Business Planning Archives - Page 3 of 5

When Dave Ramsey’s Wrong, He’s Really Wrong

April 15, 2016 by Gregory Leave a Comment

I’ve listened to Dave Ramsey. My wife owns a couple of his books. I get what he does, and I think he probably does a some good–in the debt area, at least. But he’s not always right. For example, I don’t care for some of his opinions about life insurance and much of his investment advice is off the mark as well. Further, his one-size-fits-all approach and his dismissive attitude towards insurance agents and other financial advisors are a real turn off for me. Seems that everybody’s out to get you but Dave and those he recommends. (I have more to say on this point, but I won’t.)

In short, I’m basically not a fan.

So you will not be surprised that I’m posting this link to a blog post by attorney Richard Chamberlain in response to a wildly uniformed excerpt about living/revocable trusts from one of Dave’s books. Make sure to read the entire post and the links in the post.

I must add my two cents on living/revocable trusts: Though they are just one part of a well-executed estate plan, they are an important part. Among many good reasons to establish a living/revocable trust, there’s this: setting one up and funding it will help you and yours get your minds around what you own, how you own it, and how you want it distributed or handled upon your death or incapacity. Mind you, I could add more than two cents to this conversation, but I’ll stop here.

Filed Under: Asset Protection, Business Planning, Divorce, Estate Planning, Estate Tax, Family Business, Financial Advisors, Funding, Life Insurance, Long-term Care, Probate, Stepfamilies, Taxes, Trusts, Wills

Quote for the (Business) Day

April 14, 2016 by Gregory Leave a Comment

Professor, attorney, and author of Business Planning: Closely Held Enterprises, Dwight Drake has some useful advice for would-be entrepreneurs:

“When the entrepreneurial bug bites a group of charged-up business owners, they usually are focused on making the business succeed, maximizing revenues, and minimizing expenses. They have little interest in discussing potential breakups, the risks of the three big “Ds”— death, disability and divorce — and all the other issues that should be addressed in a well-structured buy-sell agreement. A good advisor will help the owners look at the big picture and consider the entire life cycle of the business.

“Business owners need to prepare early for the day when they will part company for whatever reason. At some point down the road, they are each going to want to or have to cash out their equity interest in the business. Somebody is going to leave the business, die, become disabled, or experience a messy divorce. Plus, the owners should acknowledge the simple reality that no matter how good they feel about one another going into the enterprise, tough business decisions may create friction along the way. Friction often leads to a buyout or, worse yet, a legal blowup.

“Potential separation issues are best addressed in a calm, planning-oriented atmosphere, not at the point of crisis. Preferably, the job should be done at the outset of the business when all parties are making important decisions to devote capital and energy to the business enterprise. Encouraging clients to collectively think about the key issues up front often will bring to the surface diverse expectations that may surprise everyone. It usually helps to have these expectations out in the open before irrevocable commitments are made to the venture. Too often, the parties plunge ahead with little regard for the consequences of their inevitable separation down the road.” (emphasis added)

Consider yourself warned. (It’s not a large leap to apply this advice to estate planning as well.)

Filed Under: Attorneys, Business Planning, Contracts, Estate Planning, Family Business, Farms and Ranches, Quote for the Day, What I've Been Reading Today

Quote for the Day

April 8, 2016 by Gregory Leave a Comment

From the article “Communicating an Estate Plan to Heirs,” posted at Successful Farming at Agriculture.com:

“For some children, money equals love. Therefore, if they receive fewer dollars, they assume they are loved less. With farm distribution, there are times when the farming heir appears to get a financial advantage on paper. Sometimes this may be very legitimate if the farming heir has worked hard and helped to grow the farm. Other times, the truth is that person has just hung around waiting for the farm to fall into his or her lap. Know the difference and be honest with that in your planning, and it will be much easier to explain to all.”

Filed Under: Business Planning, Estate Planning, Family Business, Farms and Ranches, Quote for the Day, Trusts, Wealth Transfer, Wills

There are Family Offices, and There are Family Offices

March 30, 2016 by Gregory Leave a Comment

As anyone who’s read my profile knows and as I’ve stated elsewhere on this blog, I once wrote for Bloomberg–for three Bloomberg magazines, in fact. One of them was Bloomberg Wealth Manager, which was later sold and then sold again. I continued to write for the magazine in all its iterations. The other day, I stumbled upon a list of some of my articles for one of the later iterations. Since most of the articles are still (mostly) timely, I’ve started posting them here. This is the second, a story about so-called family offices. Enjoy, but with this one caveat: As I said, these stories are still (mostly) timely; the basic law underlying them is still (mostly) valid.

However, if one of them discusses a subject near and dear to your legal problems, don’t rely on the story as legal advice. Use it instead to prompt you to talk to an attorney about the problem to get more current insight on the subject.

Filed Under: Bloomberg Stories, Business Planning, Estate Planning, Family Business, Wealth Transfer

Just Say So

March 29, 2016 by Gregory Leave a Comment

Sometimes feel confused? Wonder why the left hand can’t understand what the right hand is supposed to be doing? Imagine what your family will feel like the day after you’ve passed on to the great beyond, then think about how a well-drafted trust might clear things up for them.

I’ve written more than a few blog posts about trusts, about the legal elements necessary for a trust to be enforced, about five reasons you may need a trust, about decanting as a way to correct or improve a trust, about how trusts are an effective way to handle the issues that come with blending families, about using trusts to plan for disability, about the all-important funding step in the process of establishing a trust, and on and on. But it wasn’t until I was reading someone else’s blog post when it hit me (maybe because the writer kept repeating it): if you want something to happen when you die, just say so. Just speak your mind. Tell your loved ones what you want to happen. Tell them who gets what and why. Don’t hold your piece. Tell them now.

In essence, that’s what a well-drafted trust does. Tells them now, so they’re not confused later, so what you want to happen–happens.

Just say so. If you fail to do that before you die, life will get pretty complicated for your loved ones after you die. Trust me.

Filed Under: Blended Families, Business Planning, Estate Planning, Family Business, Farms and Ranches, Stepfamilies, Trusts, Wealth Transfer, Wills

Quote for the Day

March 28, 2016 by Gregory Leave a Comment

“Family business succession planning is the cornerstone of any successful family business owner’s estate plan. As is often the case, however, planning for the inter-generational transfer of ownership and control of the business becomes complicated by the intra-generational conflicts of the business owner’s heirs. These onflicts among members of the second generation, if severe enough, can render the effective management of the business by the second generation virtually impossible, leading to a loss in productivity and profitability with a resulting decline in the enterprise’s value.”

Michael V. Bourland and Dustin G. Willey, “Setting the Stage for Planning with the Family Business Owner: Tax-Free Division,” ALI CLE Estate Planning Course Materials Journal, April 2015.

Filed Under: Business Planning, Estate Planning, Family Business, Farms and Ranches, Quote for the Day, Trusts, Wealth Transfer, Wills

Quote for the Day

March 26, 2016 by Gregory Leave a Comment

If one advances confidently in the direction of his dreams, he will meet with a success unexpected in common hours.”

Henry David Thoreau

Filed Under: Business Planning, Estate Planning, Quote for the Day

Conservation Easements: Go Big or Go Home

March 24, 2016 by Gregory Leave a Comment

Briefly, creating a conservation easement can allow you to receive good by doing good. Consider creating one on your property to protect

“natural, scenic, or open space values of [that] real property, assuring its availability for agricultural, forest, recreational or open space use, protecting natural resources, maintaining or enhancing air or water quality, or preserving the historical, architectural, archeological or cultural aspects of real property”

HeartMt_431511_10150848522799638_729014637_12580484_639413481_n and you might receive a variety of tax benefits, including a reduction in property taxes and a charitable deduction that can be carried forward on future tax returns, among other things. For a farmer or rancher, the easement can have the added benefit of ensuring the farm or ranch stays in the family, because, according to G. Bruce Chilcott and Erin Johnson,

“with most or all of the development potential given away in the easement, the next generation doesn’t have the usual incentive to sell or develop [the property] in a residential or commercial manner.” (Long-Term Planning Issues for Farm and Ranch Owners, Wealth Counsel Quarterly)

The steps to create one are outlined in the Utah and Wyoming state codes and are not particularly hard to follow. But, Chilcott and Johnson caution, don’t go the cheap route. Get it done correctly. In particular, they say,

“In creating a conservation easement, the key to achieving the desired tax benefits is the appraisal. This is no place to skimp on costs or quality, and the appraiser must have special qualifications and significant experience in this arena.”

Make sure you choose an appraiser with a good track record regarding farm and ranch appraisals for conservation easement purposes because “the quality of the appraisal can be instrumental in getting the eventual approval of the department of revenue.”

Filed Under: Business Planning, Charitable Giving, Estate Planning, Family Business, Farms and Ranches, Uncategorized, Utah, Wyoming Tagged With: conservation easements

Quote for the Day

March 23, 2016 by Gregory Leave a Comment

On the impact of the business structure of a farm on federal farm payment limitations:

The structuring question also influences eligibility for the federal farm program payment limitation. Under the Federal Agriculture Improvement and Reform (FAIR) Act, of 1996 and earlier legislation, each “person” under one or more production flexibility contracts is eligible for a maximum of $40,000 in federal farm program payments. The payment limitation was eased in 2000. Thus, a key issue any time the farm or ranch business is restructured is determining who will qualify as a separate “person,” and whether different types of entities qualify as their own separate “person.”

McEowen and Hart, “The Law of the Land: Fundamentals of Agricultural Law,” (2002)

Filed Under: Business Planning, Estate Planning, Family Business, Farms and Ranches, Quote for the Day, Trusts