Jeffrey M. Verdon Law Group, LLP
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Newport Beach Estate Planning Legal Blog

Does your family business have an asset protection plan?

The vast majority of family businesses don't have any kind of asset protection plan in place. This is unfortunate because without an asset protection plan set up, families, their life savings and the businesses that support them, are at risk of being destroyed in the event of a lawsuit.

Whether the lawsuit is frivolous or not doesn't seem to matter. Even a successful defense against a lawsuit could be costly enough to bankrupt a company even if the business owner wins the lawsuit in the end.

Should I buy liability insurance as a part of my estate plan?

Imagine you've spent your entire life and career saving up for your future and your family's future. Because of your hard work, sound investment choices and dedication to saving, you've amassed a considerable amount of wealth that you hope to pass on to your family through your estate plan one day. It's important to realize, however, that all of your hard work and sacrifice could be wiped away in a heartbeat if you become the target of a personal injury lawsuit or some other kind of legal liability matter. This is where liability insurance can give you some peace of mind.

Buying liability insurance is the most important thing that anyone can do to protect their assets. You may also want to buy an umbrella policy as a part of your homeowner's insurance to protect the equity you own in your home. If you're a business owner, there's liability insurance to cover your business operations, and you may want to buy increased liability coverage through your business-related insurance policy.

What should your exit strategy be?

Part of being successful in business is knowing when to get out of the business. As such, having a solid exit strategy should be as much a priority for business owners as next year’s business plan. An exit strategy should include plans for how to minimize taxes when you actually sell the business.

However, your tax minimization strategy may be different depending on who you sell the business to. Essentially, plans to transfer the business to family members should be (and often are) different than selling it to an unrelated third party. For instance, if you intend to transfer the business to family members (i.e. children), there are two examples of how this could be done. You could gift the business to the children (especially if they are married) and not compromise your entire lifetime gift tax credit.

The many probate challenges of high value estates

Probate serves one primary purpose: to clearly define ownership of assets after a death. Within this purpose, the ideal is to provide an efficient and undisputed transfer of ownership. It is never as simple as handling a title or deed from one party to another. In truth, complex property requires complex transfers and a thorough review of pertinent laws.

The legacy of James Brown is a clear example. Brown passed away in 2006 and his estate is still in dispute today. Over nearly twelve years, more than a dozen lawsuits have questioned its legality, involving children, his spouse, his charity and multiple state laws. The value of the estate may be as high as $100 million.

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