Monthly Archives: January 2018

Estate Planning and Business Ownership

In the course or working with clients on their estate planning (will, trust, etc.), I frequently address ownership of a company. Most often this would be an LLC membership interest but could also be a corporation, partnership or other business entity. To effectively (and efficiently) address business ownership, there are a few viable options. However, every situation is different and actual, personalized counsel is tremendously important.

First, ownership of the LLC membership interest (or corporate stock shares) could be transferred into the name of the owner’s trust. This would, in most cases, allow for smooth transition to the owner’s family or other beneficiaries upon his or her death. Also, in the event of incapacity, trust ownership of the company would allow for quick and effective control by the named successor trustee. Probate would be avoided and a smooth transition would likely occur. This change of ownership would need to be clearly documented within the company’s records.

Second, the owner’s trust (or simply their intended beneficiaries if they don’t have a trust) could be named as the TOD (“transfer on death”) beneficiary/ies. This would leave present ownership of the LLC (or corporation) with the actual person (the owner) but would provide for an automatic transfer upon death. Probate would be avoided and a relatively smooth transition could occur. This type of TOD designation would need to be clearly designated in the company operating agreement and the related membership certificates.

Third, the owner could simply name, within their Will, who they want to receive the ownership units or stock shares of the company or corporation. This would be effective but would not avoid probate—so the time and cost to effectuate this ownership change would be less than ideal.

With any situation and any business and estate plan, the particulars and best methods vary from client to client and business to business. Importantly, other agreements within the company may have a significant impact on the owner’s ability to undertake such planning. The above overview is not legal advice and really does not replace legal advice. It is important to understand the goals, situation and business of each client and to facilitate an effective estate plan accordingly.

How Much Do Lawyers Charge? Flat Fees vs. Hourly Billing

In the course of my practice, I have learned the value that “flat fee” billing has to my clients. If you ask people what their least favorite part of working with their lawyer is, very often their answer will center on fees, the “billable hour” and increments of those hours that force them to worry about even calling their lawyer! Perhaps worse yet, clients can be left not having any idea what their final bill will be! At Schleiffarth Law Firm LLC, we charge only flat fees. Additionally, initial consultations are free of charge. My clients (and potential clients) can come in, meet with me for an hour, discuss their concerns, questions or case and leave with a precise fee agreement. Or they can even decide to not hire me (hopefully this is rare!) and there will be no bill, no charge, no fee. I have discovered that billing transparency, clearly defined fees and free consultations lead to happy clients.

How Do I Protect What I Own from Liability?

Clients frequently ask what types of steps can be taken to protect them from liability (creditors, lawsuits, etc.). This can be a particular concern for some professionals that see themselves as easy targets for lawsuits (physicians, etc.) and for all kinds of people that simply want to protect the things they have worked hard for. Whenever we discuss asset protection and liability protection, we start with four available tools: (1) an umbrella insurance policy providing insurance in the event of certain types of liability, (2) professional liability insurance and/or errors and omissions insurance policies when available (3) the use of LLCs or other business structures when appropriate and (4) the possibility of creating an asset protection trust to shield certain assets/money from potential liability. The details of how these tools are utilized varies from client to client, but each can be an important option. In particular, asset protection trusts offer some unique possibilities to reduce the likelihood of financially devastating liability.

Should I Hire A Lawyer Instead of a Real Estate Agent?

We frequently have individuals contact our office seeking assistance and guidance in the course of either selling their home or buying a new home. Most often, these clients are hoping to avoid the commission that is typically paid to real estate agents (real estate agents generally charge a combined commission of 5-6% of the sale price of the home). In some cases, the agent’s ability to market the property for the Seller and guide them through the sale process can be of great value. For a buyer, an agent may be helpful in the search for the right home and the related purchase process—and a buyer frequently also considers the service “free” since their agent is compensated from the total commission paid by the Seller from the sale of the home. However, there are many instances in which a client will be better served and can save significant amount of money by hiring a real estate lawyer instead. Most commonly, for a Seller, this would be the case if they already have a buyer (for sale by owner, family member, friend, whatever else). In such a case, hiring an agent simply does not make financial sense and a lawyer is much less expensive. For a buyer, if they are comfortable doing their own home search, a real estate attorney is similarly the best alternative. The commission paid to their agent (from the sale proceeds) essentially adds to the desired sale price from the Seller (i.e. its not free). Without an agent, the Buyer can typically negotiate off at least 2.5% of the sale price right off the bat. While every property and situation is different and merits detailed and personalized consideration, it is important to understand when an attorney is cheaper and better than a real estate agent.