Planning for Small Business Owners Is Critically Important
At times we all fall victim to focusing on the present at the expense of planning for the future. Many business owners continually focus on the daily, monthly, quarterly, and annual goals of the business and often do not consider what would happen if they, or one of their key team members, would suffer and incapacity or worse. Failing to have a succession plan creates an incredible amount of stress on a business and can be insurmountable in the event of death or incapacity of key members of the business. Proper estate planning coordinates the needs of the individual, the needs of the individual’s family, and the needs of any business interests held by the individual to provide for a smoother transition.
I often describe proper estate planning for business owners as providing “schock absorbers” during a difficult time. Lets face it, the incapacity or death of a business owner impacts many things: the business, the employees, the family of the owner, other businesses that have contracts with the business, among others. Further complicating matters, is that transitions in ownership of the business (even due to death or incapacity) often trigger legal obligations under documents like leases, franchise agreements, loans, shareholder agreements, and more. Failing to address these obligations in the context of an estate plan can have disastrous results.
So what happens if you fail to plan? Well, it is a similar outcome to driving a care without shock absorbers over a rocky road, you may get through but your car will likely be damaged and the wheels may fall off. To be clear damage from an unplanned transition can impact the owner and the owner’s family, the business, or both. Effective planning means that there are “shock absorbers” on all areas that would be impacted by the death or disability of an owner.
Business succession planning at the business level provides for continuity in the business but may not prevent adverse impact against the business owner’s family. For instance, a business that provides a buyout of an owner’s shares may preserve the business, but an undercompensated buyout may leave the owner’s spouse and family in bad shape financially. In reviewing their estate plan a business owner should closely look at what would happen to their ownership interest in the event of incapacity or death.
Even if an attorney represents a business in which you have an ownership interest, properly integrating any business succession plan with your estate plan requires a comprehensive look at your personal needs and estate planning goals. The estate planning and elder law attorneys at Hook Law Center regularly assist business owners in establishing and implementing their personal estate plans so that they are coordinated with the business’ succession plan. If the opportunity to plan has passed then our attorneys also can help coordinate the aftermath so that the shocks to the individual and business are minimized.
Ask Kit Kat – Furless Fashion
Hook Law Center: Kit Kat, what can you tell us about fashion designers and their use of animal fur in their clothing lines?
Kit Kat: Well, there has been a lot of progress in this area. In 2015 the brand Hugo Boss discontinued its use of fur fashions. Now, there is word that Giorgio Armani will follow suit. In 2008 Armani stopped using fur in all its products, except for rabbit. Now that, too, will be eliminated. There had been and is tremendous pressure on fashion designers to use fur in their collections, especially the high end ones. Fur has traditionally meant elegance and wealth. However, thanks to lobbying efforts by the Humane Society of the United States (HSUS) among others, Armani decided the time had come to eliminate fur and stand up for what he believes is right. PJ Smith corporate engagement manager of HSUS says, ‘Having the leadership of somebody like Armani is very important: One of the cruelest form of fashion is unnecessary now, and you have the biggest name in fashion design saying that.’ Impacting their decision, in part, is the realization that fake fur has become so attractive, and is a great alternative to using the hide of helpless animals. It’s a win-win for all those involved.
So kudos to Mr. Armani! He is a cat lover and has two in his family. We continue to hope that other designers will follow his lead. HSUS and the Fur-Free Alliance, a coalition of 40 organizations from 28 countries, will continue to press their case for fur-free fashion the world over. (“Fashion without fur,” All Animals, September/October 2016, p. 32-33)
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