’s nothing wrong with that. In fact, you are in good company.

    All told, your business is one of the biggest challenges and accomplishments in your life. That said, it’s rare that the business is the only fulfilling thing in your life. In addition, do you really want to continue working in and on your business until the day you die, with no retirement or with old-age eventually getting in the way?

    With your life and your business so intertwined, it makes it all the more necessary to plan properly.

    The Wall Street Journal took up this matter in a recent article titled Preparing to Leave. I recommend this article to your reading list because it both warns of mistakes and offers solutions.

    To whet your appetite, here are the “mistakes” identified:

    1. Creating a business that’s too dependent on the owner.
    2. Ignoring the tax benefits of planning ahead.
    3. Incorrectly valuing the business.
    4. Rushing to accept a rich number.
    5. Hiring your brother-in-law to do the deal.
    6. Underestimating the emotional impact of selling a business.

    Like those old movie matinees, I am going to leave you pondering the solutions to these “cliffhangers.”

    In the end, only you know when to hold’em and ergo when to fold’em when it comes to the continuation of your business. However, don’t delay. You, your loved ones and others dependent on the business will be glad you didn’t.

    Reference: The Wall Street Journal (April 29, 2012) “Preparing to Leave

    The Archie’s Successors … Arch-Enemies?

    Just because two business partners get along well doesn’t mean the next generation will do so too. When succession planning is done in advance, restrictions — or at the very least, mechanisms to dictate how decisions will be made and what procedures are to be used in case of disagreement – can be used to avoid messy, protracted battles.

    Are you a Baby Boomer, or the child of one? If yes, then perhaps you recall the Archie Comics. Unfortunately, that halcyon world of yesteryear has given way to litigation and lawyers. Archie’s Comics has been in a state of war since the passing of the founders and the dysfunctional antics of their successors. There is at least one more lesson to learn from Archie and the gang: proper succession planning.

    The story of the succession and rapid rise in hostilities can be followed in an article in onwallstreet.com titled Archie Comics Power Struggle Provides Valuable Succession Planning Lessons.

    In the end, the Archie Comics tale is too commonly repeated. According to the article, one of the successors actually is accused of slashing the other’s tires; the accuser apparently is under a restraining order keeping them from the company – a restraining order which they have allegedly violated. In short, ugly stuff.

    Too often ugly feuds can break out, even in once idyllic companies. The Archie Comic Publications has been around since 1941, after all, and it was only in 2007/2008 that the newest generation came on board.

    When thinking about your company, it is vital to consider the future beyond your ownership. Who will be the successors? Will they be compatible partners to carry the business forward?

    These and other fundamental issues are better resolved now, rather than later.

    Reference: onwallstreet (April 18, 2012) “Archie Comics Power Struggle Provides Valuable Succession Planning Lessons

    Family Business Mistakes Matter

    Running a family business is the most natural thing in the world–and the most unnatural. Handle it well, and it can make you rich, capitalize on bonds no ordinary colleagues could share, and keep your family employed for generations. Handle it badly, and it can instead keep lawyers employed for generations.

    If you have a family business, then a recent article in Inc. magazine is a must read to avoid unaffordable mistakes. In short, these mistakes can kill your family business.

    The Inc. article is titled the “4 Worst Legal Mistakes a Family Business Can Make.” While I recommend the entire article to your reading, here is some of the wisdom offered:

    1. Do not mix your family finances with those of the business.
    2. Do not muddle along without employment agreements.
    3. Do not forget to get (and remain) street legal with appropriate licenses and filings.
    4. Do not fail to have a succession plan.

    Remember, large or small, your business is just that – a “business.”

    If you treat the company accounts like your personal checkbook, hire and fire employees on a handshake (if that), ignore “legal formalities” attending the creation and operation of the business and take the “get-around-to-it” approach to the succession of the business, then do not be surprised when the business crashes and burns.

    Teaching point: Take time right now to engage competent legal, accounting and financial counsel to help you stay out of trouble … before it is too late.

    Reference: Inc. (April 9, 2012) “4 Worst Legal Mistakes a Family Business Can Make




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