The Life Cycle of a Business Entity: What You Need to Know to Advise Your Clients in Business Matters
This not-to-be missed stand-alone program will navigate the entire life cycle of a business entity. From formation and choice of entity, to operations and governance, to generational transfer or sale, the panels will discuss the legal, tax, and practical considerations of advising businesses and their owners. Presenters will drill down into special topics like entity-ownership by trusts, structuring compensation, specific industry concerns, and more. The panels will use a hypothetical family business to guide attendees through every stage of the business. Sample forms and checklists will be provided to assist practitioners.
Session 1: Getting Started; Choice of Entity; Formation of Entity
Getting Started
Addressing new and existing enterprises The initial client meeting
Choice of Entity: Begin by Looking at the Big Picture
Analysis of choice of entity at verious stages Pros and cons to consider for each type of entity
Choice of Entity: Add New Tax Laws to the Mix (In-depth Coverage)
IRC Section 199A deduction New rates and other changes Planning strategies and case studies illustrating choice of entity
Speakers: Steven B. Gorin, St. Louis, MO (Moderator) T. James Lee, Phoenix, AZ Hollis F. Russell, Great Neck, NY
Session 2: Governance, Operation, and Management of an Entity
Best Practices for Partnerships, Corporations, and LLCs
Maintenance of books and records Tax compliance Documenting actions and distributions Checks and balances Periodic reviews for updating to be consistent with actual practices Annual maintenance Checklists
Owner Control, Operations, and Shareholder Agreements
Owner communications Family dynamics and consequences relating to control issues under governing documents Majority vs. super-majority actions Creditor protection Interim controls in the event of disability Officers and agents Navigating transfer restrictions Effect of governing documents on valuation Tax consequences of transfers Role of life insurance
Speakers: Lora G. Davis, Dallas, TX (Moderator) Kevin Matz, New York, NY M. Allison Taylor, Birmingham, AL
Session 3: Special Topics in Family Businesses, Part One
Related Entities and Business Intellectual Property
Identify and register valuable intellectual property such as logos, trade names, trademarks, and service marks Transfer intellectual property to related entities such as limited liability companies Create entities to hold and to manage real property and designing leases to comply with IRC §199A
Corporate Opportunities
Draft operating agreements and employment agreements to take into account outside opportunities without violating fiduciary obligations Discuss non-compete provisions and prohibitions regarding corporate opportunities Gift tax implications regarding other corporate opportunities and use of corporate assets
Trusts as Business Owners
Selection of trustees for entities owned by trusts Discussion of the net investment income tax implications Outline state income tax implications for trusts as owners of business Use of grantor and non-grantor trusts as owners of businesses Consider state income tax implications of trust ownership Review estate and GST consequences of trust ownership
Speakers: Kurt A. Sommer, Santa Fe, NM (Moderator) Andrea C. Chomakos, Charlotte, NC Joshua E. Husbands, Portland, OR Nancy Schmidt Roush, Kansas City, MO
Session 4: Special Topics in Family Businesses, Part Two
Structuring Compensation
Employee benefits Phantom stock Deferred compensation Board fees
Specific Industry Concerns
Distributor/dealer/franchisor Real estate developer/manager Manufacturing Impact of loan agreements and covenants
Specific Example: Sports Franchises—The Ultimate Family Business
Barriers to estate planning Family dynamics External controls/factors: leagues and governments Other aspects
Speakers: Brian C. Sparks, Tampa, FL (Moderator) Thomas W. Abendroth, Chicago, IL Carrie E. Byrnes, Chicago, IL Michael D. Whitty, Chicago, IL
Session 5: Wind Down, Sale, or Transition of Business
Death of an Owner
Liquidity issues for payment of expenses and taxes Life insurance options Transfer of control: impact on shareholders and employees Valuation for estate tax purposes Deferral of payment of estate taxes
Sale of Company
To third party, family, or management: tax and nontax considerations Seller and buyer due diligence Impact on family: job retention or loss, liquidity issues, family legacy Income and capital gains tax consequences of various sale options Impact of entity structure on consequences of various sale options Role of attorney and other advisors in the sale process Process and timing of various sale options Strategic buyer versus private equity/employee or management buyer Structuring the sale under various scenarios
Lifetime Transfer to Next Generation
Structure Governance Transfer taxes Active/non-active family members
Speakers: Louis S. Harrison, Chicago, IL (Moderator) T. Randall Grove, Vancouver, WA Melissa J. Willms, Houston, TX
Session 6: Keeping it Together—Ethical Considerations in Representing Family and Business (Ethics)
General Duty of Competence Conflicts of Interest
Who’s the client? Identification of potential conflicts Representation of multiple parties Obtaining informed waiver and consent
Engagement Letters
Tailoring to the situation
Client Confidentiality
Preserving confidential information while keeping lines of communication open Instructing clients
Termination of Representation
Completion of project Withdrawal when actual conflict arises Disengagement letters
Application of ABA Model Rules and ACTEC Commentaries
Speakers: John T. Rogers, Jr., Los Angeles, CA (Moderator) Paige K. Ben-Yaacov, Houston, TX J. Lee E. Osborne, Roanoke, VA Professor Mary F. Radford, Atlanta, GA
Recorded June 20 - 21, 2018 in Chicago, IL
