Blue Mountains of Jamaica

On Saturday, I had an opportunity to relax at a restaurant in the Blue Mountains of Jamaica with Ambassador Bridgewater and her assistant, Jackie.  With its organic menu, from our garden to your plate, Eits gives you a view and food that nourishes the body and soul.  I want to be ready mentally and physically for the upcoming week of presentations. 

I am finding that there are lots of Jamaican business owners and the need for business succession planning is evident.  The wonderful places that I have been and will be able to visit while in Jamaica have to be around for generations to enjoy and prosper.  But, that requires planning and the tpye of planning I will be addressing during this visit. 

Contact us at http://www.ythlaw.com/ for business succession planning and estate planning.

Business Succession Planning

Whether you are a mega corporation or a Mom and Pop operation, business succession planning is critical. Do not let your business go down the tubes because you fail to anticipate the next generation of business ownership. There are many scenarios a business owner may want to consider. The primary ones are: (1) Your children will inherit AND run the business. Have you talked to your children about their interest? Are they currently involved? Do they care about the business? Are some children more involved or interested than others? Take the time to answer these questions and plan accordingly. (2) Your children will inherit BUT others will run the business. Do you have an agreement in place with current or potential partners of your business? What are the expectations upon your death or your disability? How would your family be compensated for their interest in the business should you die? Take the time to answer these questions and plan accordingly. (3) You have a Key Employee or potential third party purchaser. Do you want to retire from the business and reap the benefits of your labor. Take the time to answer these questions and plan accordingly. Contact us at http://www.ythlaw.com/ for expert assistance with businses succession planning and other estate planning, probate and elder law needs.

Estate Planning Mistakes - Number Twenty-Two

If you have a business, then you should have a buy-sell agreement or a business succession plan. Business succession planning, including ownership succession and management succession, is critical to business owners. Will the business be transferred to family members, a key employee or other purchaser?

The buy-sell agreement is often an integral part of such planning. There are three basic types of buy-sell agreements: First, stock redemption agreements where the company agrees to purchase the departing owner’s interest; second, cross purchase agreements where the other owners agree to purchase the departing owner’s interest themselves; third, hybrid agreements that combine elements of the other two.

A buy-sell agreement protects each owner’s interest, preserves value, and prevents later disputes when an event of transfer occurs. A transition event could be a voluntary departure, disability, retirement or death. What happens if one of the owners gets a divorce? Without a buy-sell agreement to address these issues and assure orderly transition, the resulting chaos could be financially devastating for any business owner.

Critical Note:
How do you value your business? Once a value is established, how do you fund a buy-sell agreement? Business valuation is one of the most problematic issues surrounding the buy-sell agreement. There are several business valuation methods. A few of the common methods include determining value with reference to (1) book value, (2) capitalizing the earning of the company over a fixed period of time, (3) setting the value by independent appraisal, or (4) periodically setting a fixed value by mutual agreement of the owners of the company. Experience shows that having the owners periodically determine the value is seldom satisfactory; they seldom get around to doing it and the value gets stale. A backup, such as determining the value by appraisal if the owners haven’t set the value in the last year or two is an important provision of a buy-sell agreement. Choosing the appropriate valuation method to implement is critical.

As pertains to funding, there are generally three ways to fund a buy-sell agreement. They are a cash sale which requires savings; a financed sale whereby part of the sales price is represented by a promissory note usually secured by a pledge of the stock being transferred; or if a cash or financed sale is not feasible, a sale funded by life insurance may best address the funding of a buy-sell agreement.

Contact us at http://www.ythlaw.com/for all your business succession needs.

Board Members of Non-Profits - Succession Planning

Board members of non-profits often have their hands full with all aspects of raising money to further the non-profit's mission as well as keep the non-profit viable. From discussing how to raise money, organizing and having fundraisers, writing for grants, to nurturing relationships with potential donors, board members could fail to address another important aspect of their responsiblity. Business succession planning can not be overlooked by board members. A non-profit is still a business and without taking into its role business succession planning, the board members will miss out on the most important viability issue facing a non-profit.


Business succession planning is at every level of the work of a non-profit; from its committee membership, its operations personnel, to its board membership. Now is the time to take a look at each of these area and address any deficiencies. Without succession planning the future of your non-profit IS at risk.

Leave your comments or contact us at http://www.ythlaw.com/

Business Succession Planning - Continued

In follow up to yesterday's post, I wanted to provide the general estate planning principle regarding debts. Creditors can proceed against the estate to collect their debts. Debts and taxes must be paid out of the estate (or be otherwise provided for) prior to distribution of assets to beneficiaries. Therefore, it is important in any business venture to determine what exposure your venture may have on your personal estate as oppose to your business entity. You want to make sure that you separate the exposure of your business venture from your personal assets. The following are important steps to take:

1. Make sure business ventures are done in the name of your business operation.
2. Make sure your business has been properly capitalized and is in compliance with all legal requirement to assure its viability.
3. Make sure you have assessed risks in your business ventures and provided adequate insurance where your business assets might not be sufficient to cover potential exposure.

ABOVE ALL, ALWAYS seek professional advise and make sure your business succeesion planning is up to date. Leave your comments and questions here or contact us at www.ythlaw.com

Your Estate and Business Succession Planning

Well, yesterday's Memorial Service for Michael Jackson was extraordinary and a real tribute to his legacy.

I had a question posed to me. What effect will the cancellation of Michael Jackson's "This is it" Tour have on his estate? Of course, I do not know the terms of any agreement which may have been put in place but there are a number of conditions that may or should have been considered. I will discuss a few here.

FIRST, the promoters of the concerts, AEG Live, would have taken out INSURANCE on the Pop Star. They reported to the press that Michael Jackson had passed the insurance company's physical exam. He would have been insurable. How much insurance did they have on Michael Jackson and under what condition and terms would coverage be paid out? Only time will answer those questions.

SECOND, there would have been an AGREEMENT to cover all kinds of contingencies like death, disability, sickness, etc. If as reported, the promoters spent $30 million dollars in preparation and made $85 million dollars in tickets sale, in theory they might be out $115 million dollars. However, it has also been reported that 40% to 50% of the ticket holders may opt to keep the ticket as a souvenir reducing the promoter's exposure to approximately $73 million. Further reduction will occur if the agreement provided the promoter with rights to the musical footage of the rehearsal. The small footage already released has received record attention.

FINALLY, in business you must consider the effect of your actions on your estate. What happens if you die? If Michael Jackson worked with an estate planning team and professional advisors, the cancellation of the concept tour may have no negative effect on his estate. Let us see.

An interesting question that we can all watch unfold. Leave your comments here or contact us at www.ythlaw.com