Everyone must leave their business at some point. The wise business owner plans for this eventuality. In my practice, I have represented both sole business owners and joint business owners. Both types of ownership have very different interests and concerns. As in most matters I assist folks with in my law practice, the primary motivating factor is avoiding costly and painful problems for you and your family. If something ever happens to you, your family will have to pick up the pieces.

Sole business owners must address the following:

• Succession. A couple of questions you should address are: Do you have a family member or employee that can take over your business; do your employees wish to buy you out? Either way, you, or your family should receive a fair payment for their interest in your business to compensate your spouse or children. I recommend a CPA value your business or you hire a professional business valuator or appraiser. Any appraiser should value raw assets, inventory and goodwill.
• Liquidation Before Death. If you have no one that can succeed you, use your valuation or appraised value and seek out a good buyer. You can find good prospects by asking your friends in the industry, asking your suppliers or hiring a professional business sales broker.
• Liquidation After Death. If you wish to wait until your death, leave clear written instructions (including the above matters) for your family, modify your Will; and have a plan to operate your business in the short run, until the survivors can locate a buyer. Your primary concern is to avoid a fire sale.

Joint business owners must address the following concerns:

• Business Value. If a partner leaves or dies, determining a fair buyout value is critical. The departing partner tends to overvalue the business, while the remaining partner tends to undervalue it. I recommend using a qualified CPA or professional business valuator or appraiser to value the business. They will ask the tough questions and develop a formula to calculate the value of the business. I highly recommend an agreed-upon valuation formula, as the value of the business will change over time.
• Death of a Partner. When your business partner passes away, you immediately have a new partner. Either your partner’s spouse or heirs will immediately become your partner. How well do you think his or her spouse (or heirs) know your business or will work with you? Working out an agreement with your partner’s heirs can take both a lot of time and money. Avoid this hassle with pre-planning. Partners should agree to buy the other out in case of death and purchase an insurance policy on each partner to fund the buyout. Whatever is decided, the business partners need to have set and review the business valuation formula each year.
• Business Secrets/Data. Besides laying out how to value the business monetarily, good plans protect the businesses secrets, business data, and other non-liquid assets. A good attorney will help you develop appropriate protection and non-compete agreements.
• Annual Update/Other Concerns. Succession Plans should include an annual date to discuss your business’s structure and future goals with a qualified business attorney. In these meetings, you should discuss any likely scenarios affecting your business’s future, such as allowing a partner’s family member(s) to join the business, a key employee departure, retirement plans, etc. Good advance planning is good business.

How well you create a succession plan determines the life or death of your business. Seek professional financial and legal advice during the planning process. A good business with proper planning can last longer than a lifetime and be a lasting legacy for the families of the partners.

Are you a business owner with unpaid invoices or slow-paying clients? Cash flow is the lifeblood of all businesses.  Your customers MUST “Show You the Money” promptly when you deliver your products or services.  Unpaid invoices can be life-threatening. To avoid these challenges, explain your expectations clearly and upfront. Before agreeing to provide products and services to a customer:

1. Check out the client. Do they have a good financial reputation? Have they been in business long?  When you bill or invoice a client, you are extending credit to them.  Before making a “loan,” get to know them and see if they have the ability and resources to pay you.
2. Communicate clearly and document everything. Setting clear expectations in writing before extending the credit is essential to proving that the customer owes the debt to you.  What are the payment terms (how long do they have to pay your invoice (10 days, 30 days, etc.)); is there a late fee; is interest owed on late payments; do they have to pay attorney’s fees; etc.?
3. Create a legally binding business contract.  Hire an experienced qualified attorney to write up a standard business contract tailored to your business.  If you are going to be able to collect everything owed, you must have the terms clearly set forth.
4. Require a Security Deposit.  Ask for a Security Deposit up front for clients that you do not know or if you are unsure whether they can pay you upon delivery.
5. Set and follow a procedure for collection of payment.
   • Invoice promptly and on a regular schedule in writing
   • Give incentives for paying early and penalties for late payments

If your client does NOT meet your established obligations:

1. DON’T harass them. Treat your customers with respect.  Many customers have good reasons for not paying, and, given respect and understanding, will be glad to start a payment plan.  Of course, do not threaten violence or use profane language. Remember, they can record or video your conversations.  While the Fair Debt Collection Practices Act generally applies to third-party collection agencies, it can apply to businesses collecting their own debts.  The best practice is to know and comply with the rules of this act.
2. DO send collection letters.  If your discussions or communication are not effective, then send them a letter promptly.  The older a debt is the harder it is to collect. You need to act quickly to ensure that you maintain your right to the money owed.
3. Be persistent and consistent. Persistently sending bills and reminders on a regular basis will usually increase the likelihood you will get paid in full. Don’t wait until the end of a month to send reminders or past-due invoices, send them as soon as they are due.
4. File a claim. If you are owed less than $15,000, file a claim in Magistrate Court.
5. Hire a debt collection agency. If your standard practices don’t succeed, then it’s time to hire a professional. Debt collectors write demand letters and track down debtors daily, so they are really good at it. Just be sure to hire a reputable agency that complies with FDCPA. If you hire a non-compliant, non-reputable agency, you could get sued and you probably won’t get your money anyway. If you need an agency, you might want to check out Commercial Law League of America’s list of certified agencies.
6. File a lawsuit. If the debt is more than $15,000, hire a qualified attorney to file a lawsuit.  In reality, most businesses should never reach this point. However, if your business routinely deals with amounts equal to or greater than this, it could happen despite your best efforts.  If it does, properly completing all the prior steps listed above will greatly improve your chances of winning a lawsuit. While it is expensive to sue, most lawyers will handle your case on a contingency basis, so you only pay if you get paid.

Prevention is the best way to make sure your clients and customers “show you the money.”  While you may have to invest some time and money upfront, the return on investment could be exponential.

Are you thinking about loaning money to your kids or grandkids? An aging parent? Or maybe to a friend or other family member? While the intent is to help, remember that mixing love and money can easily become a difficult situation if either party fails to meet the other’s expectations.  Many such loans end up damaging relationships and straining finances if the borrower is unable to or refuses to repay.

Surprisingly, people are far more likely to get in a legal dispute with a former loved one than a stranger. That is why my grandfather advised me to just give what you can to loved ones and let them borrow money elsewhere.

Being an attorney, I’ve learned that the best practice is to document and loan money in the same way a bank would. This practice not only protects you, but it also can be a valuable and practical life lesson for your children or grandchildren.

Before making a financial commitment:

1. Do your homework. Before loaning to a friend or family member, schedule a meeting with them. During the meeting, ask key questions about their income and assets, just like a loan officer at a bank or car dealer would. For example, What is your collateral? What is your financial position? How much can you repay and when can you repay it? In fact, pulling out a copy of the last loan you took and utilizing those questions is a very good idea. Not only will you get better insight into their capabilities to repay, but they will learn about how the loan process works.
2. Communicate clearly and document. Setting clear expectations in writing before loaning money greatly improves the likelihood that your loved one will repay as expected. Take the time to write down all the details of the loan i.e. amount, collateral, and repayment schedule. For car loans – complete the back of the deed. To have legal recourse,  your best option is to hire a lawyer to draft:
   • A promissory note.
   • A Deed to Secure (which you should in the Deed records to establish your priority against creditors or their heirs if debtor passes.)
   • Take a Car Title to Tax Commissioner and put your name on the vehicle to protect your priority as a creditor.
3. Set and follow a procedure for collection of payment.
   • Email an invoice promptly at least one week prior to the scheduled due date.
   • If desired, give incentives for paying early and penalties for late payments. This system rewards loved ones for doing well and penalizes them for not doing well, just like a bank loan.

If your loved one does not meet obligations:

1. If they miss a payment or are late, immediately schedule another meeting and discuss the situation.
2. Ask questions to determine the cause of the issues and if needed, offer to adjust payment and schedule as needed.
3. If their finances have drastically changed, offer to settle the debt for a reduced price. They get the satisfaction of settling the debt and you at least get something.
4. Document the meeting and agreed upon changes.

If you own a business or have other debts to collect, be sure to read my next article: How to Collect a Debt.

P. S. I hope this article is helpful and interesting to you. Please leave a comment below and let me know if you found it helpful or if there are other topics you’d like to see articles about.

I hope you all have had an enjoyable holiday and had time to relax with your family and friends. As you make your New Year’s resolutions, consider what will happen to you and your family if you are not able to make your own decisions, due to severe illness, dementia or other reason. Do you know who will handle your affairs? According to the Alzheimer’s Association, currently 1 out of every 3 seniors over 65 dies with Alzheimer’s disease or another form of dementia^1. And these numbers continue to rise, having increased 89% since 2000. So while you might remain mentally sharp until the end of your days, it is far more likely that you will need assistance handling your affairs.

The best way to handle this possibility is to identify a person or people whom you trust completely and are willing to take on the responsibility of your finances and health when you are no longer able. Once you’ve identified this person, have a qualified attorney draft a Power of Attorney and a Healthcare Directive for you.

I recommend this action because if you don’t have a POA or health directive in place, it will be costly and time consuming for anyone to get and retain permission to take care of you.  First, your family or a friend must petition the Probate Judge of the county in which you reside to become you Conservator and/or Guardian and pay the court fee (varies by county, in Bartow its almost $600). A Conservator manages your money, real estate, and personal property.  A Guardian decides where you live, how you are cared for and what medical treatments doctors should give to you.

Once the petition is filed, an official notification of their request will be delivered to you and your family by the Sheriff’s office. Next, two (2) doctors must examine you and declare that you are incapacitated. Finally, the Probate Judge must hear all of the evidence and decide whether or not to grant the request. If the request is granted, then the Conservator must post a bond (that will pay if he or she runs off with your money), submit an inventory of all of your worldly possessions, along with annual reports on your physical condition and status of your income and disbursement records.

A properly executed POA and Healthcare Directive avoids all of the above. A POA appoints one or more trusted individuals to be your “Attorney in Fact”, i.e. they can sign any legal documents you could. For example, your Attorney in Fact, or Agent, can sign your checks, sell your stock or transfer your car. In addition, he or she could potentially sell your home or other property. Please note that this document is active the day you sign it, unless otherwise specified. Therefore, I recommend that you ONLY give this power to someone you trust completely and keep it until needed in a safe place (like a safety deposit box).

A Healthcare Directive appoints someone to make your medical decisions (including those that could result in death) once you have become mentally and physically unable.  Your Agent has full authority to act or your behalf once a doctor has determined you lack the ability to make your own decisions.

Additionally, I strongly recommend that you have a qualified attorney draft your Last Will and Testament. A valid will avoids confusion by documenting EXACTLY what you want. I also strongly recommend sitting down with your family and letting them know your exact plans and let them read your legal documents, if possible.I have seen many a family squabble after the death of a loved one because everyone has a different idea about what you want, inevitably colored by what they want personally.

Peace of mind is a great blessing. So is knowing you and your family are protected. Start the New Year off right and take care of these important matters NOW!

1. Alzheimer’s Association, Alzheimer’s Disease Facts and Figures (2017),

https://www.alz.org/mglc/in_my_community_60862.asp

The Christmas Season is the most joyous time of year in our country.  We celebrate friendship, the blessings of family and the greatest gift of all. Thank God that we all still have the freedom to celebrate Christmas. Unfortunately, reports on the national news and social media have created an incorrect perception that we can no longer celebrate this great holiday openly in our businesses and workplaces. Many of us have felt compelled to greet others with “Happy Holidays,” instead of “Merry Christmas,” or, hold a “Holiday Gathering” instead of a “Christmas Party.”

This perception of a legal prohibition is in error. A business or corporation has the legal freedom to celebrate the holiday in almost any reasonable manner that they see fit.  The 1^st Amendment to our United States Constitution gives us this great right and privilege. No business in Bartow County has ever been shut down for Christmas decorations or having a Christmas Party. As a case in point, pay special attention to many major corporations in our town, like Hobby Lobby and Chic-fil-A, during this holiday season. You will see decorations and will likely be listening to Christmas music in their places of businesses. Watch for Hobby Lobby’s full page add in your newspaper right before Christmas.

So, go ahead and break out your decorations, music, Christmas trees, and manger scenes. If you want to hold a Christmas Party, feel free to ask your manager to let you. If you are the manager or owner, know that you are legally allowed to throw a party, as long as it’s not obligatory.

During this special time of the year, showing our fellow man joy, peace and love are far more important than any legal precedents. The real reason for celebrating Christmas is to reflect God’s great gift of love.  Do everything with joy and love! Let your place of business be the most joyous and merry place in town, not only will your business grow, but others will want to celebrate this special holiday in their homes, businesses, and workplaces.

May we all be grateful for the great freedoms we are blessed with in our Country, and may we all show our fellow man joy, peace and love this Christmas.

Merry Christmas to all! 

Minimize litigation risk with these common-sense tips.

Nobody wants to get sued or to have to sue, but it can happen to anyone. It’s natural to be afraid or nervous. Follow these common-sense tips to ease your mind and likely reduce your risk of excessive judgment.

• Accept Responsibility. If you are wrong, don’t cover it up or blame it on another person. If your actions hurt another, it is best to own up to it. I recommend you retain an honorable attorney and instruct them to work with the other side to reach a fair settlement out of court as soon as possible. An ethical attorney can often act as a mediator to help both sides reach an agreement. Settlements will save you time, money and stress, as well as limit damage to any existing relationship you may have with the wronged individual. A large majority of civil cases are resolved via settlement, most likely for these very reasons. Settlement was the single most common outcome for a civil case (62%) in the Landmark Study conducted by the National Center for State Courts in cases studied from 2012-2013.¹
• Read EVERYTHING. Knowledge is power! Take the time to read anything related to your case, especially if it requires your signature. Never sign anything that you do not understand. In a diplomatic manner, ask questions and require understandable explanations. No question is a “stupid” question (sometimes it is the best question). Only sign when you understand fully why and what you are signing.
• Learn the law. Never let anyone “tell” you what the law is! Research any laws that apply to your situation on your own. Then, if need be, consult your own legal counsel. I am as much a teacher as I am an attorney. When my clients understand the law, then I can better assist them.
• Always document. Keep copies of all important documents. If you have a problem at home, at work or at the scene of an automobile accident, take pictures. Obtain the names of witnesses whenever possible. You cannot prove what you cannot show. Note: The best defense is a good offense. Be proactive and keep copies of all documents involving other people. Put things in writing. Keep copies of invoices. Document dates and times of important conversations. Keep copies of all contracts you sign (after you have read them, don’t let anyone rush you.) After a settlement, do make sure that your attorney obtains a written release of all claims.
• Exercise self-control. The apostle James said it best “…everyone should be quick to listen, slow to speak, and slow to grow angry.” (James 1:19 CEB) Keeping control of your tongue and your emotions is your best defense, because, once you speak out or act out, you have no way of taking it back. Chances are good your actions will be caught on tape as most people have a video camera and recorder with them at all times. Smartphones do not lie. Georgia is a one-party state. If two (2) people are on a phone call, only one has to consent to be recorded.

For centuries, history has admired individuals with great courage and integrity. Men of great integrity take responsibility for their actions. If you have a matter that may involve litigation, retain an honorable attorney with the objective of working things out for the benefit of all concerned. If we all did this, our legal system and the world would be a much better place.

1 National Center for State Courts, The Landscape of Civil Litigation in State Courts (November 2015),   https://www.ncsc.org/~/media/Files/PDF/Research/CivilJusticeReport-2015.ashx

Estate planning is the process of creating all the legal documents necessary to ensure your assets and your care are handled according to your wishes when you die or become incapacitated. Typical documents include a Will, Guardianship, Power of Attorney and Health Care Directive but may also include insurance and other financial planning documents as needed.  The sobering truth is that if you don’t plan your estate according to your wishes then the state will distribute your estate as it wishes.

Despite this fact, 56% of American adults do not have a Will or other estate planning documents in place, according to 2011 LexisNexis survey.  Many Americans believe that they do not need estate planning.  They think the process is too complicated, expensive and time consuming.  Many prepare online wills, which are not comprehensive and always leave out key provisions. Most do not realize that incomplete or lack of estate planning will cost them and their heirs thousands of dollars and leave them without the care they or their children need.

If you do not have an estate plan, consider this:

1. Only 1/3 of your property will go to your spouse, the other 2/3 will go to your children. If your house is in your name alone and you die before your spouse, your home will have to be sold to pay your children their share, leaving your spouse without a home. A properly executed Will avoids this problem.
2. If you have children under 18, a court will decide who raises your children and controls their money.  This process can be a very time consuming and costly. A Will prepared by an experienced attorney can avoid all of this by naming a Guardian to care for your children and naming a Trustee to manage their money.
3. If you are incapacitated, no one can manage your assets and make decisions for you until the Probate Court has declared you incapacitated and appointed a guardian. Appointing a Guardian for you can be a very difficult, expensive and time-consuming process, during which time you are very vulnerable and anyone can take advantage of you. Additionally, important bills may be left unpaid.  You also have no input over who has control over you and your care. A Durable Power of Attorney for Property appoints the person you’d like to manage your affairs when you are no longer able.
4. When you are incapacitated, your health care decisions are left up to the doctor in consultation with your family.  A Healthcare Directive allows a person that you trust make these important decisions.  In addition, your family will be comforted to know just how you feel about continuing or dis-continuing life support.

No man knows the day or the hour of his death, or when or if a disabling accident will occur.  A properly prepared estate plan insures that others will follow your wishes and protect you from unethical or deceitful relatives and “friends”. In addition, it will minimize taxes and allow you to direct your final medical care. Thus, estate planning greatly reduces the financial and mental stress a sudden death or incapacitating tragedy has on your family. So the choice is yours – pay an experienced estate planning attorney a small fee now and have total control over how your care and assets are handled, or pay another attorney a whole lot more later for limited control.

Do you know the difference between a business venture and a business adventure? Both are risky, but adventures are bold and exciting! Starting a new business is one of the most exciting and challenging journeys one sets off on in a lifetime. In 28 years of practicing law, I’ve seen many individuals start business adventures, and succeed beyond their wildest imaginations, while others have shown me what NOT to do when getting started. There is no greater challenge or greater joy than boldly setting out on your own. However, as with any adventure, the guide(s) and resources you utilize will determine your success or failure. So before you start off on your new business adventure, make sure you have the following:

Passion:  Are you passionate about your business idea?  If your idea does not excite and drive you, then don’t do it. You have to have -confidence in your idea, drive, and determination to persevere through the challenges that lie ahead.

Competence:  Do you have expertise, or can you afford to hire individuals with the talents you need in the area you want to start your business?

Support:  Do you have the buy in of your family and friends?  Do your spouse, kids, siblings, parents and good friends believe in you and your new venture?  Will they support you, encourage you and cheer you on?

Counsel:  Have you sought wise counsel from other successful businessmen in the same industry, mentors, and elders in your community? No question is too dumb.

Business Plan and Capital:  Have you planned your first 12 months and do you have enough capital to get things off and rolling? Underestimate your revenue and overestimate the expenses.  You will find it tight, but you must have goals!  Without a vision, you will perish.  Planning gives you a map that you can adjust as you move forward.

Risk Tolerance:  Even the best new businesses have risks.  You will never make money without taking some risks.  If you have successfully made it through the first six (6) questions, then, have faith in God, yourself and those behind you, and go for it!

Asset Protection:  Find a good business attorney to help you form your business structure. Depending on your type of business, an attorney will usually recommend incorporating or forming a limited liability company to insulate and protect your personal assets.

Buy-sell agreement:  This section only applies if you have partners. If you do, then you must have a buy sell agreement in place in case one of you wants to leave or passes away.  If a partner passes without a buy-sell agreement, you will then be in business with his/her spouse or the beneficiary of his or her Will.

Certified Public Accountant:  Our government and taxes shut down more businesses than you will ever believe.  Immediately, get a Certified Public Accountant (not a bookkeeper) on your team.  They will save you money, and heartache and keep you headed to great success!

Insurance, Licenses and Permits:  Depending on your business, you will need various types of insurance, licenses, and permits. Ask your Attorney and CPA to guide you through the red tape – otherwise you could break the law unwittingly, get sued and not be covered, or worse.

The difficult challenges of starting a new business venture and great joys of succeeding are like no other in the world. Pack your bags carefully, good luck and Godspeed on your exciting journey!