Are You a Blended Family? What Happens to Your Property If You Die Without a Will?
If you have a blended family, your property may be distributed in ways that you do not intend. To show what happens, let’s assume Mommy Shark and Daddy Shark have one baby shark together. Daddy Shark had one baby shark from a previous marriage. When Daddy dies, he leaves behind the following assets: A home that Mommy and Daddy bought together after they got married and still live in it. A flower shop with commercial property acquired during their marriage. A lake house which Daddy owned before he met mommy. A bank account worth $200,000 to which both contributed for their retirement. The home in which they lived is community property. But because daddy has a child from another marriage, Daddy’s half share of the house will pass directly and equally to his 2 children. Mommy will retain the right to live in the home during her lifetime and retain her half ownership in the home. The flower shop and commercial property are classified as community property. Daddy’s half share of the business and commercial property will pass directly and equally to his two children. Mommy will keep her half ownership in the business and commercial property. Mommy will now run the business with her child and stepchild. Did she want partners in this business? Since Daddy owned the lake house before he met mommy, it is classified as separate property. All of the lake house will go to the children but Mommy will have a one-third life interest in the property. he may not have unlimited access to the lake house as she once did. What will happen to the bank account they saved for their retirement? It will be split in half, Mommy will retain $100,000 but the rest will be split equally between Daddy’s two children. Will Mommy have enough to retire now? If you find yourself in a similar situation or to avoid issues like these, contact us.
Continue ReadingCommon Commercial Lease Mistakes
Common Commercial Lease Mistakes and How to Avoid Them — A common business need that every business owner should be prepared to deal with is finding the space for their business operations, be it a manufacturing facility or an office space. Whether it is the main office, a shop, or a manufacturing facility, renting real property can be an asset or a liability depending on how early the negotiations start and how well the final terms are written. Leasing the space out can also be tricky if you and your tenant are not on the same page from the start. Let us give you an overview of some of the common commercial lease mistakes that new and experienced business owners make, how you can avoid them, as well as some details that you should know about. The Basics The business of commercial leasing is a cutthroat world. As they say in real estate, everything is about the location. If you are selling a luxury brand, you definitely do not want to be caught up in the outskirts of town. If you are dealing with downtown clientele, you cannot afford to locate your office in the suburbs. If you are processing specialty food items, you would also want to locate your commercial kitchen in the most suitable location for the business. If you have a manufacturing facility, you would want for it to be easily accessible by your target customers. Keeping yourself and your business in the right location could be critical to your cashflow. What is a commercial lease? Basically, a commercial lease is an agreement written up and signed by both parties, the lessor and the lessee. The lessor is the individual who owns the property or leases it out to others. You, as the business owner, is the lessee. If you get confused by the terms, think of it as the relationship between the landlord and the tenant. A commercial lease is entirely different from a residential lease, both in the key legal terms, in the landlord’s rights and in the financial terms. When you enter into a commercial lease agreement, it is expected that you are knowledgeable about commercial real estate and prepared to negotiate in accordance with the then current local market conditions. Having rented an apartment as a tenant is not sufficient experience for negotiating a commercial lease. If you do not protect yourself properly when entering into a commercial lease, it could lead to legal, financial and tax problems down the road. The Common Commercial Lease Mistakes to Avoid There are a couple of things that you need to avoid in order to make sure that your commercial lease agreement will protect you. Failure To Hire A Realtor, A Lawyer, Or A Professional Hiring a realtor, a lawyer, or any professional with great experience in the law and commercial leasing is not an added cost but an added layer of protection. All of the terms that are included in a commercial lease are going to be easily handled by individuals who know the market and understand what is and is not negotiable in a lease. […]
Continue ReadingWhen Your Business Partner Divorces or Dies
Did You and Your Business Partner form an LLC? Do You Know What Happens If Your Business Partner Dies or Divorces? Death and divorce are probably two most uncomfortable topics for family members and business partners to discuss. No one wants to start the unpleasant conversation, yet these are necessary topics to consider when forming a business. Figuring out what happens if your business partner dies or divorces is best addressed before either of these events become reality. ** In the event that one of the company co-founders or owners dies, what does happen? ** How is their percentage of the business handled? ** Are you prepared to become partners with your deceased partner’s children? ** What happens if your business partner divorces their spouse? ** Could the court order you to be in business with your partner’s former spouse? These are all tough questions. Even if you do not want to discuss these matters with your business partner(s), it is important to understand whether your LLC agreements address these contingencies and have a plan of action in place just in case. And it’s definitely important if this is something you’re currently going through. WHAT ARE BUY SELL PROVISIONS? WHY ARE THEY NEEDED? One of the most crucial steps in creating a business with multiple partners is agreeing on buy-sell terms, which could be part of the company agreement for your limited liability company or could take a form of a separate agreement for a corporation. Buy-sell agreements essentially provide a method for the remaining partners to carry on with the business without the concern of becoming partners with unintended parties, such as the former business partner’s ex-spouse or the deceased partner’s family members. WHAT HAPPENS WHEN YOUR BUSINESS PARTNER DIES? First of all, the deceased partner is disassociated from the business, whether it is a partnership, corporation or limited liability company, when he or she passes. There can be a few different options for how this could shake out: The deceased’s estate takes over the deceased member’s share of the business. The deceased’s estate sells the membership interest back to the business upon a payment to the estate. You buy the share of the partnership using a financial formula and insurance proceeds. WHAT HAPPENS IF THERE IS NO AGREEMENT? However, if you and your business partner did not have an agreement providing for transfer of the partner’s interest upon death, business succession might become a bit more complex. In some cases, it could mean that company is dissolved immediately upon one of the partners’ death. The surviving partner might also owe the later partner’s estate a debt for their share of the partnership that accrues at the date of their death. In Texas, combination of the company agreement, the Texas Business Organization Code and the deceased partner’s Last Will and Testament will govern what happens to the former partner’s share of the business. WHAT HAPPENS WHEN YOUR BUSINESS PARTNER DIVORCES? Texas is a community property state, and as a result, your spouse has the right to half of any business interests you created or acquired in the course of the marriage. […]
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