Business Planning

February 20, 2012   Business Planning

Business Owners: Have You Planned Your Exit?

You've worked hard building your business, but have you thought about what will happen when you are no longer there running the show?According to one study (Small Business Review, Summer 2001), only 30% of all family-owned businesses survive to the next generation; only 12% make it to the third generation; and a meager 3% are functioning into the 4th generation and beyond.Why? Most business owners simply do not plan an exit. They do not do proper estate planning, which often results in unnecessary estate taxes that drain the life out of their businesses. And they do not plan for a successful transition to the next generation.Who could take over your business? You may have more choices than you think.Family members are often a logical choice. Most business owners feel a certain pride in...
February 10, 2012   Business Planning

The Family Limited Partnership

How to Transfer Your Business (and Other Assets) to Your Children Without Losing Control A family limited partnership will let you remove your business, and any future appreciation on it, from your estate now, and still keep some control. It is especially useful when the business might otherwise have to be liquidated to pay estate taxes. Stocks, real estate or insurance can also be used instead of a business.Here's how it works. When you set up a family limited partnership, you transfer the assets into the partnership in exchange for partnership shares. You keep the general partner shares and, over time, you can gift limited partnership shares to your children, removing the value of the gifted partnership interests from your estate.Though you have a fiduciary obligation to the other ow...
October 15, 2010   Business Planning

Understanding Business Exit Planning in Today's Market

Have you been looking forward to the day you can retire, perhaps turn your business over to a son or daughter, or sell it? Even if you are not planning to stop working, you need to plan for the day you cannot run your business due to unforeseen illness or death.Most business owners do not take the time to plan for how they will leave their business. They are busy running the company, or they don't know where to start. But if you continue to own a business until you die, it will be included in your estate and could be subject to substantial estate taxes. Your family could be forced to sell the business or its assets at "fire sale" prices. Then you will have worked hard all these years so that the vultures and Uncle Sam, not your family, will reap the benefits.Planning for how...
October 6, 2009   Estate Planning

Planning Solutions for Families in Agriculture

By Matthew A. Tavrides, J.D.
Estate, Business Succession and Wealth Preservation Planning are issues of immediate importance to farmers and ranchers. Not surprisingly, like most Americans the vast majority of the nation’s farmers and ranchers have no succession or estate plan in place. Although unlike other Americans, these families have much more at stake than a few mutual funds and a life insurance policy.The U.S. food and farming system contributes nearly $1 trillion to our national economy, more than 13 percent of the gross domestic product, and employs 17 percent of the labor force. Eighty-six percent of America’s fruits and vegetables are grown near metropolitan regions, where they are continuously threatened by development. Cattle are a significant economic driver in rural communities and are produc...
October 4, 2009   Estate Planning

How Should Non-Traditional Partners Hold Title to Property

By Tanya D. Simpson, J.D., MBA
In my July 2009 article in the WealthCounsel Quar­terly entitled Special Considerations in Planning for Non-traditional Families, I briefly addressed the topic of how non-traditional partners should hold title to property. This article takes an expanded look at the ways non-traditional partners can take and hold title to property, and some of the advantages, disadvantages, tax conse­quences and potential pitfalls of each.   Joint Tenancy With Right of Survivorship As stated in my previous article, non-traditional partners typically come to the table with the assumption that joint tenancy with right of survivorship (JTWROS) is the obvi­ous and best way for them to hold title to their shared property to ensure efficient transfer of the property at their death. Frequently, a...
October 10, 2008   Estate Administration,   Business Planning

The Importance of Treating Your LLC as a Business

By Cecil Smith, J.D. & Carol Gonnella, J.D.
Now that you have formed an LLC for your client, the LLC as an independent and separate entity from his other affairs. Among other things, your client’s goals are to:       • Protect his assets from future creditors;     • Protect his other assets from any claims made against the LLC;     • Have centralized management for future generations;     • Protect the assets against failed marriages;     • Facilitate transfers among family members;     • Obtain discounts for estate and gift tax purposes, or for purposes of a sale to family       members or trusts for their benefit.   The IRS often attacks these discounts in LLC planning. Their a...
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