We are a different kind of Estate Planning and Small Business law firm
It is not enough for a law firm to say they are different. They actually have to be different, to come from a totally different mindset, to have a totally different business model, and to have a totally different way of working with clients. We don’t just say we are different – we actually are.
The traditional experience, whether you are looking for estate planning or small business law, is to go to an attorney when you need something specific handled, like a will or a trust, or incorporation documents or a contract drafted. That attorney listens attentively, drafts whatever it is that you need, charges you for the document (and you may or may not have known the cost in advance), and then you go your merry way.
Maybe you will get a holiday card from your attorney (if you are lucky), but otherwise you don’t hear from them and they don’t hear from you. Of course, why would you call them? If you called them, that would start the billing meter running again.
Then, life happens, your circumstances change, the law changes, and your whatever-it-was legal document is no longer doing its job.
If it’s an estate plan, your estate is going to have to go through probate, despite your intentions otherwise, or your estate is now taxable, or your disabled beneficiary is now going to lose their ability to get the help they need. All sorts of things can happen that affect your estate plan.
If it’s a business matter, things happen even more rapidly and operating without the right legal advice can get you into a lot of trouble. The wipe-you-off-the-map kind of trouble.
You think you are protected because you went to see that lawyer whenever-it-was in the past, but really it’s a false sense of security.
Wouldn’t it be better to have an ongoing relationship with your lawyer, so when life happened and things changed, you could call and find out if those changes impact you? And wouldn’t it be better if your lawyer knew you well enough to know when changes in the law might impact you, and let you know about it?
Wouldn’t it be better if you had someone to call when a legal situation came up, and they could send you to the attorney they know and trust who handles that area of law if they couldn’t help you themselves? It would be like having a lawyer in the family. Wouldn’t that be nice?
Well, that is what we do and that is how we are different. Yes, we draft documents – but those documents are a by-product of our relationship with our clients. Really, we are trusted advisors and we are in it for the long-haul. We aren’t interested in drafting your documents and then hanging you out to dry. We want to be your lawyers for life.
Want to know what that looks like? For estate planning, look at our Personal Family Lawyer page and our Estate Planning Services page. For small business owners, look at our Creative Business Lawyer page and our Small Business Legal Services page.
Do you own a family-owned business? You have come to exactly the right place. We combine the best of our estate planning know-how with the best of our small business law know-how to make sure you are protected on both fronts.
If you think that sounds better than just having a document drafted and then being left to fend for yourself, give us a call.
The challenges of Alzheimer’s disease are becoming more and more familiar to millions of Americans. Its direct cause yet a mystery to medical science, the disease seemingly strikes at random with no regard for intelligence or accomplishment, wealth or generosity.
For journalist Maria Shriver, the catastrophic nature of Alzheimer’s disease became all too personal when her father received the diagnosis. Sargent Shriver, a man who once moved mountains as the founder of the US Peace Corps and even a one-time candidate for Vice President of the United States felt his mental faculties slipping through his hands as early as the mid-90s. Diagnosed in 2003, he succamb to the disease in 2011.
Steps to take
Our nation’s growing life expectancy ensures that more and more Americans may find their lives affected by this disease. Currently, over five million Americans have been diagnosed. Shriver’s experience with her father and their “long goodbye” spurred her to bring the topic further into the public eye–including the legal imperatives involved:
Execute powers of attorney and advance medical directives
Among the most important first steps is for the diagnosed individual to designate an individual who they trust to act on their behalf. As the mind deteriorates, essential things like finances or medical decisions require that the decision be made by someone of sound mind.
Create a will
To make sure that your wishes for the distribution of your assets is carried out safely and without causing unexpected harm or disrupting your family’s harmony, be sure to write a will while you still have the capability.
Share your plan
The best way to avoid intra-familial acrimony is to engage with your loved ones about what you desire for the years that remain to you and how your estate will be distributed once you have gone. How will you be taken care of? Where can they find important documents you have left behind?
Do not forget to take advantage of modern technology: our estate planning packages include a special Family Legacy Video to allow you to leave behind personal messages and stories for your loved ones that will stay with them, always.
Do not wait until it is too late
While we are all inclined to procrastinate on tasks we would rather not think about, you simply do not know how much longer you have to finalize your plan. As a progressive illness, Alzheimers and its like advance each day–at times slower, but at others with unexpected speed. Act now and save yourself and your family the pain of figuring it out as you go.
What you can do today
For more on managing Alzheimers, Maria Shriver has written a great deal on the subject. For a wealth of information and no little inspiration, visit MariaShriver.com.
Call our office today at (612) 206–3701 or reach out via our online contact form to schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify the best ways for you to ensure your legacy of love and financial security for your family.
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To a business owner, declaring their company bankrupt is often emotionally difficult. The years of effort put into building it from the ground up have likely made it an integral part of your identity—something which it is hard to imagine doing without.
Yet, with the right state of mind, bankruptcy can be turned to your advantage. So long as you laid solid foundations as you launched the business and ensured that your business’s financials are wholly separate from your own, there is every reason to see this setback as incitement for a fresh start.
Getting to that state of mind is, of course, easier said than done and–even when you want it to be—the process of getting to that mindset isn’t always quick or easy. One uncomforting fact is that last year well over 25,000 businesses did just that, so if you are considering the bankruptcy option, you are not alone.
What Happens When You Declare Bankruptcy?
As a small business attorney, I do everything I can to keep you from falling into bankruptcy in the first place, but also to make sure that, if filing becomes a strategic necessary move, you can retain the capacity to move forward with a new venture.
While a future article will cover the alternatives to bankruptcy, today’s post focuses on the process of filing if filing is necessary. What do you need to know about today’s process? A little context is necessary:
Putting it in Context
The founding fathers of the United States knew well the horrors and inefficiencies of so-called “debtor’s prisons”. Common throughout Europe at the time, such prisons bore lesser prominence in the United States and were eliminated entirely in 1833. So too has the stigma against bankruptcy diminished greatly—even becoming a semi-acceptable risk in startup culture.
That is not to say it bankruptcy poses no bump in the road to the would-be entrepreneur. Instead, it is an unfortunate, but entirely surmountable obstacle—provided, of course, that you prepared ahead of time. With that in mind, how do business owners find themselves in over their heads in the first place?
Getting Through the Tough Times
Often business owners start with sufficient financial resources and credit to get the business going, but often those resources get depleted more quickly than a new entrepreneur expects. So the business owner puts in more and more cash and leverages more and more credit. If the business is growing at a faster rate than the money and available credit are being depleted, then the company can make it through. If not, there comes a time when the business owner has to decide if they are going to put everything at stake (putting in every bit of financial resources they have) and even borrow from family members or take on other investors until the business has positive cash flow, or if they are going to take the loss and walk away with what’s left of their personal assets intact.
While it is inspiring to hear about stories of entrepreneurs who went “all in” and made it through the tough times, that’s definitely not an easy or comfortable road and not everyone is cut out for it nor does everyone really have the freedom to make that choice.
If your choice is between keeping a struggling business open and feeding your children, feed your children. If your choice is between managing the stress of tight financial times for another year but suffering from stroke-risking high blood pressure to do it or walking away and staying healthy, walk away and stay healthy.
Don’t get me wrong – I’m all about buckling down, tightening the belt, and working through lean times. Sometimes it’s not a wise decision to do that, though. Sometimes smart and dedicated people work really hard and nonetheless their circumstances make risking it all an irresponsible choice.
Distressing though it will be, bankruptcy is best seen, as it is by many, toward getting your life back in order. The best news of all? It’s not all that bad if you do your research. Depending on exactly which type of bankruptcy you choose, you may be able to continue your business without the pressure you have now from your creditors.
With a sole proprietorship, the business owner files for bankruptcy personally and all the debts of the business are wiped out along with personal debts. With a sole proprietorship, the business owner is personally responsible to all the creditors of the business, so there is no separation for bankruptcy purposes. Before proceeding to corporate bankruptcies, some background on personal bankruptcies is invaluable. A personal bankruptcy can take the form of either a Chapter 7 or a Chapter 13 bankruptcy.
This is the primary way for an individual to completely wipe out his or her debt obligations. Often, the debt comes as a result of either sky-high medical expenses or poor credit card management. Additional loans may exist.
It is typically best to turn to the help of an experienced bankruptcy attorney, as the paperwork is highly challenging. All the information on the individual’s assets and debts is compiled into a document that often nears 100 pages. Following the case filing, a date will be set for a ‘creditor’s meeting’ to be interviewed under oath by a trustee.
If the individual seeking debt relief has not omitted any vital information and can pass the “means” test—they lack any disposable income to pay off their debts–all of the debts are, with some exception, discharged.
In the case that you do have a source of disposable income and fall outside of the means test, it is most likely that a trustee will place you on a payment plan. After all, your creditors prefer to receive some money back. Typically, the schedule aims for repayment in three to five years. If all the debt cannot be paid off in five years, then the remaining debt is discharged just like in a Chapter 7 bankruptcy.
A business entity like a corporation or an LLC can have a business bankruptcy while the owner doesn’t necessarily have a personal bankruptcy. Provided that you have kept the business finances separate from your personal finances, you have kept your business records properly and up-to-date (and I mean corporate records, not just financial), and you haven’t done anything that is fraud-like (getting credit extended under false information or while knowing that you would be filing for bankruptcy), then only the business will be responsible for the business debts, and your personal assets will go untouched.
A business can file for a Chapter 7 bankruptcy, but if it does then the assets of the business are completely liquidated and used to pay the creditors, and the business no longer exists or operates after the bankruptcy.
Only individuals can file for chapter 13 bankruptcy, but for both individuals and business entities, Chapter 11 may be a possibility. You may have heard it called a “Chapter 11 Reorganization.” Similar to a Chapter 13, a payment plan is scheduled for the years ahead, but there is no time limit. Since there is no time limit, all the debts get paid off eventually. In addition to managing creditor payments, the court has the ability to replace the company management with a bankruptcy trustee who controls the company until the debts are paid off and the business comes out of bankruptcy .
How we can help
Keep in mind that bankruptcy is a complicated and document intensive process. You are required to disclose everything regarding your finances in order for the trustee, creditors and judge to be satisfied with the reorganization and/or payment plans or to approve the debt discharge. It is not something you want to navigate on your own, and a business bankruptcy is best handled by a well seasoned attorney who has a good working relationship with the court, the bankruptcy trustees, and the court’s administrative office.
If you have found that you are getting close to a time when your debts are becoming unmanageable, contact us before you stop paying on your debts. There are many steps that can be taken short of bankruptcy to get your business back on track. We may be able to help. And if a business bankruptcy is on your horizon, we can refer you to the attorneys that we know and trust, so that your case will be handled right. Call today at 612-2060-3701 or reach out via our online contact form. We look forward to hearing from you.
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If you have two or more children, chances are you spent a good portion of their early years trying to keep the peace between them. Though they usually grow out of creating bitter spats out of thin air, even adult siblings will find a reason to go head to head from time to time.
Unsurprisingly, money plays a huge role in instigating such conflicts—an inheritance most of all. You need to address these problems in advance because, well, if your children are set to inherit your estate, you are not going to be there to sort things out. In my years as an estate planning attorney, the experience of working with parents to safeguard their family harmony has given me ten essentials for nipping conflict in the bud.
Talk to children about your estate plan
Neither you nor they will be particularly eager to discuss matters of mortality, but this is the necessary foundation of an agreeable plan—without it, you will never know of any contentious points until it is too late. Consider inviting your estate planning attorney to be by your side as you do this. They’ll have your back and be able to answer the more complicated questions with ease.
Write your children a letter
A face-to-face discussion is not for everyone. The stress involved can be somewhat alleviated by choosing instead to rely on the exchange of letters or emails. This allows you to give exactly as much detail as you are comfortable with, and provides more time to think. Try first putting it to your children in general terms with a request for their input—this may get you a better idea of their expectations.
Email your children your estate plan summary.
Typically, a summary of your estate plan, minus the specific dollar amounts, will be given to you by your estate planning attorney. Be sure to ask them for a copy you can provide to your children—this can be a great way to get more detailed input from them.
For complex estates, consider a mediator.
If your estate is a large one, full of a variety of different components—a family business, an art collection, etc.—it would be best to turn to a professional mediator. The mediator will sit down with each of your children individually to work out what they expect to receive and whether one child’s desires will conflict with another’s. Afterward, you all meet together smooth over any disagreements.
Use equal treatment
Unsurprisingly, a plan that distributes your estate to your children equally is least likely to elicit jealousies and anger. However, this can be difficult with items not easily assigned a dollar value—some particular item may mean the world to one child, but be worthless to the rest. Furthermore, if your children are of widely varying means, you may wish to consider a progressive distribution (distributing more to those with less). Just be sure to talk it over first!
If you establish a trust for children, name each child as a co-trustee of their own trust at a certain age
Many peoples’ children are nothing alike. What may be a reasonable age for one child to begin to participate in managing their own trust alongside the main trustee is not necessarily the same as their sibling.
Consider staggered distributions from a trust
Particularly as a young adult, your child will still need to acquire the skills of managing their finances responsibly. A sizeable inheritance will complicate this. Your best option is to space out distributions over a period of time—say, age 25, 30, etc.
Provide children with option to remove or replace main trustee
There’s a good reason arranged marriages are long out of style in America: whether the two individuals will form a positive relationship with one another is largely unknowable. It is odd to think of it this way, but the same goes for your children and the trustees you assign to them. While you do not want to simply allow your child to rid themselves of a trustee who refuses to cater to their every whim, the limited power to replace the trustee with another qualified individual can make a real difference in your child’s quality of life.
Allow children to name their own co-trustee
If your children are already capable of handling things largely on their own, consider granting them the power to designate a co-trustee to work out the more complicated aspects of the trust.
Include mediation instructions in your estate plan
Toss out any ideas daytime TV may have given you about courtroom battles. The truth is that litigation is enormously draining, affecting both your children’s emotional health and their finances.
What you can do
Just by reading this list, you have started yourself on a journey to the perfect estate plan. Remember, the most invaluable resource for estate planning is an estate planning attorney—that’s why we offer our renowned Family Wealth Planning Sessions. The session will enable you to identify your best options for protecting the financial security and emotional wellbeing of your loved ones.
Contact us today to schedule your free Family Wealth Planning Session. Give us a call at 612-206-3701 or reach out via our online contact form. I look forward to hearing from you.
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Whether you call them customers or clients, you depend on them for everything. The money they put into your business is its lifeblood—and probably that of you and your employees, as well. But, just as a clog in an artery can lead to a heart attack, so too can the bankruptcy of a large client cut off what your business needs to survive.
Unfortunately, protecting your business is not nearly so simple as regular exercise and eating right. As a small business attorney, I have supported a number of my clients through the unexpected effects of a client’s bankruptcy and come away with sixt steps that will save your business a great deal of pain:
Cut off contact
If your client is in arrears on their account and has just declared bankruptcy, end all contact. Creditors are strictly prohibited from taking any collections actions or communicating with debtors about their debt under bankruptcy law. Instead, you must contact their attorney or court-appointed trustee to see if the money they owe you is listed on the bankruptcy petition. If the debt to you is listed, you will need to discuss how the case will be handled. If you are not listed, it will be possible to pursue collection after the prohibition on collections is lifted.
Do the math
It is important that you learn the extent of your clients resources versus their obligations. That way, you can establish whether it will be worth continuing to pursue the amount they owe, or if it would be better to simply take a bad debt deduction on your taxes.
Discern the bankruptcy type
Depending on the type of bankruptcy, you will want to adjust your calculations.
- Under Chapter 7, the business will be completely liquidated and the proceeds will be distributed to the creditors. There’s a system for the order of payments, though, so if there are a number of secured creditors or priority unsecured creditors and not enough to go around, you might not get paid at all.
- Under Chapter 13, the debtor pursues a court-approved plan to pay back all (or most) of the group of creditors. It is likely that you will (mostly) get paid, but over time.
- If a Chapter 11 reorganization, your business may have longer to wait, but is more likely to get back what is owed.
File a proof of claim
Want to get paid? Then file a proof of claim before the deadline listed on the bankruptcy petition. Procrastination here means you get nothing.
Attend the creditors meeting
A “341” creditors meeting brings together the trustee, the debtor, and any creditors that exist. This can be enormously valuable, as it offers you the opportunity to not only hear the debtor’s repayment plan, but voice your own objections, as well. If you get the impression you have been treated unfairly, this is the time to speak up.
Review the repayment plan
Approval of the debtor’s repayment plan by the court-appointed trustee is then immediately followed by the submission of copies to all listed creditors for comment. The plan should detail exactly how much the debtor plans to pay you.Those creditors who hold a greater portion of the debt wield proportionally greater vote count—a vote which requires at least half of the debtors to vote for accepting the deal.
While there is no guarantee that you will never get stiffed by a client, other than not ever extending credit in the first place, there are a couple of things you can do to make it less likely that you will be left with a large receivables balance to write off.
File a UCC form before giving credit
One of the two best safeguards you can erect against a customer’s bankruptcy filing is to file a Uniform Commercial Code 1 form with your state or county. The form will create a security interest in the personal property that is tied to the debt, and this places you at a higher priority than unsecured creditors, making it more likely that you will get something, even if there’s not enough to go around.
Do your due diligence
The other best preventive measure? Finding out ahead of time that your customer can actually pay what they will owe you before you extend them credit. A background or credit check should give you notice of any unusual payment behavior and, if you do find something, run another check. Don’t miss the warning signs: slow payment from a customer that has typically paid on time should warrant your attention. Pay close attention—you should always be aware of who has not paid on time and track whether the trend continues.
What you can do
If you’re a small or mid-size business owner, call us today at 651-206-3701 or reach out via our online contact form to schedule your comprehensive LIFT™Foundation Audit. Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will give it to you for free.
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By the time you are ready for retirement, the mistakes you have made—both minor and major—have taught you valuable lessons that still stick with you. If you are a business owner, however, one experience that you may still have yet to encounter and learn from is selling your business. Wouldn’t it be nice to go about things the right way without first paying the price of an unexpected mistake?
Fortunately, many business owners have come before you and their business attorneys have been right alongside them to provide experienced guidance. If you plan to rely on the sale of your business to provide for your retirement, make sure you heed their advice.
Business owners often have a large portion of their personal wealth tied up in their business. That’s why it’s so important for business owners to engage in some business estate planning to be able to transition into retirement. These are the common mistakes that business owners need to avoid when preparing to sell their business:
The Business Is Dependent On You
The effort you have put into your business could move mountains. You powered through every challenge and have come out the other side the better for it. Who can say what would have become of the thousands of lives you and your business touched without your dedication?
But did you prepare your business for your no longer being there? If you left yourself as the key lynchpin without establishing a structure of people and protocols to hold it all up once you have stepped out the door, what value is there for a buyer?
Make sure you delegate responsibilities to managers well in advance of putting your business on the market. It will not only create confidence in your buyer that they can hit the ground running, but it will take some of that extra work off of your shoulders, as well. Business buyers don’t like it when the business’ success is tied to its owner. The best thing to do is to delegate responsibility to multiple company managers. Not only will it make your business more attractive to potential buyers, it will make the transition to the new ownership easier when it comes time to retire.
Not Thinking Ahead
If you are looking to sell by the time the decade is out, give serious thought to what advantage you might get from selling sooner than later. Even at a lower valuation, it could prevent the bite of a much larger capital gains tax. Keep in mind, too, that if part of the sale is structured so that you stay on as a consultant, the portion of the buyout for consulting fees counts as ordinary income and reduces the amount of your capital gains tax bill.
Not Having a Realistic Valuation
You can’t sell for what a buyer won’t pay. Basic your retirement plans off your ideal asking pricing is unlikely to work out exactly the way you would like. Consider hiring a professional who can not only provide a realistic valuation of your business, but may make you, and your buyers, aware of sources of value that you had not even considered.
Considering Just the Money
Business owners are so often forced to focus on their bottom line that sometimes it seems like the money is all that’s important. When selling your business, however, make sure that you consider all factors of an offer. One thing in particular that may help you avoid a huge mistake is to look closely at the buyer’s plan and ability to finance the purchase.
Not Keeping Negotiations At Arm’s Length
No matter how good your cousin’s poker face is, a deal is best negotiated by a professional. Rather than dragging the deal down by relying on friends or family member, a business attorney will help you get the best result they can without the baggage of family ties. Remember to shop around and vet your legal counsel thoroughly—your business and your retirement are worth the effort. Inquire about their negotiation strategy, time to close, and what structure they would recommend for a deal that would keep other family members involved in the business.
Not Making an Exit Strategy
In order to bring about a smooth transition, your personal retirement planning deserves a discussion with your attorney. A Creative Business Lawyer® is particularly skilled at this unique mixture of business law and estate planning.
If you’re a small or mid-size business owner, call us today at 612-206-3701 or reach out via our online contact form to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will give it to you for free.
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