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Business Succession

Monday, August 10, 2015

My Business is Small. Do I Need a Succession Plan?

A Minneapolis Estate Planning Attorney Explains the Value of Drafting a Business Succession Plan for Small Business Owners 

Business succession planning is a practice or set of estate planning practices used by business owners to ensure that a small business can run successfully in the event of their death or in the unfortunate circumstance where they are unable to manage or operate the business.   I receive a lot of inquiries on this topic.  People want to know if they need a business succession plan or if they are somehow covered by wills and living trusts.  I usually walk people through a basic set of questions such as:


Read more . . .


Monday, March 30, 2015

For How Long Should a Business Keep Tax Records?


Minnesota Estate Planning Lawyer Talks About the Issues Related to Keeping Tax Records

There are many reasons for retaining tax records. They can be a useful guide for business planning, for tracking receipts and expenses, and in cases where the company or shares are being sold to outside parties.

The IRS expects taxpayers to keep records for as long as they are needed to administer any part of the Internal Revenue Code. In other words, if you fail to keep records, and an item in a past return is questioned, you may not have the documentation you need to defend yourself and avoid taxes and penalties. In addition, insurance companies and creditors may wish to see tax returns even after the IRS no longer does.
Read more . . .


Monday, March 31, 2014

Transferring Shares in A Business


Estate Planning: How Certificates of Shares Are Passed Down

How is the funding handled if you decide to use a living trust?

Certificates represent shares of a company. There are generally two types of company shares: those for a publicly traded company, and those for a privately held company, which is not traded on one of the stock exchanges.

Let's assume you hold the physical share certificates of a publicly held company and the shares are not held in a brokerage account. If, upon your death, you own shares of that company's stock in certificated form, the first step is to have the court appoint an executor of your estate.

Once appointed, the executor would write to the transfer agent for the company, fill out some forms, present copies of the court documents showing their authority to act for your estate, and request that the stock certificates be re-issued to the estate beneficiaries.
Read more . . .


Monday, September 16, 2013

A Simple Will Is Not Enough


A Minnesota Estate Planning Attorney Explains Why You Need to do More Than Draft a Will

A basic last will and testament cannot accomplish every goal of estate planning; in fact, it often cannot even accomplish the most common goals.  This fact often surprises people who are going through the estate planning process for the first time.  In addition to a last will and testament, there are other important planning tools which are necessary to ensure your estate planning wishes are honored.

Beneficiary Designations
Do you have a pension plan, 401(k), life insurance, a bank account with a pay-on-death directive, or investments in transfer-on-death (TOD) form?

When you established each of these accounts, you designated at least one beneficiary of the account in the event of your death.  You cannot use your will to change or override the beneficiary designations of such accounts.
Read more . . .


Monday, May 13, 2013

Overview: Buy-Sell Agreements and Your Small Business


Minneapolis Business Lawyer Explains Why Your Small Business Needs a Buy-Sell Agreement

If you co-own a business, you need a buy-sell agreement. Also called a buyout agreement, this document is essentially the business world’s equivalent of a prenup. An effective buy-sell agreement helps prevent conflict between the company’s owners, while also preserving the company’s closely held status. Any business with more than one owner should address this issue upfront, before problems arise.

With a proper buy-sell agreement, all business owners are protected in the event one of the owners wishes to leave the company.
Read more . . .


Wednesday, May 8, 2013

Family Business: Preserving Your Legacy for Generations to Come


A Twin Cities Business Lawyer Discusses How You Can Protect Your Family Business

Your family-owned business is not just one of your most significant assets, it is also your legacy. Both must be protected by implementing a transition plan to arrange for transfer to your children or other loved ones upon your retirement or death.


More than 70 percent of family businesses do not survive the transition to the next generation. Ensuring your family does not fall victim to the same fate requires a unique combination of proper estate and tax planning, business acumen and common-sense communication with those closest to you. Below are some steps you can take today to make sure your family business continues from generation to generation.
Read more . . .


Monday, April 15, 2013

Which Business Structure is Right for You?


Minneapolis Small Business Attorney Explains the Different Types of Business Entities

Which entity is best for your business depends on many factors, and the decision can have a significant impact on both profitability and asset protection afforded to its owners. Below is an overview of the most common business structures.

Sole Proprietorship
The sole proprietorship is the simplest and least regulated of all business structures. For legal and tax purposes, the sole proprietorship’s owner and the business are one and the same. The liabilities of the business are personal to the owner, and the business terminates when the owner dies.
Read more . . .


Friday, March 22, 2013

Estate Planning Lessons, Part 3: The Family Business

This is a continuation of the series I've been writing on the estate planning lessons taught to me by the recent deaths in my own family.  My father was a dreamer. He left a job with a large company here to follow his dream of having his own business.  He founded that business over 23 years ago and devoted most of his energy to keeping it alive and then to helping it grow.

Upon his death, I learned that the only asset listed solely in his name were the shares of his stock in the company. Further, he had a will that was over 15 years old. I'm not sure that his estate planning lawyer knew about the stock in the company and it doesn't matter now. It has created an estate administration nightmare for our family because his assets were to be divided equally between his spouse and a family trust. What's wrong with that?

1.  They did not want a trust once the kids reached 23 but the will doesn't contain language to that effect.

2.  That tax status of the company is in jeopardy if a trust holds it's stock. Luckily, such events were anticipated and we have a 2-year grace period to decide what to do with those shares before we have issues with the IRS.

3.  The trustee must jump through additional hoops to get the shares and/or dividends from last year to the "new beneficiary" (i.e. the family trust).

All of these issues could have been resolved with careful planning and some knowledge of my father's specific situation and a follow up to see if things had changed.

It is important that you work with an attorney who will take the time to sit and talk through what you want for your family - now and in the future - so your family can avoid these types of headaches later.


Thursday, June 21, 2012

Utilizing Family Limited Partnerships as Part of Your Estate Plan


Utilizing Family Limited Partnerships as Part of Your Estate Plan

Designed to preserve family businesses for future generations, Family Limited Partnerships (FLPs) can help shelter your assets and reduce overall estate and gift taxes. FLPs are commonly used as part of business succession planning, business continuity plans, and often serve as an integral component of an estate plan for high net worth individuals.

A Family Limited Partnership is typically established by married couples who place assets in the FLP and serve as its general partners. They may then grant limited-partnership interests to the children, of up to 99% of the value of the FLP’s assets. When this occurs, the assets are removed from the general partners’ estates, thus saving on future estate taxes.
Read more . . .


Monday, May 28, 2012

Limited Liability Company (LLC): An Overview


Limited Liability Company (LLC): An Overview

The limited liability company (LLC) is a hybrid type of business structure, offering business owners the best of both worlds: the simplicity of a sole proprietorship or partnership, with the liability protection of a corporation. A limited liability company consists of one or more owners (called “members”) who actively manage the company’s business affairs. LLCs are relatively simple to establish and operate, with minimal annual filing requirements in most jurisdictions.


The best form of business structure depends on many factors, and must be determined according to your particular business and overall goals:

Advantages

  • LLC members enjoy a limited liability, similar to that of a shareholder in a corporation. In general, your risk is limited to the amount of your investment in the limited liability company.
    Read more . . .


Saturday, February 18, 2012

Overview: Buy-Sell Agreements and Your Small Business


Overview: Buy-Sell Agreements and Your Small Business

If you co-own a business, you need a buy-sell agreement. Also called a buyout agreement, this document is essentially the business world’s equivalent of a prenup. An effective buy-sell agreement helps prevent conflict between the company’s owners, while also preserving the company’s closely held status. Any business with more than one owner should address this issue upfront, before problems arise.

With a proper buy-sell agreement, all business owners are protected in the event one of the owners wishes to leave the company.
Read more . . .


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From within Hennepin County Unique Estate Law represents clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park.


9.3Chris Tymchuck

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