Wednesday, May 18, 2016
Friday, May 13, 2016
Business succession planning is a topic that many business owners sweep under the rug – waiting until they absolutely have to address it, if they do so at all. These business owners give little attention to succession planning. They think it’s an issue that will work itself out. But what they don’t realize is that statistically most businesses fail to successfully transition to subsequent generations. Indeed, less than one-third of businesses successfully pass to the second generation, and that proportion is substantially less for the third and fourth generations and so on. In our experience, family conflicts are the primary contributor to unsuccessful business succession. The main family conflicts concern (1) the unwillingness to change traditions and adapt, which is required to operate a successful business, (2) the interjection of emotion in what should be logical business decisions, (3) the unrestrained willingness to hire unqualified family members, and (4) the lack of family unity. Unaddressed, these conflicts can relegate a business to the category of failed business succession, where statistics say two-thirds of businesses end up. However, with proper planning and counseling an otherwise prosperous business can be passed from generation to generation providing benefit to each.
|Michael D. Lum|
If you are a business owner and have not planned your business succession or have not visited the topic in a while, please contact an attorney at JEFFREY BURR who can help introduce you to a team of professionals and participate with your current advisors to help you plan for business succession.
Tuesday, May 3, 2016
Limited Liability Companies (“LLCs”) are a type of business entity recognized in all fifty states. LLCs provide the protections of a corporation and the flexibility and tax advantages of a partnership.
An LLC possesses the corporate characteristic of limited liability for all its members. This characteristic generally shields the individual LLC members from personal liability beyond their investment or capital commitment to the LLC for the debts and obligations of the LLC. Thus, members are protected from being liable for debts incurred by the company, but the company’s assets are also protected from a member’s individual creditors. In Nevada (along with only a handful of other states), a charging order is the exclusive remedy for creditors of LLC members, which means that those creditors can generally only get money or property that is actually distributed to the liable member. The manager of the LLC, or the controlling member or members of the LLC, has some flexibility in withholding distributions to ensure that the creditor of the liable member does not get the company’s property. Additionally, an LLC possesses the income tax flow-through attributes of a partnership, avoiding the double taxation problems typically associated with traditional corporations.
The LLC also has extremely valuable estate planning uses, such as for gifting and reducing estate tax liability, protecting family assets, and insurance planning considerations. Thus, the LLC is an extremely versatile tool from both business and estate planning perspectives. To determine whether an LLC could work for your business or as a part of your integrated estate plan, contact one of the attorneys at JEFFREY BURR today.