Cornwall Wills and Estates Lawyer Asks, “Will Your Small Business Survive after Your Death?”

You’ve worked so hard for the success of your small business, but have you thought about what will happen to it after you’re gone?  By planning in advance, the small business owner can ensure that his or her wishes are followed should the unthinkable occur.  Not only does this kind of planning make for an easier transition on those left behind, but it also saves money and can literally keep the business from failing altogether.

Your small business is a part of your estate, and just like your home and other assets, planning needs to be done for how it should be handled upon your death.  You’ll want to go over your options with a qualified Cornwall and area wills and estates lawyer (as well as your accountant!) and make your decisions legal and binding with proper documentation.  Of course, you’ll also want to communicate with those individuals who will be charged with following your wishes and keeping the small business running smoothly.

Unfortunately, the death of a small business owner can also spell the death of the business.  Estate administration (also known as probate) taxes and income taxes can be so expensive that the business just can’t survive paying them. Or, the other partners in the business cannot afford to buy the decease’s share in the business, so the business gets sold to a third party and the profits divided.

Laws like this play a role in the fact that small businesses do not typically survive through the generations.  According to The Small Business Review, only about 30% of family businesses make it to the second generation, 12% to the third generation, and 3% to the fourth generation.  Obviously, there are a number of factors involved, but the need to pay taxes and take care of other transitional costs creates a significant burden in passing a business on to heirs.

By planning in advance, you can take advantage of tax reduction planning and limiting (or avoiding) probate taxes. Many of the options available to small business owners can only be utilized before death, not after, so it is important to make plans for your business succession now.

 

Are you interested in using this article in your newsletter or on your blog or website?

 

You can, but  please use this complete caption with it:

 

Michele R.J. Allinotte is the owner of Allinotte Law Office in Cornwall, Ontario and she helps her clients make the best decisions for themselves, their families and their businesses. Her practice focuses on the areas of  business law, estate planning and real estate. Visit www.YourCornwallLawyer.com to get her FREE Peace of Mind Personal Inventory to make sure that your family has all the information they need.

 

 

 

Wait! Don’t Sign That Contract!

I hear it all the time from my clients in Cornwall and area, “Can I get out of this [insert name of contract here]?”.

People are asking about leases, guarantees, agreements to purchase a home, weight loss center memberships, you name it.

My answer is usually the same. “Well, I would have to review the agreement first.”

Some agreements do contemplate how to “get out” of the agreement, or, in legal speak, how to terminate the agreement.

If the contract says you can “get out” of an agreement before the term is up, normally you will need to have a reason (which would be set out in the agreement), or you have to give notice to the other party for a period of time, or it is going to cost you.

Most of the time there is a cost to ending the agreement early.

In other agreements, there is nothing in the document that discusses ending it early.

So what do you do then?

Well, you can try to negotiate with the other party, or you can stop honouring your obligations under the agreement and wait for the other party to sue you.

Because that is what generally happens when you don’t fulfill your side of the bargain – someone is going to pursue you for whatever money they have lost. If it is a lot of money, they are going to sue you.

Depending on the fact situation, you might be sued successfully if you break your contract.

And then you will be responsible not only for your initial obligations in the agreement, but you also might have to pay interest, and, sometimes, part of the legal costs of the other party.

Many of my clients are surprised at what their obligations are under the agreements and contracts they have signed.

Problem is, they come to me AFTER they have signed the agreements.

It doesn’t do much good for me to explain all of your obligations under a contract once it has been signed. I cannot change the contract for you (unless the other party would agree to amend the contract, which isn’t likely).

So, next time someone puts a contract in front of you to sign, don’t just sign it blindly.

First of all, READ the contract. It may not be what you agreed to, or you may not like the terms and want to renegotiate some items.

Secondly, if you aren’t sure what it means, ask to have a few days to review it before you sign. You can use that time to have your lawyer review it, or to look it over in more detail yourself so you can figure out what the heck it means.

I know not everyone can afford to hire a lawyer for every contract they sign, but think about what it might cost you if you want to get out of the contract. If you couldn’t handle the cost of fulfilling your end of the bargain if certain things do or don’t happen, you should get some legal advice on what it all means and also, if you can “get out” of it if you need to down the road.

I can almost guarantee that the cost of having me review a contract after it is signed to see if you can “get out” of it (and to help you deal with attempting to get out of it) is going to be greater than the cost of reviewing the agreement up front before you sign.

I can also tell you that almost every time I review a contract for a client, we end up asking for changes.

Some of the things we end up changing could have cost my clients a lot of money if they had signed the contract as is.

And sometimes, my clients decide that once they know their obligations and the true cost of the contract, it is not worth it, and they don’t go through with the agreement.

I recommend that you review in detail EVERY agreement you sign. A gym membership, a lease, a loan agreement, an agreement to buy a home or other large ticket item, you get the picture.

And if you aren’t sure about what is in the agreement or what your obligations are (or what the other party’s obligations are), you should get legal advice.

This is especially important for small business owners and entrepreneurs.

I have membership programs available for clients who want to have ongoing access to legal advice for contract reviews and other issues but who are concerned about managing the cost of legal services.

If you are interested in Allinotte Law Office’s membership program, give us a call at 613-933-7720 or email erin@allinottelawoffice.com.