Lessons on Family Business Succession from the British Royals

from Brett Lee Shelton, licensed Family Business Lawyer™

The recent birth of Prince George Alexander Louis to Prince William and Kate Middleton gives the House of Windsor a living 4th generation heir to the throne.  Prince George will undoubtedly need to wait for 60 or more years until he ascends to that throne, given the longevity that runs in his bloodline.  His grandfather, Prince Charles, has been waiting 64 years, and since the throne is not something royalty retires from, it may be a much longer wait indeed.

Letting go the reins of power is something most business owners struggle with, so preparing successors is something they should consider carefully, especially if you’re keeping it in the family.  Here are some tips for preparing to let go of the family business:

Develop capabilities. You undoubtedly will feel more comfortable handing a business over to the next generation if he or she has developed the proper capabilities to run the firm.  For a family business, that may mean letting a son or daughter work outside the business for a number of years to gain that valuable experience.

Share interests. Don’t try to pre-determine the roles your children will play in the business; instead, expose them to a number of different disciplines so they can find their own niche.

Share power. To train the next generation to be good stewards of the family business, you need to let them make and own their own decisions.

Bow out gracefully. Once you have passed the reins on to the next generation, learn to respect their decisions and don’t try to insert yourself in areas where you no longer belong.  Let them know you are available to share your experience, but don’t try to force yourself on them.  This inevitably leads to family conflict and destabilizes the business.

If you’re a small or mid-size business owner, call us today 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.

How Much Do You Charge for a Will?

from Brett Lee Shelton, licensed Family Business Lawyer™

If you came to this page to find out what I’ll charge you for a Will or you are considering calling me (or any other attorney) to ask, “How much do you charge for a will?” stop.

It’s not the right question.

The question you need an answer to first is “What do I really need to have in place to ensure me, my family, and money are cared for the way I want?”

Far too many people make their estate planning decisions based on what it’s going to cost. Sometimes, that may be the right criteria. Most of the time it’s not.

The problem is you don’t know what you don’t know.

When you get on the internet to download a cheap will or fill out canned documents from a book or DIY kit from the office supply store, you don’t know what you are actually putting into place or setting in motion.

When tragedy strikes, it’s your family who is left holding the bag.

Failed plans, unnecessary, expensive, totally public probate, multiple probates in different states, even, loss of sovereignty, legal fees for guardianships and conservatorships, being at the mercy of the judicial system.

When you hire me, you aren’t paying for documents.

You are hiring me for my guidance throughout your lifetime and to be there for your loved ones when you can’t be.

When you hire me, you aren’t renting my time, but my brain and my heart. You are hiring an ally who will help you get your affairs in order, and keep them there across time and changes in the law, tax policies and your life.

When you call me and ask how much for a Will, I can’t give you an answer because I don’t even know if that’s what you need.

Maybe a Will would suffice for your family, but maybe it won’t.  And if I tell you how much a Will costs and then you come into my office and you need so much more, you’ll be angry with me.

So I won’t answer your question.  Because I don’t charge for Wills.  I charge for advice, guidance, counsel and support.  The Will? It’s free.

Our process begins with a Family Wealth Planning Session.  Before this Session, you will receive a package of information with homework for you to complete so you can benefit from the time with me the most.

Whether I ever write a Will (or any other documents) for you or not, I want every interaction of ours to be extremely valuable to you.

To that end, I’ll review the homework you complete before we meet.  And then we’ll invest our time together exploring your life, looking at what would happen to you, your children, your money, and the people you love if anything happens to you.

You will feel heard, cared about, informed, educated, and empowered to make the best decisions for the people and things that matter most in your life.

If, after we spend that time together, it turns out you need a Will (or any other type of legal planning), it will be because we came to that conclusion together.

Then, I will offer you planning packages that will cover the different options for taking care of things the way you want.

I can tell you this – most of our foundational plans range between $1,500 and $8,000.  Your package will be customized to the specific needs of your family.  And you will stay in control the whole time.

How do you choose a lawyer, if not based on price?

Get referrals from your friends and family. When you call the office to inquire about their services, rather than asking what they charge, ask HOW they charge and what makes their office different than others.

See who stands out in your area. Is there a lawyer who is frequently seen around your community? That lawyer means business and is putting their reputation on the line every day. Give them a try.

Search for a local provider on www.personalfamilylawyer.com or www.estateplanning.com. These two websites host some of the best planners in the world.

Get connected. When you find the right lawyer, he or she will be a member of your team for the long term, not for just this one transaction. Your lawyer should be approachable and not only want to be in a long-term relationship with you, but have systems and a team to support that.

Read this report.  I’ve written a report on the common mistakes I see families make when choosing a lawyer for their loved ones.  You can get it for free here. [LINK TO PAGE OFFERING YOUR REPORT] Read it.

Simply asking, “What do you charge for a Will?” does not get you what you need to know to make a smart and loving decision for your family.

A far more powerful question to begin with is “What do I need to do to make things as easy for my family as possible, if something happens to me?”

Please call me at 303-255-3588 to find out.

10 Legal Myths That Could Get You and Your Business in Trouble

from Brett Lee Shelton, licensed Family Business Lawyer™

Inc. magazine recently wrote an article that made me realize many business people are flying blind about the legal parts of business.  These are all places you could get in trouble, if you aren’t awake, aware and doing business with your eyes wide open.

Personal assets are protected by the right business entity.  Choosing a corporation or LLC as a business entity provides some asset protection, but if someone is determined to go after you personally, they could pierce that protection easier than you may think.

Patents and NDAs protect intellectual property. If someone has more money than you do, or is located overseas, they can steal your ideas.

Conversations between lawyers and their clients are always confidential. Attorney-client privilege is not always absolute.  A judge can pierce this privilege.

Good contracts are complicated.  Quite the reverse – the best contracts are simple and clear.

Your online posts are protected from libel claims.  Even if you frame your post clearly as your own opinion, if someone feels you have libeled them they can sue you.

If someone is injured on your property, you’re liable.  You are not responsible if someone hurts themselves on your property if they were negligent, clumsy, stupid or engaged in a criminal act.  Also – if you were negligent or intended to harm someone, your insurance will probably not cover any damages.

You can’t be sued if you did nothing wrong. Anyone, anywhere, at any time, can sue you for any reason.  It’s called frivolous litigation, and even if you prevail, you can spend big money getting out of it.

Once you get a trademark, it’s yours forever. On the contrary, getting a trademark is just the first step – the really important part is protecting that trademark.

You can’t get a DUI on private property.  The fact is, you can be charged with a DUI even if you are sleeping it off in your own car in your own driveway.

Lawyers are a necessary evil only to be used as a last resort. It is amazing how many people won’t invest a few hundred dollars for solid legal advice that may save them a fortune and lots of pain in the future.

Good legal strategy and planning begins when you start your business, not when you get into trouble.

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.

How to Get Your Boomerang Kid Off Your Couch & Ensure He Becomes an Adult You Are Proud to Say You Raised

from Brett Lee Shelton, licensed Family Business Lawyer™

A recent Economist article says a “perfect storm” of the poor economy of the past few years, resulting in fewer job prospects for college grads and other young adults has more kids than ever living at home well into adulthood.

I believe it has a lot more to do with the fact that college simply isn’t preparing kids for today’s workforce and little to do with a “poor” economy. A new economy yes. But, it doesn’t seem that poor to me. Anyway, that’ll be a topic for another article.

Regardless of the reason, more than one-third of Americans aged 18-31 still live at home with their parents.  And it’s probably not because the kids just love their parents so much they can’t leave.

If you are one of these parents harboring young-adults who won’t grow up and move out (and you want them to go), here are three tips to either get them contributing to or out of the house:

Teach your kid to be work-worthy online. Employers are going online to check out the social networking profiles of many job applicants and if what they see is decidedly unprofessional, they don’t go any further.  Encourage your son or daughter to clean up his/her online presence, deleting party photos and filling those profiles with updated information on their skills and qualifications for real work.

Charge your kid rent or require a work trade. If your adult child has a job but is still living at home, s/he may be saving for a deposit on his/her own place.  But don’t let that lead you to giving a free ride.

Charge a nominal rent that will still allow for saving, but will reinforce the idea that there’s no such thing as a free lunch (or breakfast or dinner).  Or, instead of rent, get your kid working around the house doing all the things you no longer want to (or can) do.

Make your kid more attractive to the opposite sex.  Young men who live at home are often considered unmarriageable, according to a sociologist from the University of Texas.  Plus, having mom and dad in the next room can be a relationship killer from the get-go.  Open their eyes to the fact that living at home may be hazardous to his love life.

If you would like to talk to us about ensuring your kids grow up to be great adults, no matter what age they are, call our office today to schedule a time for us to sit down and talk.  Many of these issues are a reflection of a lack of family wealth planning, the practice of how you’ll pass on what really matters.

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.

How to Conduct the Perfect Interview

from Brett Lee Shelton, licensed Family Business Lawyer™

Savvy business owners know that there are few legal landmines they need to side-step when interviewing candidates for a job.  Sometimes, though, even the best get caught with their proverbial foot in the mouth by asking a question that to them seems innocent enough but could land the company in legal hot water.

Here are some tips for how to conduct the perfect (legally speaking) interview:

Avoid age-related questions. Even something as innocuous as commenting on how young a person looks for their level of experience can lead to trouble.  Age discrimination is a big issue these days with so many people over 40 looking for work.  Steer clear of anything age-related.

Avoid origin of birth questions. If you ask a candidate where they were born or citizenship status, this could imply discrimination on the basis of national origin.   Instead ask if the potential employee has the right to work in the U.S. and if they can provide verification – which the law requires them to do if hired.

Refrain from the religious. You know you can’t discriminate on the basis of religious belief, but how do you find out if religious holidays will interfere with the job?  Be sure to explain if working weekends is part of the job and inquire about their flexibility to serve under these conditions.

Steer clear of family questions.  Asking about marital status or any plans to have children is verboten.  And what if the person is married, but to someone of the same sex?  Many states prohibit companies from discrimination based on sexual orientation, and with the recent U.S. Supreme Court decision in United States v. Windsor that invalidated the Defense of Marriage Act, it is likely to become a federal issue as well.

Avoid health-related queries. Employers are not allowed to discriminate against potential employees with a disability, so you should avoid this area of inquiry.  If there is some doubt about their ability to perform, you should ask about his or her ability to perform certain job functions.

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.

Windsor Ruling Expands Estate Planning Prospects for Married Same-Sex Couples

from Brett Lee Shelton, licensed Family Business Lawyer™

In June, the U.S. Supreme Court ruling in United States v. Windsor invalidated the federal Defense of Marriage Act (DOMA).  The Windsor ruling has led to a number of recent federal rule changes from the IRS, Social Security Administration and other agencies that provide new estate planning opportunities for legally married same-sex couples.

Earlier this month, the IRS ruled that legally married same-sex couples would now have the same status as opposite sex married couples for income, estate and gift tax purposes.  This new rule applies to all married same-sex couples no matter where they live, provided they were wed in states that recognize same-sex marriage.

These rule changes open up a whole new estate planning landscape for married same-sex couples, including:

Portability – a deceased spouse’s unused estate tax exemption may transfer to the surviving spouse’s estate tax exemption.

Marital deductions – ability to make unlimited transfers to each other without incurring federal gift or estate tax, during life or after death.

Gift splitting – spouses can combine their annual gift tax exemptions of $14,000 per year to make a gift to anyone up to $28,000 without incurring a gift tax.

Retirement plan and IRA beneficiary designation – married same-sex spouses can be the sole beneficiary of qualified retirement plans and IRAs; surviving spouse can now take advantage of special rules when it comes to rollovers and delayed distribution of retirement account assets.

Community property – married same-sex spouses living in community property states can retitle assets to get a full step-up in income tax basis following the death of one spouse.

Tax refunds – married same-sex couples may be entitled to income, gift or estate tax refunds for 2011, 2012 and 2013.

Life insurance – couples with individual life insurance policies may want to consider changing to survivor policies to maximize death benefits.

If you would like to have a talk about estate planning, 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.

Litigation Over Noncompete Agreements Up 61%

from Brett Lee Shelton, licensed Family Business Lawyer™

According to the Wall Street Journal, litigation over noncompete agreements has risen 61%in the past decade – a number that may be low considering most cases are settled out of court and not reported.

Long considered the standard for senior management employment contracts, noncompetes are becoming increasingly common at all levels of employment as a way to protect trade secrets and customer goodwill as well as a deterrent to employees leaving a company.  Studies show that employees with noncompetes are less likely to leave a company to start their own business or work in a similar field.

For many small businesses and startups, noncompetes can impede growth by limiting access to qualified prospects.  Fear of litigation causes many small businesses to avoid potential employees that have existing noncompetes.

The enforcement of noncompete agreements varies greatly by state.  In California, noncompetes are virtually never enforced because they are considered void under the California Business and Professions Code.  Florida and Massachusetts made it relatively easy to enforce noncompetes if a former employee joined or started a rival business within a year of leaving his or her employer.

If you are a business owner considering the use of noncompete agreements to protect your investment in employees or intellectual property – or want to hire someone with an existing noncompete — you should consult with a Creative Business Lawyer™ on the enforceability of noncompete agreements in the state where you do business.

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.

Divorce After 50: Common Mistakes That Can Ruin Retirement

from Brett Lee Shelton, licensed Family Business Lawyer™

Beyond the emotional impact that divorce can have on couples of any age that decide to split, it can have a potentially devastating effect on the retirement plans of those who divorce later in life.  Divorce after 50 usually results in a loss of income for both parties, which can mean working longer to fund a single retirement.

A recent article at Forbes.com pointed out four common mistakes made by those over 50 who are divorcing that can ruin retirement plans:

Choosing the house over other assets. For many people, choosing the family home in a divorce is more of an emotional than a rational choice.  If the housing bust of the last few years has taught us anything, it’s that you can’t count on a house as a nest egg.  Plus, a house is likely to cost you more as well in property taxes, maintenance and unexpected expenses like a roof or furnace replacement.    So don’t automatically sacrifice retirement assets for a house until you weigh the costs.

Forgetting to consider the tax implications of retirement assets. If you decide to divvy up retirement savings by one of you taking the 401(k) and the other taking the Roth IRA, you need to realize that these are not equal distributions.  Withdrawals from a 401(k) or traditional IRA will be taxed during retirement, while withdrawals from a Roth IRA are not taxed during retirement.  Therefore, the payout from the Roth IRA will be larger over time.

Rolling over a spouse’s retirement account into an IRA after the divorce. If you are under the age of 59 1/2 at the time of your divorce, you have a one-time opportunity to withdraw money from an  ex-spouse’s 401(k) or 403(b) without having to pay the 10 percent early withdrawal penalty as long as those funds have been allocated to you under a qualified domestic relations order (QDRO).  If you do a rollover and need to tap the account early, you will have to pay the tax penalty.  And while it may be tempting to dip into retirement savings now, remember that you are eroding the nest egg that needs to last you for 20-30 years in retirement.

If you would like to have a talk about retirement planning, 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.