Legal-Ease: Two principles in business succession and estate planning


LEGAL-EASE

By Lee R. Schroeder - Contributing Columnist



Lee R. Schroeder

Lee R. Schroeder


Hard work is seldom a problem for the people of northwest Ohio. People here only really struggle when they face challenges that are individualized to them that do not have readily apparent solutions.

A notable challenge for many people in our region is business succession and estate planning because nobody’s family or business is the same as other people’s families or businesses. These challenges are sometimes deepest when it comes to farms because farming often evokes people’s deepest passions and love, even in times of unquestioned discouragement.

As people attempt to chart a course for passing on a family business and non-business assets, with or without an attorney, the conflicting feelings and desire for fairness can appear daunting. To help clients, I have created two primary principles that I ask clients to consider as they undertake business and estate planning.

First, I believe that mom and dad are always right. More professionally stated, the senior generation, as the owner of most of the assets, simply has disproportionate decision-making power over the assets they own. Mom and dad should feel absolutely no guilt in making any particular decision. Simply put, mom and dad make the rules as to that which they own.

This is not to say that the junior generation’s wishes are to be ignored. Parents who are well-educated on their options, who feel comfortable and not threatened and who have time to reflect on their deepest goals tend to create brilliant business succession plans and beautiful and very fair estate plans. In my experience, the junior generation’s wishes are only improperly disregarded when the senior generation does not feel comfortable, is not fully educated or is rushed.

Second, I believe that there is always a way for a family business to remain viable for generations while treating non-business family members fairly. Obviously, a family business that remains in the family should be easier for the junior generation to take over than if the junior generation had to start from scratch. However, a child who charts his or her own course should also be treated fairly.

For example, some offspring of farmers do not farm. Farming parents can feel conflicted and guilty when thinking about how to be fair to non-farm family members while keeping the farm operation viable for the on-farm family members.

I believe that any family that exercises enough patience, self-education and analysis can create a family business estate plan that maintains the viability of the family business while treating non-business family members fair.

The ways to accomplish this balancing act are too many to count. Life insurance can be a tool in certain circumstances. Facilitating payouts between or among family members over many years is also sometimes used. Making non-business family members silent owners can sometimes work. Other times, non-business family members are provided co-ownership of certain non-business focused assets, like real estate, subject to long-term leases to protect the business.

Lee R. Schroeder
https://www.limaohio.com/wp-content/uploads/sites/54/2016/02/web1_Schroeder-Lee-RGB.jpgLee R. Schroeder
LEGAL-EASE

By Lee R. Schroeder

Contributing Columnist

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-523-5523. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-523-5523. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

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