The Importance of Family Business Succession Planning
Do you have a plan if the family business must change hands because of illness or retirement? Why is it important to start considering a business succession plan for your business? A succession plan will establish an orderly transfer of the management and ownership of the business to new managers and owners to avoid liquidation of the business, as well considering tax treatment and other anticipated expenses and allows incorporation of the family’s nontax objectives.
A Succession Plan controls future ownership and management transfers to different groups or designated transferees.
What is considered a family business? It is an enterprise owned and controlled by one or more families who plan on succeeding generations continuing to own and manage the business. Generally, only about 30% of these businesses survive the second generation and 12% the third generation.
Family businesses generate about 50% of our gross national product. The strength of the family business is independence, accomplishment and income for the family.
Why is a family Business Succession Plan so important? Estate taxes may be significant and is an important issue to be addressed. The estate tax plan involves providing funds to pay estate taxes upon the death of the founder of the company. Other strategies may involve transactions that are subject to income tax such as intra-family sales not involving grantor trusts.
As the principal of the family business starts to age, tension can develop concerning when the older generation should retire and turn over ownership and management to the younger generation. Another big concern is the effect of estate taxes on the business. Personal issues concerning siblings’ emotions and roles in the business are usually in the mix.
Once the decision is made to establish a succession plan, find a knowledgeable attorney who understands the company’s financial situation and the family dynamics. This person should have knowledge of the tax and related issues, including corporate, partnership, limited liability company, and employee benefit law and knowledge of the estate planning and administration issues.
A family needs to consider commencing a succession business plan at least ten years before retirement and implementing new management five years before the anticipated retirement date. This is important since many family businesses do not survive the death of the founder because of inadequate planning and insufficient cash to pay taxes and maintain the business’s viability. Many businesses will close or be liquidated in order to meet the needs of the family.
Texas Deceptive Trade Practices Act : Pre-Purchase Protection When Buying a Home in Texas
Purchasing a home can be a daunting yet exhilarating experience depending on the circumstances. Sometimes after a couple has purchased a home they regretfully discover many construction defects that were not disclosed to them by the Seller. Many undisclosed material defects within a home not detected by the buyer’s independent inspector that were misrepresented by the Seller may cause severe hardships in the future.
Legal relief requires an experienced real estate lawyer. A fraudulent misrepresentation made by a Seller when selling a home may give rise to a claim under the Deceptive Trade Practices Act of Texas. Multiple provisions relating to the misrepresentation of property per Tex. Bus. & Comm. Code §§ 17.46(b) are designed to protect a buyer. These misrepresentations if properly proven by the evidence will give rise to certain damages available to Buyers under the Texas DTPA Statute.
If you are the victim of fraudulent misrepresentations your independent inspector did not discover during the house inspection, you may still have relief. If circumstances prove that a misrepresentation was intently made or defect was concealed by the Seller, then under the DTPA you may be eligible to receive Economic Damages. Economic Damages include compensation for any pecuniary loss, including repair or replacement of defect. If the buyer of the home is victorious at trial, attorney’s fees and additional damages may be awarded as well.
If it can be proven that a Seller “knowingly” misrepresented a portion of the home to a buyer such as hiding evidence of termites, hiding foundation defect or old repairs, or electrical problems, then the buyer may be entitled to 3 times the amount of actual economic damages of the suit including attorney’s fees. The DTPA is a consumer based protection statute that ensures normal people are not taken advantage of due to their lack of knowledge.
If you are a buyer that has intentionally been taken advantage of by a Seller through fraud or deceit you should find an experienced attorney. DTPA actions are complex and time sensitive. An experienced attorney will give you the highest probability of success.
The Texas housing market is exploding and there are many out of state individuals moving into the Dallas / Fort Worth area. If you are a native Texan or a family transferring into the Dallas / Fort Worth area and feel you have been fraudulently deceived by a Seller, please call an experienced attorney with a firm hand to obtain the justice you deserve under the DTPA and other Consumer Protection Laws.
Julian Nacol, Attorney
Nacol Law Firm P.C.
Social Networking: Did you Say it or Show It? Then You Have to Defend It!
Social media provides everyone with a digital treasure trove of information. Always remember what you post online can and often will be used against you.
Approximately 302.35 million or 90% of all adult internet users in the United States actively use Social Networking sites daily. A new 2023 Hootsuite survey shows an average American user spends 2 hrs. and 31minutes daily on social networking. This usage amount is the Highest Record ever recorded! Social networking is considered the most popular online activity. When posting on Facebook, TikTok, or other social networking sites, just remember the updates you post can cause serious problems when searching for a job, starting a new relationship, or during involvement in a legal issue or lawsuit!
People are now sharing everything online. Can this get you in trouble? YOU BET!! Social networking technologies have forced people to learn how to navigate the murky waters between business and pleasure. Such a mixture creates a “Permanent Record” on social /90% private issues and sharing it with their “multi” friends online and “Advertising their Product” for all to see. Social networking sites can provide anyone who is confused, angry or distraught with a perfect venue for airing their gripes and disclosing their feelings in public!
Evidence from all social media sites is now used by prosecutors, defense attorneys, personal injury attorneys, employment attorneys, securities litigators, and particularly family law attorneys. An American Academy of Matrimonial Lawyers survey found that 81% of divorce attorneys have increased their use of social media to find evidence against the opposing side. The main source of information is Facebook, with attorneys citing it as the source for incrimination information.
A Wide Variety of Evidence?
1. Incriminating photos
2. Incriminating statements and wall posts
3. Status Updates
4. Mood Indicators
5. List of Friends
6. Login/Log off records for example: not able to work, alcohol/drug use, intimate issues).
How to Preserve Evidence from Social Media Sites?
1. Capture a full content screen shot with full key metadata information of web site to prove authenticity!
2. Print any pertinent information ASAP since it may be deleted by user
3. Well-tailored discovery requests to the person.
4. Motion compelling the user to execute a consent form permitting the discovery
seeking party to obtain the profile contents.
5. Check all Social Media platforms for pertinent information. Be sure not to miss some nugget of information that could help win your case!
How to Authenticate Evidence from social media?
1. Stipulation
2. Admission from author/poster.
3. Testimony from person who copied information.
4. Capture a full content screen shot with full key metadata information of web site to prove authenticity
Think about these Situations before using social media to sound off:
1. If you share a computer with a spouse or business partner and there is a potential break up; create a new web-based email address with a new password to ensure no other unauthorized access.
2. Don’t forget the children! Always more tech-savvy than mom and dad, monitor children to ensure information related to divorce proceedings or family problems do not become part of the internet!
3. Never make online references to finances. No big trips, bonuses or raises at work. This could affect your case adversely.
4. Always be careful with third- party conversations. The internet has many eyes and not just your friends.
The advance and reach of social media force our legal system to adapt quickly. Legal professionals now have very good new sources for evidence and discovery.
Just consider the implications of this technology before you vent out online. It could and will be used against you in a Court of Law!
Nacol Law Firm P.C.
Dallas Texas Civil Litigation Attorneys
Call (972) 690-3333
Texas Divorce: For Richer or Poorer, Hire Expert Help to Protect Your Interests
For better or worse,
For richer or poorer,
Until . . . a divorce is filed.
When there are several zeros at the end of your bank balance, as in $500,000.00; $5,000,000.00 or more, the financial aspects of divorce can be high risk.
Texas divorce laws are the same regarding the division of property whether the money and assets in a marital estate are a lot or a little; however, the courts will inevitably encounter and address more complex issues regarding the property division in a divorce case with substantial financial and business assets.
Texas is a community property state. What does that mean, as a practical matter, when divorce occurs?
1. The law presumes that all property owned by either spouse is community property, meaning that both spouses own an undivided one-half interest.
2. The court cannot divest a spouse of his or her separate property in divorce.
In a very simple explanation: Texas community property is everything earned or acquired during the marriage other than inheritances or gifts. Your paycheck is community property, your rental income is community property, the cars you purchase are community property, retirement funds accumulated during marriage are community property.
At the time of the divorce, the court will make a just and right division of the community property. “Just and right” does not mean 50/50. Often the courts will split the community property equally, but many factors may affect this division including:
1. The spouses’ earning abilities and education.
2. The spouses’ actual earnings.
3. Who has care and primary custody of the children.
4. The value of separate property owned by the spouses. If the wife inherited $3,000,000.00, should the husband be awarded more of the community property?
5. Fault in the break up of the marriage, especially if a cheating spouse spent substantial assets dating or cavorting with others.
6. The debts of the spouses.
7. Tax consequences.
The bigger the marital pocketbook, the bigger the risk to assets in play.
Texas Child Support and High Asset Divorces:
The court also has discretion in setting child support when the parents are wealthy. The Texas Family Code provides guidelines and the guidelines are presumably in the best interest of the child.
The law caps the Texas child support amount guidelines to a percentage of the first $9,200.00 of the paying parent’s earnings. However, the cap is not made of steel. The law is a guideline.
The court has the discretion to order child support in excess of the guidelines based on the children’s best interest which includes an examination of the proven needs of the children. In the case of children growing up in a high-income household, do not expect the court to necessarily limit its consideration to basic food and shelter. The court may consider many factors in setting child support, including the children’s current living standards, such as private education, nannies, medical issues, emotional issues, sports and other extracurricular activities and, in the rare case, a body guard.
When setting child support within a wealthy family undergoing divorce, the court has discretion, based on the evidence, to set order child support above the presumptive amount in the guidelines. The court’s determination is subjective and is reversed by higher courts only if the trial court “abused its discretion,” a high threshold indeed.
With so much at stake, you should hire an experienced family law attorney who can present your case clearly, and persuasively.
Nacol Law Firm P.C.
Dallas Divorce Attorneys
(972) 690-3333
Winding Up of a Business Partnership in Texas
Many substantial businesses start with a handshake. This can be a good thing or a bad thing. Some million-dollar businesses in Dallas and Collin County begin when two entrepreneurs seek a common goal without proper legal documentation to protect their investments. When profitable, oral partnerships are created, but conflicts arise and it is important to know how to successfully terminate the oral partnership.
When irrevocable discord and conflict occur within the partnership it may be necessary to “Winding Up” and properly dissolve the relationship. Some of the triggering events are as follows:
- Expiration of the period of duration, completion of an undertaking, or occurrence of a specified event that requires winding up the relationship;
- Consent of the partners or the consent of the majority-in-interest partners where the partnership is at will;
- Judicial decree requiring the winding up of the partnership;
- The sale of all or substantially all the partnership assets outside the ordinary course of business; or
- Receipt of a partner’s request to wind up a partnership at will, unless a majority-in-interest partner denies the request or agrees to continue.
A partnership agreement can limit or set specific events which require a “winding up” and eventual termination. When the partnership begins the process of “winding up” all assets will be sold, and any creditors will be paid first, followed by partners who may also be creditors. Then the remaining assets are distributed to the remaining partners according to their capital contributions and other partnership interest.
If the partners can come to a mutual agreement to sell all the assets or simply agree to dissolve the partnership, then no judicial interference or assistance is needed. This is sometimes not the case. If a partnership becomes lucrative and litigation ensues, the dissolution of a partnership may be determined by litigation in a Dallas or Collin County legal proceeding, often a very costly proceeding. It is always important to talk to an experienced attorney prior to entering a business to determine your options and set up a business formation that is suitable for the needs of your business and all individual partners or investors from the onset. The initial legal expense to create a proper written rather than oral business structure may pay dividends in the long run, likely avoiding and time-consuming, costly litigation
If you are currently in a troubled or conflicted business partnership please call the Nacol Law Firm to help you in determining your options, rights and road to resolving the conflicts.
Julian Nacol, Attorney
Nacol Law Firm
NACOL LAW FIRM P.C.
8144 Walnut Hill Lane
Suite 1190
Dallas, Texas 75231
972-690-3333
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Friday, 8:30am – 5pm
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization
