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If You Are a Business Owner, You Need an Estate Plan – Even Before You Think You Do

Lucere Legal helps small business owners with estate planning

Most business owners build their businesses with an exit strategy in mind: either cashing it out or passing it on.  Whatever your thoughts are for what happens to your business when you retire or die, it is  unlikely to happen without a comprehensive plan that aligns your personal and business goals.

If you plan to pass on control of your business to one or more of your children, then you may want to consider giving them direct voting interests through your will or a trust.  If you own business real estate that is separate from your primary business, you should establish a mechanism for passing on that real estate to your heirs.

Some things to consider for protecting your business interests in your estate plan include:

Buy/Sell Agreement.  If you don’t have one, you need one now.  If you do have one, you need to ensure it is up to date and that the valuation mechanism used – appraisal, formula or fixed valuation — will still work for your purposes.

Liquidity.  Will there be enough cash flow from the business to still support the business, provide income for your spouse, and pay estate taxes?   If not, you need to consider having the business own a life insurance policy or set up an irrevocable life insurance trust to meet these needs.

Authority.  Does your will provide your personal representative with the necessary authority to protect and preserve your business interests?  More importantly, does your personal representative have the expertise to manage your business interests?  This is especially important if you have ownership interests in multiple business entities.

These are just a few of the considerations you need to make when taking the necessary steps to align business planning with estate planning.

This week is National Estate Planning Awareness Week, so take this opportunity to call us at (612) 206-3701 or fill out our contact form today to schedule a business consultation session.

Image courtesy of stockimages / FreeDigitalPhotos.net

Contact us to see how we can help you with Business Succession Planning

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The plain-English guide for Minnesota small business owners

When it comes to business, ignorance isn't bliss; ignorance is risk.

There's a handful of legal topics that business owners should be familiar with, at least on a rudimentary level, to reduce the risk of having something horrible come out of left field.

This book is a legal guide to help you put the most common business legal issues on your radar, with enough information for you to be on the alert for when you may need to get some professional advice.

The intention in arming you with this information is so that you can proceed in business confidently and with fewer legal quagmires.

Do you have a cabin?

The first generation that buys a cabin enjoys it to the fullest and it’s a magical place where happy memories are made and families go for some much needed respite. Unfortunately, without thoughtful planning, the chances of the cabin staying a place of happiness and tranquility into successive generations is very, very slim.

If you haven’t done the planning in advance and made it legally binding, the family members (and their ex-spouses and new spouses) will have to work every detail out for themselves. If they can’t, what is likely to happen is a lawsuit called an action for partition that forces everyone to sell their interest. This lawsuit is expensive, and the costs of litigation will come out of the proceeds of the sale of the cabin, so to add insult to injury to those who wanted to keep the cabin but couldn’t afford to buy the others out, they are footing part of the legal bills in the lawsuit against them. Ouch!

It’s no wonder that family members stop speaking for years after the cabin conflict is “resolved.” You can’t make family relationships perfect, but you can take away much of the fuel for the family conflict fire. That’s what cabin planning does, and it has the nice side effect of giving you peace of mind now.

That’s why Kimberly wrote The Minnesota Cabin Planning Guide and Workbook, and you can get a free electronic copy of her book on our cabin planning website, or you can find it in many county libraries in Minnesota, or you can get it on amazon.com.

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