Don’t Bet the Family Business on No Estate Plan

from Brett Lee Shelton, licensed Family Business Lawyer™

Being the owner of a family business can complicate your personal estate planning, since no doubt much of the wealth you want to pass on to your heirs is tied up in the business.  Being able to do so in a tax-advantaged way – and in a way that won’t cause a family feud – is one of the best reasons you should be talking with a Creative Business Lawyer about a business succession or exit plan as part of your own estate plan.

Even if you don’t have to pass on as much as the Waltons (Walmart), the Fords or the Murdochs, you do need to plan for what you have.  Here are some things you should be considering:

How to handle not only the death of a family business owner, but also his or her possible disability, incapacity, bankruptcy or retirement.  A buy-sell agreement is the usual way to prepare for these possibilities.

If you transfer family business assets to the next generation before you die, you will be able to lower estate and gift taxes.

Do your heirs want to continue to run the business without you?  If so, a business succession plan needs to be put into place.  If not, then an exit strategy for selling the business and divvying up the proceeds would be a necessary task.

If you’re a small or mid-size business owner, call us today at 303-255-3588 to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

7 Steps for Effectively Managing an Inheritance

from Brett Lee Shelton, licensed Family Business Lawyer™

Research shows that a majority of baby boomers will receive an inheritance at some time during the lives, with the average inheritance estimated at almost $65,000.  Should you be the recipient of family largesse, here are 7 steps you can take to be sure your inheritance is managed wisely:

1.  Re-examine your financial goals. This should provide you with the direction you need to determine how to invest your inheritance, either for short-term gain or long-term benefit.

2.  Review your estate plan. If you inherit a significant amount, you will need to review your estate plan to see what strategies can be put into place to protect your increased assets.  If you inherit a valuable collection of art or jewelry, you’ll need to look into ways to protect that, too.

3.  Get rid of debt. If your inheritance is significant enough to allow you to pay off debt – especially credit card debt or loans with high rates – be sure to consider paying it off.  You can evaluate whether or not this is a good idea by estimating what you currently pay in interest and then determine if investing your windfall will provide a better return.

4.  Have an emergency stash. If you do not have at least six months’ worth of living expenses in an emergency fund, it’s a good idea to park some inheritance money there.

5.  Take your time. Take the time to consider the best use of your inheritance before you may any major moves.  Inheritances are separate marital property, so if you are headed for divorce, it may be more prudent to just put the cash in an interest-bearing account until the dust settles.

6.  Consult a professional. A financial planner and an estate planner are good choices to help you navigate your new wealth.

7.  Give yourself a treat. Put a small amount by for a special “treat” but don’t go overboard.

A Personal Family Lawyer® can further advise you of all your options as part of a comprehensive estate plan.  If you would like to have a talk about estate planning for your family, call our office today to schedule a time for us to sit down and talk.

We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call 303-255-3588 today and mention this article.

Starting a Business? Plan for Your Own Success

from Brett Lee Shelton, licensed Family Business Lawyer™

According to the Kauffman Index of Entrepreneurial Activity, approximately 300 of every 100,000 U.S. adults started a business in 2012.   The Index found that over 514,000 new firms were started every month in 2012 – but how many will succeed?

Of course, in business –as in life – there are no guarantees.  According to the U.S. Small Business Association, about half of small businesses fail within the first five years.  And while there is no way to eliminate every risk associated with starting up a new business venture, you can improve your chances of success by careful advance planning and getting good advice from professionals who help people start new businesses every day.

Studies have shown that entrepreneurs who engage in business planning early in the company development process are much more likely to create a successful venture.

While having a carefully researched and well thought out business model is essential, smart business planning also means seeking the advice of a Creative Business Lawyer for the development of:

●     Articles of Incorporation

●     Bylaws

●     Operating Agreements

●     Buy/Sell Agreement

●     Business Succession Planning (it’s never too early to start!)

●     Employee/Independent Contractor Agreements

●     Intellectual Property Planning

●     Insurance reviews

●     Tax strategy

If you are thinking of starting your own business, one of your first steps should be to seek legal advice about the structure of your business – sole proprietorship, partnership, corporation or LLC (Limited Liability Company) – including the tax implications for different ownership structures, protecting your personal assets from business liabilities and more.

We recommend a LIFT (legal, insurance, financial and tax) Startup Session.  Normally, this session is $1,500, but if you call 303-255-3588 today and mention this article and if we still have room on our calendar this month, we will discount your session by $500.

Learn From the Expensive Mistakes & Smart Decisions Made By Actor James Gandolfini In Planning for His Estate

from Brett Lee Shelton, licensed Family Business Lawyer™

James Gandolfini, the actor best known for his portrayal of Tony Soprano on HBO’s The Sopranos, died suddenly last month while on vacation in Italy.  His will is already on the Internet, available for everyone to read – which is the first lesson we should all take away from what he did and did not do right in his estate plan: establishing a trust keeps your private financial matters private!

Estate planning attorney Julie Garber, who writes a column on Wills & Estate Planning on, lists 5 other estate planning lessons learned from James Gandolfini:

Lifetime trusts are often better for beneficiaries.  James Gandolfini’s 13-year-old son and infant daughter will inherit a large portion each of the actor’s estimated $70 million estate once they reach the age of 21.  It may have been better to establish lifetime trusts for each of the children, then making them co-trustees at 25 or 30, then sole trustees at the more mature age of 35 or 40.  This would have protected their inherited assets for life, from creditors, bankruptcy, lawsuits and divorce.

If you own foreign real estate, you need a foreign estate plan. James Gandolfini owned property in Italy, which his will specified should be turned over to his children.  However, Italy has forced heirship laws that may trump the will.  He should have consulted with an Italian attorney and had an Italian will drawn that passes the property in accordance with Italian law.

Update your will regularly. James Gandolfini had updated his will just six months prior to his death, and a few months following the birth of his daughter.  By taking action to update his will following the new birth, he saved his heirs a lot of headaches and heartaches. But unfortunately, he missed a big one — he didn’t update for estate taxes.

Irrevocable Life Insurance Trusts are a smart move.  James Gandolfini established an ILIT for his son Michael and funded it with a $7 million life insurance policy.  By setting up an ILIT, the proceeds from the insurance policy flow directly to the trust, with no New York or federal estate taxes on the $7 million.

Multiple executors and trustees can provide necessary checks and balances. James Gandolfini had two children with two different wives.  He named his sister, his current wife and one of his attorneys as co-executors of his will and co-trustees of the testamentary trusts set up in his will, which was a savvy move to prevent any one beneficiary from being favored.

The one thing that Gandolfini and his lawyers did not think about enough was his estate taxes.  He’ll owe nearly $30,000,000 in estate taxes and much of it could have been avoided with good planning in advance.

As a Personal Family Lawyer®, I can further advise you on all your options and make things as easy as possible for your family during a Family Wealth Planning Session.  If you would like to have a talk about estate planning for your family, call our office today to schedule a time for us to sit down and talk.

We normally charge $750 for a Family Wealth Planning Session, and this month I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call 303-255-3588 today and mention this article.

What the Delay in Obamacare Means for Small Business

from Brett Lee Shelton, licensed Family Business Lawyer™

The Obama administration unexpectedly announced in late June that it was delaying the implementation of new health law penalties for at least a year, leading many small business owners to wonder what the reprieve will mean for their companies.

Firms with more than 50 full-time employees would have been penalized $2,000 per uninsured employee starting in January 2014.  That deadline has now been put off for another year, delaying the implementation deadline for the Obamacare provisions until January 2015.

This delay means small businesses may rethink their strategies for complying with the new health law.  Some takeaways from the delay:

More time to assess options. A recent Wall Street Journal survey of small business owners found that about half didn’t know the cost of providing insurance for all employees, and if it would be more or less costly to provide the insurance or pay the penalties.  The extra 12 months provides employers with more time to assess their options.

Better compete for talent. Research shows that companies offering health care benefits tend to attract more qualified talent.  By implementing coverage before your competitors do, you may be able to recruit better employees.

Renew spending plans. With a year’s delay in implementation of health care law provisions, the cash you may have already set aside to pay for a 2014 implementation could be freed up to cover other operating costs.

If you need more guidance on new health care laws for small business, call us today at 303-255-3588 to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

Planning for What Happens Last

from Brett Lee Shelton, licensed Family Business Lawyer™

Seth Godin is a well known and oft-quoted American entrepreneur who has authored 13 best sellers that have been translated into 33 languages.  Recently, he wrote a post on his blog at that is a must-read for everyone.  I am reprinting it here in its entirety, so please take a few moments to digest this important message from Seth:

How do you want to die?

Let’s assert that you’re almost certainly not going to be the very first person to live forever.

Also worth noting that you’re probably going to die of natural causes.

The expectations we have for medical care are derived directly from marketing and popular culture. Marcus Welby and a host of medical shows taught us about the heroic doctor, and more than that, about the power of technology and intervention to reliably deliver a cure.

It’s not a conspiracy–it’s just the result of many industries that all profit from the herculean effort and expense designed to extend human life, sometimes at great personal cost.

Hence the question: Do you want to choose whether or not you will be a profit center in the ever scaling medical-industrial complex? One percent of the population accounts for 30% of all health care expenditures, and half of those people are elderly.

Most of that care is designed to prolong life, regardless of the cost, the pain or the impact on the family. A lot of doctors are uncomfortable with this, but they need you to speak up and make a choice (in advance) about what you’d like. Some people want the full treatment, intervention at all costs.

If that’s your choice, go for it. But be clear, in writing, that you’d like to spare no expense and invest in every procedure, even if it’s pointless and painful. Don’t be selfish and let someone else have to guess.

On the other hand, you have the right to speak up and stand up and clearly state if you’d prefer the alternative. Many people prefer a quiet dignity that spares them and their family pain and trauma. But you have to do it now, because later is too late.

The web makes it easy to generate and sign a simple generic form. Or even better, go find the formsstate by state. (If those pages are down, try a search on “health care proxy” and the name of your state.) [A reader also suggests MyDirectives.]  [And consider the Five Wishes.]

There are two critical components: assigning an individual to be your health care proxy, and then telling that proxy, in writing, what you’d like done (and not done) to you when the time comes.

If every person who reads this sits down with his or her family and talks this through (and then tells a few friends), we’ll make a magnificent dent in the cultural expectation of what happens last.

It’s free, it’s not difficult, it takes five minutes. Do it today if you can, whatever your wishes are. Don’t make the people you love guess and then live with the memory of that guessing.

Some things are more likely to happen if you plan for them. In this case, the end comes whether you plan for it or not. Planning merely makes it better.

# # #

Seth is right. You need to plan. We are here to make sure you do it right and your family has the guidance they need when you can’t be there. Form documents can’t do that. Your family deserves more.

Call our office at 303-255-3588, mention this article and we will prepare a free health care proxy for you at the conclusion of your Family Wealth Planning Session. The regular $750 fee for the planning session will be waived for the first 3 to book with us this month.