Kaufman Law: Will and Business Succession Perils
-
Upload
guest39e7f6c4 -
Category
Business
-
view
606 -
download
0
description
Transcript of Kaufman Law: Will and Business Succession Perils
![Page 1: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/1.jpg)
Will and Business Succession Perils
![Page 2: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/2.jpg)
Overview
Closely held businesses have an extraordinary failure rate:
– 70% do not survive to the second generation
– 85% do not survive to the third generation
– The average family owned business lasts only 24 years
![Page 3: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/3.jpg)
Overview
Why do so many businesses fail after the first generation?– Failure to address basic issues of ownership
succession planning and estate planning– Failure to develop a comprehensive strategic vision• Ownership• Control• Management
![Page 4: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/4.jpg)
Wealth Protection Techniques Can Be Challenged
Five techniques for business succession planning– Buy/Sell Agreements
– Family Limited Partnerships
– S Corp Recapitalizations
– Employee Stock Ownership Plans
– Intentionally Defective Grantor Trusts
All Five Can Be Successfully Challenged If Not Done Right
![Page 5: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/5.jpg)
The Legal System is Expensive
• The cost to defend a frivolous suit can easily run $50,000 to $100,000.
• The Cost of an Appeal can be another $40,000 or more.
• Are you willing to kiss that $100,000 goodbye? (You don’t get it back, even if you win.)
• A juror has a 50/50 chance of detecting a lie.
![Page 6: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/6.jpg)
Succession Nightmares
• Does your client want to be in business with their partner’s spouse and children?
• The cost to defend a frivolous suit can easily run $50,000 to $100,000.
• If your client is incapacitated, can their business survive?
• Can your clients’ family get a fair price for their share from the partner?
• At any given time, 40% of U.S. businesses are facing immediate transfer of ownership issues.
![Page 7: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/7.jpg)
Attack by Predators
• Are all of your clients’ beneficiaries financially savvy?
• Would your clients’ assets be a nice prize if their balance sheet were publicly available?
• Are all of your clients’ children in solid marriages?
• Will your client or your client’s spouse ever become elderly and dependent upon others for financial management?
![Page 8: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/8.jpg)
Divided You Stand, United You Fall
• If your client owns everything in one trust, one company, or in their or their spouse’s own name, they can lose everything in one lawsuit.
• If your client owns assets in separate entities, only one is threatened by one lawsuit.
• If your client is personally sued, multiple entities can keep creditors from controlling their assets for their benefit.
![Page 9: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/9.jpg)
Will Contests
![Page 10: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/10.jpg)
Will Contests
What makes a piece of paper a will?– Signed
– 2 witnesses are there at time of signature
– Testator acknowledged the will at time of signature
– Two witnesses sign will when testator does
![Page 11: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/11.jpg)
Will Contests
Did Uncle Meleager really know that he was writing a will?• Testamentary Capacity
• Undue Influence
• Fraud
![Page 12: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/12.jpg)
Will Contests
Testamentary Capacity- Initial burden on proponent
- Then swings to challenger
- NOT same as legal capacity as you normally think of it- Understand what he is doing when making will
(giving away his stuff when he dies)
- Has idea of what he owns and what he’s doing with it
- Knows who he might give stuff to
- Able to decide who gets what*
- MD different from VA in this one - MD requires that decedent be able to “appreciate the relative claims” of heirs and/or potential heirs
- “Insane delusion”- VA & MD differ somewhat
![Page 13: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/13.jpg)
Will Contests
Undue influence
- Someone tries to get decedent to do something he wouldn’t normally do
- Irresistible pressure
- Decedent does something he wouldn’t normally do
- 3 part test
- Enfeebled in mind at time of execution
- Note VERY UNCERTAIN concept in VA & MD
- Requisite activity
- Contrary intention expressed
![Page 14: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/14.jpg)
Will Contests
Fraud– She was deceived
– Decedent relied on deception
– Decedent did something different as a result
![Page 15: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/15.jpg)
Will Contests
Revocation
- Must be explicit
- Can be act or statement
- If can’t find will it is presumed to be destroyed
- Shift of BoProof
![Page 16: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/16.jpg)
Will Contests
Scenarios• Uncle Meleager & The Missing Will
Uncle Meleager is a mischievous
old man who hides the will
![Page 17: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/17.jpg)
Will Contests
Scenarios• The Dawson Pedigree
Old Lady Dawson does not want a will
believing that her caretaker 2nd cousin
twice removed will inherit by statue.
But the law changes.
![Page 18: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/18.jpg)
Will Contests
Scenarios• The Portuguese Aunt
The Portuguese Aunt is old and suddenly disinherits her caretaker niece.
![Page 19: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/19.jpg)
Will Contests
Scenarios• The Case of the Stained Book
In the stained book a new will is substituted for an old one.
![Page 20: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/20.jpg)
Will Contests
Scenarios• An Uncommon Inheritance
The Uncommon Inheritance is a treasure hunt with the winner inheriting it all.
![Page 21: Kaufman Law: Will and Business Succession Perils](https://reader034.fdocuments.in/reader034/viewer/2022051817/547900c3b479598a098b4649/html5/thumbnails/21.jpg)
Thank You
– If you would like a FREE consultation for your clients, please complete the information sheet.
– Be sure to get all handouts before you go.
–