Category Archives: Business Transitions

Sibling vs. Sibling: The Inheritance Wars

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Kansas, Missouri, Probate, Small Business

Caren Chesler has this interesting article in the March/April edition of Private Wealth magazine. The article addresses the inheritance wars that often arise between siblings when another sibling gets a larger inheritance for their caregiving work for the deceased parent, or one sibling grew up more frugally than a younger sibling who was born after their parents made a fortune, and the business succession disputes that can break out and threaten companies, especially where one sibling is deeply involved with the company’s operation and another sibling is not in the family business.

All of these inheritance wars boil down to a lack of communication. Communication is critical in estate planning and business succession.  Your desires, wishes, and intent need to be clearly laid out for your children or grandchildren and business partners. And your documents need to be crystal clear to help avoid potentially divisive and costly disputes.

Estate planning and business succession planning can be an excruciating process where raw emotions and decades-old resentments and grudges are laid bare and flare up over the continuation of the family name/money. San Francisco attorney John O’Grady is quoted in the article as recommending a healthy alternative where:

“Everyone has a voice. Everyone knows what the plan is. And in the end, [the siblings] participated in that plan, whether or not mom and did did it their way.” Without good communication about estate planning and business succession, siblings may feel ignored, as if “their parents mentioned a plan but never showed it to them, and they have no idea what’s going to happen when their parents die.” The unhappy result of a lack of communication is that the estate planning process may “end in tears.”

Please give me a call (913-707-9220) or email me (steve@johnsonlawkc.com) if I can help you or your family with estate planning and business succession issues.

(c) 2012, Stephen M. Johnson, Esq.

The Demographics of Wealth Concentration

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Kansas, Missouri, Retirement, Small Business, Trusts, Wills

The Wall Street Journal has this story about the latest demographic study of wealth concentration. The WSJ notes that (1) the concentration of multi millionaires mainly tracks the population and (2) the number of high network individuals in a community and their relative concentration within that community may be very different. As always, if we can help with your estate planning or small business needs, call or email us for a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

Heckerling Insights on Family Businesses and Gift Planning

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, LLCs, Missouri, Small Business

Here’s the first part of the Trusts and Estates annual roundup from the Heckerling Institute in Florida. The Heckerling Institute is America’s premier estate planning seminar for attorneys and other professionals. If we can help you with your family business, gift planning, or other estate planning, call or email us.

(c) 2012, Stephen M. Johnson, Esq.

Bad Demographic News for Baby Boomers

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Generation Skipping Tax, Gift Tax, Gifts to Minors, Kansas, Missouri, Small Business, Trusts, Wills

If you’re a member of the Baby Boomer generation, you would be well advised to read this demographic study regarding investment returns and retirement planning. If we can help you optimize your estate plan for your retirement needs, please give us a call or send us an email, and we look forward to meeting with you.

(c) 2012, Stephen M. Johnson, Esq.

“Mom/Dad, I need some money…”

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Generation Skipping Tax, Gift Tax, Gifts to Minors, Illiquid Assets, Income Tax, Kansas, Missouri, Small Business, Trusts

CNBC offers this advice to parents whose children want more money. If you need counsel on estate planning or gifting options to your children, give me a call to schedule a convenient appointment.

(c) 2012, Stephen M. Johnson, Esq.

Take Your Time …. Hurry Up!

Posted on by under Business Succession Planning, Business Transitions, Digital Estate Planning, Estate Planning, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

A brief story: In high school trigonometry class, my math teacher used to give us frequent quizzes over basic trigonometry equations and other pre-calculus functions. I vividly recall him pacing up and down the thin aisles of desks (about 20 or 30 students), cradling his hands behind his back, and looking out over the class through his glasses while calling out  “take your time,” then “hurry up!” a few seconds later. It was a charming eccentricity if you weren’t knee deep in a math problem, or an annoying interruption if you were racking your brain to remember that math formula you had stayed up late the night before trying to learn.

The changing economic realities, increased life spans, and increasing standards of living are causing many retirees to go on the “hurry-up offense” with retirement planning. There’s a similar phenomenon in estate planning. The tolling of the New Year bells draws closer, you get married and have a child, you get divorced, a relative dies and you receive an inheritance, or you or your spouse get the dreaded grim health news from the doctor. Time to visit your estate planning attorney.

While several “hurry-up offense” estate planning tactics that can be helpful, I recommend confronting these issues when you are healthy and have some time to contemplate how you want your last affairs handled. We all know that it’s best to make big decisions when you’re calm, relaxed, and feeling great. A Will or trust, living will, and durable financial and medical powers of attorney are the estate planning building blocks that every adult needs. Cross an item off your new year’s to do list, or make a new resolution to take care of your estate planning needs this year. Need to do any digital estate planning for your computer, email, Facebook, LinkedIn, online banking, or other valuable electronic information? Have a small business you’re looking to transition, or thinking about family business succession and your kids? We can help with that too. Call or email us any time to set up a convenient appointment and start off 2012 right with the peace of mind that good planning brings.

(c) 2012, Stephen M. Johnson, Esq.

Conflicts of interest

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Gift Tax, Illiquid Assets, Income Tax, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Prenups, Probate, Small Business, Trusts, Wills

This Daily Mail article highlights a classic case of lawyers (and accountants) getting removed from a case by the judge because of conflicts of interest, in the Clark case, for each being slated for an $8 million bequest from the estate. This is a classic legal ethics question that confronts estate planning attorneys – can the lawyer accept a gift from the estate of the deceased? Short answer is “no.” If a lawyer drafts estate planning documents for family members, the relative is entitled to independent legal counsel if they so choose and the lawyer may not receive more than an intestate share of the estate (e.g. what they would’ve received if the relative had died without a will). A client can theoretically leave gifts to their lawyer or other professional advisors in a will or trust, but those gifts are automatically suspect and best practice is to only be paid your attorney’s fees and not accept gifts from a client’s estate.

If you need legal counsel with year end estate planning or if you’re an attorney who has a conflict of interest and need independent legal counsel to help, give me a call or send me an email. Merry Christmas and see you in the New Year – 2012, here we come!

(c) 2011, Stephen M. Johnson, Esq.

Time to Sell Your Small Business?

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Generation Skipping Tax, Illiquid Assets, Kansas, LLCs, Missouri, Small Business, Trusts, Wills

Interesting NY Times article about business owners thinking of selling in the current economy. There’s a wonderful piece of old-fashioned, homespun wisdom quoted: “success is when opportunity and preparation intersect.” Successful business people have to be alert for new and emerging opportunities to capitalize on those venues and maximize their enterprise profitability. Perhaps a few business successes come down to being in the right place in the right time, serendipity, or luck, but most business people (and certainly most lawyers) would say that chance favors the prepared – you have to do your homework, which will often show you openings or opportunities that your competitors don’t see. Or as one early rising quipster put it, the comfort of being awake near dawn is “my competition is still sleeping,” so an edge or lead can be acquired. In this economy, business people and successful individuals must capitalize on every edge or lead they can find or create to distinguish themselves and get ahead.

The article’s advice reminds me of a piece of financial/investment advice I read a couple years ago in The Great Depression Ahead by (gloom and doom) economist Harry S. Dent. If I can help you in the process of selling your business or thinking about the pros and cons of the sale decision, give me a call or email me to set up a convenient appointment. If you are going to sell your business, getting the wheels of the deal in motion before December 31 is ideal for tax purposes.

(c) 2011, Stephen M. Johnson, Esq.

Planning for Life’s Unexpected Moments

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Generation Skipping Tax, Gift Tax, Gifts to Minors, Illiquid Assets, Income Tax, Kansas, Living Wills, LLCs, Medical Powers of Attorney, Missouri, Probate, Small Business, Trusts, Wills

CNBC has this story of a family who benefited greatly from doing basic estate planning, when the unexpected happened and the father and family patriarch died suddenly. Every adult – regardless of age, wealth level, or other factors – needs a will, a living will, and medical and financial durable powers of attorney. To live life without these basic estate planning documents is to play Russian roulette with your future and your family’s.

(c) 2011, Stephen M. Johnson, Esq. All rights reserved.

The Brave New World of Estate Planning – Trusts and Estates in 2011

Posted on by under Business Succession Planning, Business Transitions, Dynasty Trusts, Estate Planning, Estate Tax, Family Business, Family Limited Partnerships, Financial Powers of Attorney, Generation Skipping Tax, Gift Tax, Gifts to Minors, Illiquid Assets, Kansas, LLCs, Missouri, Probate, Small Business, Trusts, Wills

As the 2010 holiday season descended upon America, Congress passed and President Obama signed an extension of the 2001 Bush tax cuts.  The new tax law has many provisions that last until the 2012 election, but most significant for our purposes are the new estate tax and the new gift tax.  The federal estate tax is now 35% on any estates over $5 million for a single person or $10 million for a married couple.  The new gift tax is 50% of any gift to a person of over $13,000 per year with the lifetime exclusion (the maximum amount you can give to someone other than a spouse during your lifetime) now at $5 million from its prior $1 million threshold.  Count on the 2001 Bush tax cut extension to be a big deal for President Obama and his Republican colleagues in 2012, especially with the economic cauldron of high unemployment, exploding deficits, promiscuous and unsustainable spending, a weakening dollar, states teetering on the edge of bankruptcy, and potential inflationary pressures, all boiling to a simmering storm of uncertainty and populist discontent.

Many estate planning attorneys, including many that I have talked with in the Kansas City area, find these new developments very troublesome.  Won’t it eliminate our clients? Not many people have $5 or $10 million, the argument goes.  Those that do already have relationships with private banks, investment firms, and noted law firms. Does anyone still need a trust?  Or do we simply terminate trusts and execute new I-love-you wills that leave everything to the spouse and children?  Won’t that kill our revenue streams from trust drafting and asset re-titling? Is it worth it to be an estate planning attorney any more? These are all good questions that need to be answered and I plan to answer soon in much more detail.

For now, let’s focus on what every client needs: (1) a will (2) a living will (3) a durable medical power of attorney and (4) a durable financial power of attorney.  Anyone over the age of 18 who doesn’t have these legal instruments in place risks catastrophic consequences a la Terri Schiavo and Nancy Cruzan if they get in a car accident or die leaving student loan debt (or other secured debts, like a home mortgage) for their parents (buying life insurance to pay these debts off may be wise). If you are married or have children, the stakes are even higher – your spouse might have to probate your estate and get the Court to appoint them Guardian and Conservator of your child.

Maybe you’re an individual and figure you’re fine, you don’t drive a Ferrari or have millions of dollars, so you don’t need an estate plan, right? Wrong. An estate plan doesn’t need to be expensive or complicated, but you need one, whether you’re Bill Gates or Bob Jones the college student.  Call (913-707-9220) or email me (steve@johnsonlawkc.com) if I can help.

(C) 2011, Stephen M. Johnson