Archives for May 2013

Fatal Legal Mistakes Family Businesses Can Avoid With Planning

Fatal Legal Mistakes Family Businesses Can Avoid With Planning

Anyone involved in a family business knows that working with family has its pleasures and its pitfalls. However,  some legal pitfalls can prove deadly to your family business.  Here is a list of four commonly seen mistakes and how to fix them with fairly simple planning.

1.  Mixing family & business finances.  Unfortunately, we live in a litigious society, so as soon as your family business is up and running, it’s important to shelter your personal assets by forming a legal entity like a corporation or limited liability company, which will protect the personal assets of investors/owners (i.e., family members) from business liabilities.  Without that protection, everyone’s assets are vulnerable if something goes wrong with the business.

2.  No business license.  Many businesses, even those that are home-based, require a local, state or federal license to operate.  Without the proper license(s), you can face stiff fines or even be shut down.  Your city hall or county government office can tell you what is necessary to operate your business legally in your area of Colorado.

3.  No agreements.  Unless you want employment in your family business to be a birthright, you need to have employment (or Independent Contractor) agreements that spell out – in writing – what the expectations are for the job each family member is doing and how they will be compensated.  These agreements should also have termination guidelines because there will probably come a time when you will have to transition a relative out.  Having a written agreement to refer back to can help keep things civil and maintain important personal and familial relationships.

4.  No succession plan.  You must start your business with the end in mind so you can ensure your business takes care of your family throughout all of your life’s stages, including retirement and beyond your life as well. And what happens if the person who started it all suddenly wants to cash out, falls ill or dies?  If you want your business to go on without you, a succession plan that spells out how this will be accomplished is crucial.

If you’re a small or mid-size business owner, call us today at 720-248-7621 to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit or LIFT Start Up Session.

5 Cases When A Trust is Better Than a Will

5 Cases When a Trust is Better Than a Will in Colorado

A will is one of the most basic Colorado estate planning documents, and everyone should have one to make sure that there is no question about what would happen to your assets and kids if something happens to you.  But there are some cases when having a trust in addition to a will may be the better option. Here are six of them:

Privacy.  When a will undergoes probate in Colorado, it becomes public record.  A trust is private.  If you don’t want just any one to be able to learn about what your assets are and how you have chosen to distribute them, a trust is a great option. The probate process also takes months to a couple years to complete with associated costs depending on the complexity of the situation, while a trust will bypass this process.

Providing for a person with special needs.  If you have a child or another dependent with special needs, a trust commonly known as a Special Needs Trust can protect assets for a special needs person without jeopardizing their qualification for government benefits.  A will allows you to transfer assets to a special needs person, but will not protect those assets and could potentially put a special needs person’s government benefits in jeopardy.

Blended families.  If you are part of a blended family, a trust can give you the flexibility you want to make sure that children from prior marriages are provided for in the way you want.

Out-of-state property.  If you own property in another state besides Colorado, you can more easily transfer ownership via a trust than a will.  Transferring out-of-state property in a will usually means additional legal expenses because you could have ancillary probate in multiple states.

Asset protection.  If you want to protect the assets you leave your loved ones from creditors (including bankruptcy and divorce) a trust is the way to go.

If you would like to learn more about the use of trusts in Colorado to pass on what you care about to the people you love, call our office today to schedule a time for us to sit down and talk.  We normally charge $500 for an Initial Estate Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to complete a planning session at half off. Call 720-248-7621 today and mention this article.

Best Mother’s Day Gift Ever? The Kids Protection Planning Kit

Best Mother’s Day Gift Ever?  Protecting Your Kids. 

By now, the flood of floral commercials has already reminded us that Mother’s Day is this Sunday, May 12.  But before you plunk down hard earned cash on something that will wilt and die in a week or so, consider a gift that is truly priceless: a plan for your kids (or grandkids) that provides Mom with the peace of mind that if anything should happen to her (or both of you), her children will always be in the care of  people she knows, loves and trusts.

We all hate to think that something could happen to us, but we know it happens to others like us every day.

We’ve all seen the news stories of moms and dads who leave their children with a babysitter, get into a terrible accident and don’t make it home.

The babysitter calls and calls, but there is no one to answer. The police are summoned and the children have to be placed with Child Protective Services. It’s one of a parent’s worst fears.

We’ve seen the stories of children placed in the care of people they barely know just because they are related by blood since there was no plan in place that dictated who would take on this incredible responsibility.

And we have seen the fall out of family fights created when mom and dad didn’t make a plan and the family couldn’t agree on what would happen.  Or in the worst case, what happens when there is no family available.

In all of these cases, it’s left up to a judge to decide when mom and dad don’t.

We know you don’t want this for your children (or grandchildren, nieces or nephews).  And this is where good estate planning can ensure it never does. Not for your kids.

A good estate plan includes planning and tools that allow Moms (and Dads) to make sure there is never a question about who will take care of your kids if you are in an accident.  Estate planning for those with minor children includes, as needed, the following types of documents:

  • Legal documents to name short-term guardians who can be there immediately for your children so they’ll never be taken into the arms of strangers or anyone you wouldn’t want. Not even for a moment.
  • Letters to the people you name as short-term guardians so the people you’ve named will know just what to do if called upon.
  • Instructions to everyone who takes care of your kids as to exactly what to do if you are in an accident … so there’s never any question about who to call.
  • Legal documents to name long-term guardians who will raise your children just as you would so there is no family feuding over your children.
  • Letters to your long-term guardians letting them know what to do if called upon.
  • Instructions and guidelines for your long-term guardians on how you want your kids to be raised…make sure your kids are raised with your values, insights, stories and experience.
  • Delegations of Power and/or Medical powers of attorney for your minor children so the next time they travel without you or you travel without them, you know they’ll get the medical care they need.
  • A custom, personalized I.D. card for your wallet stating that you have minor children at home and who should be contacted if you are in an accident.

As an estate planning attorney with kid of my own, I want to make sure a legal plan is in place to take care of your kids and think this Mother’s Day is the perfect time to gift this planning to your family.

We include specific planning for minors with all the planning we do for families who plan with our office.  You can purchase a special gift certificate and flowers from our office to give this Mother’s Day, with the flowers being on us.  Mention this post when you call 720-248-7621 to schedule your appointment.