All relationships can have problems, and that includes business relationships, as well. The goal of creating a business partnership is to combine resources and maximize strengths in order to grow a successful and profitable business. However, before you enter that partnership, you should examine how to avoid any future partnership disputes before they start.
Discuss the Vision
Strategize the vision for the business down to the smallest detail. Strategic planning for a partnership can include everything such as finances, expenses, costs, branding, online website strategy, and everyone’s specific roles. Make sure to only ever partner with those people whom you have known for a while, like, respect, and trust.
Discuss the Details
Determine your six-month, one-year, three-year, and 10-year plan for growth. Make sure everyone is on the same page for all areas of a business. Determine why you truly want to partner with this specific person, and why it would be profitable and emotionally beneficial for you to do so. Determine the percentage of ownership, and the allocation of any profits or losses. Decide who can make fiduciary decisions or bind the partnership with or without consent from the other partners. Decide which partners will be able to make decisions, and the areas for which each partner will be responsible. Decide what will happen if one partner dies, or if there is a dispute. Decide on a business structure and how the business will operate day-to-day.
Write it All Down
Make sure to memorialize all conversations regarding your business. Oftentimes, people have short memories. After making all of the decisions above, contact an attorney to create the legal documents you need to ensure that your business is established legally and will operate effectively. An experienced business attorney will also be able to help provide additional information and resources you may not have considered.
Have an Exit Strategy
Unfortunately, relationships do not always work out, even with the best of intentions and planning. Business relationships are the same way. Just like having a prenuptial agreement, making sure that your partnership has an established plan for dissolution that is fair to all parties can help avoid any future lawsuits about intellectual property, real property, assets, and debts.
Unfortunately, if business disputes can not be resolved, the partnership will have to terminate. Making this difficult process easier by having an established plan in place will only help all parties involved.
Contact an Experienced Business Attorney
If you are considering establishing a partnership, it is imperative that you visit with an experienced business attorney. Executing legal documents that not only correctly set up your business, but also offer protection against future liabilities, are important to establish for all partners in the new business relationship. Contact the Law Office of Kris Mukherji at (858) 442-5747 to learn how you can create a wonderful partnership from the beginning and attempt to avoid or mitigate any future partnership disputes.
If you have rental properties or are considering purchasing rental properties, you may wonder whether or not to form a Limited Liability Company (LLC) to attempt to protect yourself and your assets. Unfortunately, the answer is not clear cut, and there are both pros and cons that must be weighed when making the decision to put rental property in an LLC.
Pros of an LLC
There are many advantages to establishing an LLC for your rental properties. Depending on your specific situation and unique circumstances, the following may be considered “pros” for making the decision to form an LLC.
- Asset Protection. One of the main reasons that rental property owners decide to create an LLC is to limit personal liability. In our litigious society, lawsuits are common, and no property owner wants to place his or her own personal assets at risk.
- Tax Advantages. An LLC has the option of being taxed as a “pass-through” entity, which means that any income and/or capital gains pass directly to you, the owner. Taxes are paid as an individual taxpayer, yet you still are afforded protections through the LLC.
- With an LLC, you will not have to put your own personal name on the deed, which will ultimately become public knowledge. If you create a holding company in a state that allows for anonymity then it will make it more challenging for anyone to determine who the actual owner of the property is.
Cons of an LLC
While there are several substantial advantages to the creation of an LLC regarding your rental properties, there are disadvantages, as well. Some of the most common disadvantages include the following:
- An LLC costs more money than not creating any kind of entity. LLC costs can vary depending on who creates your LLC and what kind of tax preparation you will need.
- Possible Lack of Asset Protection. While asset protection was listed as an advantage, the truth is that having an LLC does not necessarily completely insulate the owner from full liability. There are some situations where having an LLC will not offer much protection at all. Specifics listed in an operating agreement, as well as business practices, can change the level of asset protection afforded by the establishment of an LLC.
- Attempting to purchase a property such as a home, duplex, or townhome can be challenging as an LLC, instead of as an individual person. Many lenders will not allow a person to borrow money to finance the purchase of a property under the name of an LLC, but require an actual person’s name. Understandably, they want to hold someone personally liable if there is any issue in the future regarding payments. There are other options, such as paying in cash, or deeding the property to the LLC after you purchase it in your own personal name.
- Due-On-Sale. If you attempt the last move to deed the property to your LLC after you purchase it, then the lender may see that as a complete change of ownership and require full repayment of the loan. Whether this happens or not is a gamble, and entirely up to the lender.
Contact an Experienced Estate Attorney
If you are an owner of rental properties or are considering owning rental properties, you may be confused about whether or not you should establish an LLC. Contact the Law Office of Kris Mukherji at (858) 442-5747 to learn how best you can protect yourself and what structure will work best for your business.
Every person should have an estate plan, however medical professionals have additional needs and considerations. Several options are available to protect your assets and to ensure that the practice you spent years building benefits your heirs when you pass away. Learning the different ways to not only preserve your assets but protect them through estate planning can help you understand your rights and help you make the best choices as you create your estate plan.
Standard Estate Planning
Every person needs a solid and comprehensive estate plan in which retirement planning, tax planning, business planning, and estate planning work in unison. While medical professionals need a traditional estate plan, they have additional concerns and issues that others outside the medical community may not face.
Additionally, although doctors and dentists may be making a lot of income, they may not have a high net worth. Without a solid retirement plan, they may not be setting enough aside for retirement, or failing to strategically save in a way that would reduce their income tax liability. Estate planning for medical professionals can be a unique process in that there are certain advantages available, such as irrevocable trusts for minor children, that can help not only prepare for retirement but also ensure that your estate passes to your beneficiaries with minimal tax penalties.
As a medical practitioner, you are likely aware of the potential for medical malpractice lawsuits. There is a saying among medical professionals, “There are two kinds of doctors – those who have been sued, and those who will be sued.” Given our litigious society, it is important to create a plan that will protect the practice’s business assets.
There are two types of trusts that may assist in asset protection for medical professionals: domestic asset protection trusts and foreign asset protection trusts. Visiting with an estate planning attorney can help you understand how these types of trusts could be useful or advantageous to you financially.
The assets that your medical practice owns are likely considerable. Property, equipment, and receivables are just some of the assets of your business. Who will buy your interest in this property when you pass away? Who knows the true value of your business?
A buy-sell agreement is a tool that eliminates the complicated transaction of selling a business after a medical professional passes away. The agreement decides ahead of time who will buy the interest and the value of your business and eliminates the uncertainty regarding not only who will buy the business, but at what price. There are even options for you to pre-fund the buy-sell agreement with an insurance policy, which would ensure that funds are available to any beneficiaries, therefore avoiding any disruption in the course of your business.
Protecting your business interests and ensuring that your beneficiaries receive the benefit of your practice after you pass away can be done through a properly executed buy-sell agreement. Consider visiting with an experienced estate planning attorney to determine if this estate planning option is right for your business.
Contact an Estate Planning Attorney Today
If you are a medical professional, you have distinct and unique financial situations to examine as you create your estate plan. Contact the Law Office of Kris Mukherji at (858) 442-5747 to learn your best plan for ensuring that your beneficiaries receive the assets from your practice that took you years to build.
Unless you have not had to access to social media, a newspaper, or television in recent weeks, it is likely you have heard the name, Jeffrey Epstein. Epstein is now widely known for his alleged sexual assault of underage girls spanning a number of years. Allegations include assaulting girls in New York, Florida, and other locations, and more recently, he was charged with one count of sex trafficking of a minor and one count of conspiracy to commit sex trafficking. He pled not guilty to these crimes and was being held in jail in New York.
Two days before committing suicide in his jail cell, Epstein signed a will. Victims who allege assault by Epstein have filed a lawsuit against his estate. In his will, Epstein left his estate to a private trust. It is estimated that his estate is worth more than $577 million. The victims of Epstein suing the estate might have a difficult time making a claim on his assets now that they have been left to a private trust.
The use of a private trust in an individual’s estate is not new. Using a trust is often a strategic move based on the needs and wants of the individual preparing the estate documents. Accusers who filed a civil suit against Epstein’s estate face a tough legal battle for monetary damages. The criminal suit against Epstein died with him, but his estate is still subject to civil suits. If the criminal case had gone to court and Epstein had been convicted, it would have likely been easier to collect monetary damages in a civil suit. The elimination of the criminal suit does not eliminate the possibility of recovering in a civil suit, however.
One possible scenario for those suing Epstein’s estate is that they will be locked in a legal battle for many years. Epstein’s will was filed in the Virgin Islands. There will be no money leaving the trust until all claims are settled.
While the use of a trust could create some legal roadblocks, there is the possibility that all of Epstein’s assets were not transferred into the trust before his death, especially since it was signed only two days before his death. Additionally, even if all assets were transferred before his death, there is a possibility that the transfer could be deemed fraudulent. This is because Epstein was facing criminal charges when the transfer was made and the courts could rule the transfer of property as fraudulent and therefore the assets would be available to those pursuing damages because they are not a part of the trust.
While your estate plan will likely never be as contested as Jeffrey Epstein’s, it is important to have a solid and legal plan nonetheless. Knowing that your assets will be handled in your preferred way after death provides peace of mind to most people. The estate planning attorneys at the Law Office of Kris Mukherji are here to help you create an estate plan specifically tailored to your needs and wants. Contact us today for a consultation.Read More
Key Elements in a Buy-Sell Agreement and Their Importance
Those individuals successful in business know that there is an advantage to forward-thinking. Being prepared for the future, unexpected challenges or a changing business climate all need to be in the forefront of a business owner’s mind. Preparation is a key element of any business. There are many ways in which a business owner can be prepared, such as through the use of a buy-sell agreement.
A buy-sell agreement is a “legally binding contract that stipulates how a partner’s share of a business may be reassigned if that partner dies or otherwise leaves the business.” It is a contract among co-owners of a business that outlines a plan of action if a partner leaves the business. Many of the terms and conditions of a buy-sell agreement will be heavily dependent on the type of business entity involved, the number of business owners, nature of the business, and other considerations. The specifics of every buy-sell agreement will be different between each individual business, but there are key elements that anyone involved with a buy-sell agreement will want to consider:
- Triggering Events: It is essential to have language in the agreement that outlines when the agreement is triggered and the conditions contained within it can be enforced. Is this agreement only applicable to the death of an owner? Can events like termination of employment, losing required professional licenses, or even bankruptcy trigger the agreement?
- Rights and Obligations: There is a difference in something being considered a right versus an obligation. If a triggering event happens, are conditions in the agreement mandatory? Or do the parties to the agreement have the option to enforce the terms?
- Tax Implications: Buying and selling a business can have serious tax implications. The implications for all parties to the agreement need to be considered before signing.
- Valuation of the Business: In many agreements, owners are given the option to buy the leaving owner’s share of the business. This comes for the need to valuing the business. Business owners do not know what the value of their business will definitely be in the future, but the agreement can set forth the manner in which the business will be valued when it needs to be.
- Funding and Buy-Out Term: The buy-sell agreement needs to contain terms that outline the timeline of buying the business. It needs to be done efficiently so that the goals of both the buyer and the seller are considered. The timing of the buyout needs to be considered in the funding. You never want to leave your business in a vulnerable cash position, so timing the buyout with the funding required is essential.
The business law attorneys at the Law Office of Kris Mukherji know the importance of being prepared and the importance a buy-sell agreement can have on your business. We want your business to be set up for success, and part of that success is having properly drafted language in contracts. Contact us today for a consultation.Read More