Category: Breakfast at Epiphany’s

Introducing a new weekly blog that covers legal matters, business strategy, and life perspectives… all from the mind of a non-attorney (Project Specialist: Kelton Dopp).

 

Selling the Family Farm

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

Farming runs deep in my bloodline.

My ancestors were homesteaders. Farmers by trade. According to the Portage County records, Henry H. Dopp settled in the BOOMING (there were 3 families total) township of Belmont, WI around the year 1852.

Fast forward 166 years and natural selection hasn’t taken its course on the Dopp family.

But it has taken its course on the Dopp Family Farm – at least our portion of it.

My Grandfather still farms a small portion of the original Dopp homestead today. But it’s just a fraction of what ‘Dopp Farms’ was in its hay day.

I grew up less than a mile from that homestead. We drove past those fields every day on our way to and from school. I still drive past it every time I go home to visit.

I sometimes wonder how life would have been different if somebody else had been given the keys to the operation after my great-grandfather stepped out. If some better – more proactive – planning had been done, maybe the operation wouldn’t have failed while my dad was graduating high school.

Would my dad have followed in the family footsteps and become a farmer himself? The answer is likely yes. After all, his lifelong idol – my great-grandfather Russ Dopp – was the very man who had built the operation to one of the largest in the area.

WHAT WOULD I BE DOING?

It took only one generation of mismanagement – no, no. One PERSON making a series of terrible, erratic decisions – to unravel the whole deal.

Boom. That was it. Dopp Farms – for all intents and purposes – was gone.

The rest is history.

Dad went into Ag sales instead of Ag production, and my brothers and I haven’t spent but a handful of days working in the fields.

Amazing how life goes sometimes, isn’t it?

Whether you’re considering an internal transition or a sale to a 3rd party, here are a few tips so your farm doesn’t implode like my family’s did.

Things to consider as you transition your family farm.

Fair does not mean equal.

This is a big one for farms. Inevitably, most farm operations have some children who are an active part of the farm and some who have moved on to “bigger and better” things. How do you split it up ‘fairly’ among all the kids?

I can’t answer that question confidently without having a conversation with you, but I can tell you what not to do:

  • Don’t avoid the conversation. The absolute worst thing you can do is ignore the conversation and keep the future of your estate a mystery to your children. In the face of mystery, most people begin to act very irrationally. Starving for clarity on the situation, they will formulate their own (false) set of facts to try and control the narrative. Depending on their outlook on life, those facts will be heavily slanted for or against them, and fracture within the family will ensue. This can all be avoided if you – the leader of the family – are willing to step up and provide a clear and well-reasoned agenda for how the farm will be distributed. You should do it the moment you sense it becoming a concern among your children.
  • Don’t discount sweat equity. The children who have an active role on the farm have likely contributed to the growth of the business as a whole. In addition to helping you grow the business, they have worked longer hours, taken on a greater amount of risk, and potentially earned less compensation than they would have if they had never come back to the farm. While it is difficult to quantify what this is worth, it is a great mistake to ignore sweat equity entirely. Doing so will likely fracture the business and personal relationship you have with your children who are active in the business.

Finding – and keeping – a Successor.

It is no secret that the farming industry as a whole is having a very difficult time finding and retaining hard-working, trustworthy, talented employees.

Suppose you don’t have any children who are interested in taking over, or perhaps you do, but you know they – alone – won’t be able to manage the whole operation. What do you do?

Once again, I can’t answer that question confidently without having a conversation with you, but here are a few good ideas:

  • Update your employee benefits. You are not allowed to complain about “no good employees” if you aren’t offering the most basic employee benefits. This isn’t 1980 anymore. You need to offer a 401k, a basic healthcare package with dental and vision, and a smattering of PTO days.
  • Offer a clear path to ownership. Handshakes and verbal “promises” of future ownership aren’t going to cut it anymore. It’s your responsibility, as the employer, to offer a written plan that leads to ownership for your successor. Tell them what they need to get better at. Tell them how much money they need to save. Offer them a creative incentive program that helps them accumulate wealth.
  • Contact a reputable “Ag” University. If all of your ducks are in a row and you still can’t find a successor, it might be time to start working with a reputable University to start getting talented young people in the door. Contrary to what you may have heard, there are still several thousand students pursuing ag-related degrees this year. UW-River Falls and UW-Madison produce the most. You can coordinate with their department coordinators to offer internships, schedule interviews, and promote post-graduate positions.

Growing the value of your business.

Understand something: As a farm owner, you can choose to think about the value of your business in one of two contexts.

  1. The value of the assets your business has accumulated.
  2. The value of the ongoing income your business generates.

By thinking along the lines of #1, you are not transferring a business upon your exit. Rather, you are selling assets. There is certainly nothing wrong with that, as your assets likely have a substantial amount of value…

However, by thinking along the lines of #2, you have much greater upside. If you are selling a business – a business that will continue producing income even in your absence – you have the opportunity to demand a premium on top of the Fair Market Value of your assets.

Whether you are seeking an internal transition or external sale, you likely want to drive the value of your farm business upwards in the years leading up to your exit.

Here are some things that can help you drive the value of your farm business upwards:

  • Strong brand reputation.
  • Valuable land base – difficult to replicate.
  • Cross-training among management. Owner has delegated the majority of day-to-day tasks.
  • Strong culture.
  • Dependable management team.
  • Customer base and/or special contracts that bring the business higher margins.
  • Intellectual property (patents / unique processes).
  • Highly efficient day-to-day operations.

 

Give us a call or shoot me an email if you have more specific questions!

Thanks for reading! To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

 

Don’t Panic, it’s just a Will!

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

 

I was diagnosed with a Panic Disorder in February 2014.

If you’re reading this and you know what a panic attack feels like: I am sorry.

If you’re reading this and you don’t know what a panic attack feels like, the first part of this blog post is for you; to help you understand what the rest of us go through.

 

What does a Panic Attack feel like?

Now, once again I feel the need to preface my comments by saying that EVERYONE IS DIFFERENT. For some, panic attacks might not be quite as dramatic as I describe. For others – unfortunately – they are every bit of what I describe, and even more.

Imagine this:

You’re in your car at dusk, driving along the winding back roads on your way home from a weekend of camping with friends and family. It’s a dark Sunday evening, heavy cloud cover concealing the moon and the stars. That’s the least of your concerns, though. All you can think about is what you have to do to get ready for work tomorrow morning.

Really shouldn’t have stayed that late on a Sunday… But the Packers had the Sunday Night game, so whatever, it was worth it.

Then, strangely, your right foot starts falling asleep.

Why is my right foot falling asleep? That’s annoying.

You shake it to try and get the blood flowing. Adjust in your seat. No help.

How am I supposed to drive with a tingly foot?

Angrily, you slam down the remainder of your now-cold coffee.

UGH.

You adjust the radio to a different station.

Just as you turn the dial, three (3) things happen simultaneously:

  1. Your right foot gets extremely heavy. It slowly depresses more and more on the accelerator. You try and lift your foot off the pedal, but for whatever reason YOU CAN’T LIFT IT OFF.
  2. The volume on the radio starts increasing.
  3. The headlights on your car shut off. Complete darkness.

All you can do is sit and watch as the RPMs go red. You’re FLYING down the road at 120… 130… 140 mph.

You can see nothing.

You know that trees line both sides of the road. Curves in the road are coming up soon.

Def Leppard blaring in your ears.

Do you feel like you’re going to die? Of course you do. It’s the only logical explanation based on all the facts you have.

That is what a panic attack feels like.

It feels like someone grabs ahold of all the figurative “levers” inside your brain and whips them into overdrive, all at once, for seemingly no reason at all.

Heart rate approaches 2-3x its normal speed. Thoughts begin racing and swirling so much that you physically cannot hold a conversation. Breathing becomes incredibly short and thin – a 1000 lb. weight is sitting on your chest.

Roughly 6 times a year I will wake out of a dead sleep in the middle of the night to this happening to my body.

Half the time I am able to control my thoughts enough to remember what is going on. I utilize some of the tactics I have developed over the years, and my ‘episodes’ end more quickly.

The other half of the time, my world spirals out of control and I all-but pick a spot on the floor for myself to die.

Eventually my world always stabilizes. It feels like hours while I’m going through it. The reality is that it last 20-30 minutes.

I guess you could compare the “post-panic” feeling to the feeling of waking up from a particularly disturbing nightmare. The pure thankfulness to be alive – to have your family happy and healthy – to have everything be ‘normal’ again.

I’ll say it again:

If you’re reading this and you know what a panic attack feels like: I am sorry.

It is living through a state of hell that nobody should have to experience.

 

As for the rest of you: When someone you love comes to you and complains of panic-like symptoms, please do not blow them off. Please do not demand that they “get over it”. Please do not seek out “real” explanations for the symptoms they are having. Want to get them checked out for a heart arrhythmia? – great. Beyond that, seek a reputable mental health professional for a consultation. And most of all: Love them. Support them. They feel stupid enough already, don’t do anything to add to it.

 

Drafting your Will

According to a 2017 study conducted by Caring.com, only 42 percent of U.S. adults have estate planning documents such as a will or a living trust.

For those with children under the age of 18, only 36 percent have those documents in place.

Those are not opinions. Those are facts.

I’m not here to lecture. I get it (probably better than most): Facing your own mortality is extremely difficult.

But guess what? You’re not doing it for yourself. You’re doing it for the people you love.

You need to be able to answer these questions when drafting your will:

  • Name a guardian for your children.
  • Name a caretaker for your pets.
  • List specific personal property assets. Name desired beneficiaries. Name alternate beneficiaries.
  • Name a ‘personal representative’ to make sure your will is carried out. Name an alternate representative.
  • Name a beneficiary of any property left over.
  • Specify how debts, expenses, and taxes should be paid.
  • Specify instructions for the care/upkeep of real estate.

 

The time is now: Just do it. I know that you can handle it.

 

My tips for dealing with Panic Attacks:

  • If you are able to recognize that you are having a panic attack, focus intensely on breathing. Force yourself to take long, exaggerated breaths. In for 4 seconds. Hold for 4 seconds. Out for 4 seconds.
  • Have a “go-to” person to call or talk to. It could be a parent, a significant other, or a friend. Coach this person on your condition. Tell them to talk “at you”. They shouldn’t expect a response. They can talk about dreams, sporting events, or even just recount their day. The simple act of listening to someone talk can be enormously helpful.
  • Ice on the back of the neck. No idea why, but the change of sensation helps me.
  • Take a shower. Again, no idea why, but the change of sensation helps me.

 

Thanks for reading! To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

 

What does Tax Reform mean for Departing Business Owners?

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

 

Do you remember that sinking pit in your stomach you got after you received an exam back from the teacher and it was a bad score?

68% D

That feeling has got to be one of the worst things ever.

At least it was for me.

I’ve always been my own worst critic, so it killed me inside when I didn’t live up to the standards I set for myself.

Thankfully, my mom always knew what to say to get me back on track.

“It’s done now. Control what you can control.”

Simple, but great advice. It helped me refocus my perspective and move forward with new energy.

Talk to the teacher, do extra credit, and above all else: Bust my a** to make sure it didn’t happen again.

 

2018 Tax Reform

Whether you were a big proponent of the Tax Cuts and Jobs Act, or a harsh critic, my mom has some advice for you:

“It’s done now. Control what you can control.”

The bill was passed and signed. Barring something unprecedented, it will be effective for at least the next 4 years.

If you’re a small business owner nearing the end of your runway, in some respects this bill should feel more like “100% A+” territory than anything else.

Why?

2 reasons.

1. Higher Net Cash Flows Leading to Higher Valuations

BizEquity recently published a white paper predicting trends for 2018 valuations of privately-held businesses. The spark-notes version of their findings is that valuations are expected to trend upwards, across the board, in 2018 due to positive GDP growth and tax cuts.

The overall methodology is pretty simple: The economy is doing well, so in general, businesses should make a little more money than last year. Those businesses also don’t have to pay quite as much in taxes as they did last year. These two elements result in more money on the table for the owner(s) of the business at year-end. Increasing the “bottom line” is one way to increase the value of your business. The bottom line of every business in the nation was just increased, by virtue of the 2018 tax bill.

2. Lower Taxation of Asset-Based Sales

According to wbjournal.com, more than 90% of business sales to an outside 3rd party (where the purchase price is < $10 million) are Asset-Based sales.

So?

Asset-based sales are confusing. I won’t get into the details of how they differ from stock-based sales this time (we’ll save that for later), but this is what you need to know:

  • 99% of the time, an asset-based sale requires the seller to pay ordinary income tax on some portion of the gain from sale.
  • Sometimes, like in businesses that have a large amount of fixed assets, accounts receivable, or work-in-progress, the amount taxed as ordinary income is quite large.

Thanks to the new tax bill, the highest marginal rate fell from 39.7% to 37.0%.

2.7%, for many business owners, can mean tens – if not hundreds – of thousands of dollars in tax savings – if you sell your business in an asset-based sale under the current regime.

I would get into an example, but again, it’s highly complex and I don’t want to distract from the point (look for a future post on asset vs stock sale).

Bottom line: Business owners who are approaching the end of their runway just received an A+. Especially when you consider that tax rates could have easily gone the other way

 

What will tax rates do in the future?

Look, I’m not here to speculate. I’m here to bring you facts. Period.

Some people like to look at the past to predict the future. If that’s you, you’ll enjoy the following chart. The blue line represents the United States’ highest marginal tax rate for each year since 1913. The orange line shows the current highest marginal tax rate.

Based on that chart, in the last 100 years (since 1918), there have only been 22 years of MORE FAVORABLE tax environments to departing business owners.

Other people like to look at the Nation’s current Debt situation as an indication of where taxes might head in the future. If that’s you, you’ll enjoy the following chart. The blue line is the same. The grey line represents Debt / GDP (an indication of our country’s ability to repay debt) for each year since 1913.

Based on that chart, it’s interesting to see that the last time our Debt / GDP trended downward was between 1946 and 1981. The average highest marginal tax rate in that time? Over 80%. Current highest rate: 37%

I don’t know what the tax situation will look like the next time someone rolls out a new tax bill.

To be honest, I don’t care.

Neither should you.

I’ll say it again: CONTROL WHAT YOU CAN CONTROL.

If you are a business owner who is approaching retirement, you were just given an A+ grade.

Now you control the situation for at least the next 4 years.

It’s time to strike while the iron is hot.

Use your time to develop an Exit Plan. Control your risks. Maximize the value of your business. And get out on favorable terms.

None of us know what the future holds, so there’s no sense wasting any more time worrying about it.

Let’s get to work.

 

The time to start your Exit Plan is NOW. Contact Epiphany Law to do so.

 

 

Thanks for reading! To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

http://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates

https://www.usgovernmentdebt.us/spending_chart_1900_2020USp_XXs2li011tcn_H0sH0lH0f_Combined_Gross_Public_Debt#copypaste

 

Got Sued? Now what?

 

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

Careful what you wish for…

In 2016, 852,828 new lawsuits were opened in the state of Wisconsin… We only have 5.8 million people living in the state. For those that were never “math” people, that’s roughly 1 lawsuit for every 7 people in the state.

The statistics get even more mind-numbing if you expand the scope to include the entire United States, where over 100 million new cases are opened each year in a country that is home to 323 million (about 1:3).

Facts:

  • On average, a new lawsuit is filed every 30 seconds.
  • 78% of lawsuit defendants never thought it would happen to them.
  • America has 80% of the World’s lawyers.
  • 96% of the WORLD’S lawsuits are filed in the United States.

Yikes.

Unless you’ve had the misfortune of being involved in a lawsuit, the likelihood is that you have no idea how the whole process works.

USLegal.com explains it this way:

“In Wisconsin a civil action commences by filing of a complaint.  (The) Party who commences the action is called the plaintiff, and the opposite party is called the defendant.  A civil action can be classified into various stages that include: pleading stage, discovery stage, trial stage, and judgment stage.

Pleadings acceptable in Wisconsin courts are: complaint, answer to complaint, counter claim, reply to counter claim, cross claim, answer to cross claim, third party complaint and answer to third party complaint.  A complaint should be filed by the real party in interest… Parties may obtain discovery by depositions upon oral examination or written questions; written interrogatories; production of documents or things or permission to enter upon land or other property, for inspection and other purposes; physical and mental examinations; and requests for admission.

At the trial stage, a party may demand for trial by jury.  A judgment is passed after trial.”

To be fair, it started off promising. The basic identification of how the process begins. Definition of Plaintiff/Defendant. But then… … … ???

Let’s see if I can do better.

So someone wants to sue you.

How do they do it? When do you know it’s for real? Better yet, when should you contact an attorney?

Chill. One question at a time, please.

First of all, they can’t just text you saying, “I hate your guts, I’m suing you for $500 because you’re the worst!”… I mean they CAN do that, but it doesn’t mean anything. If you’re a fan of The Office, someone doing that to you is basically the equivalent of Michael Scott’s famous, “I. DECLARE. BANKRUPTCYYYYYYY!!!!!!”

You don’t need to get worked up yet. And unless you’re truly having a meltdown, there’s probably no need to contact an attorney.

Everything gets real when the person who hates your guts files a “Summons and Complaint” with the Clerk of Courts. It basically says two (2) things: 1) Hey, guys, this jerk is the worst! They did “X, Y, and Z” to me and those things are against the law. 2) I will give this jerk “X” days to respond to my claim, otherwise they admit guilt.

Once the Clerk of Courts receives this “Summons and Complaint”, the information will be forwarded along to you. When YOU receive it, “You’ve been served.”

At this point, you have a whole bunch of options. The ball is in your court:

  • “Yep, I did it.”
  • “Nope, didn’t do it.”
  • “Yep, I did ‘X’ but I didn’t do ‘Y’ and ‘Z’”
  • “Hey, I don’t like you either! I want to sue you back!”

Unless you know beyond the shadow of a doubt how you should respond, this is a very good time to contact an attorney.

DISCOVERY

Short of you admitting guilt or not responding to the claims, the next step is for your case to go into discovery. It is what you’d expect: both sides ask each other information about the case, trying to discover as much factual information as possible, with the goal of building the strongest possible case. The length of the discovery period can vary dramatically, but usually lasts several months.

MEDIATION

After the discovery phase is over and all the facts are out in the open, the sides may decide to avoid trial by seeking to resolve the case in mediation. Mediation is heard by an unbiased 3rd party, who will offer a nonbinding verdict (meaning if either party disagrees with the verdict, the case will continue on and be heard by a judge/jury). However, if both parties DO agree, the case will be resolved without going to court! Pursuing mediation makes a TON of sense if you feel the individual(s) opposing you have some sense of rationale. Mediation, in general, offers the advantages of being much less time consuming, stressful, and costly than the standard Civil Court process.

One could say that pursuing mediation is the “mature” way of handling a dispute. “Hey, man, I see where you’re coming from. You see where I’m coming from. Let’s just get this over with so we can get on with our lives.”

Rather than waiting months – sometimes years – to have your case heard by the court system, a hearing with a mediator can often be scheduled within a couple of weeks.

SUMMARY JUDGEMENT

If the facts clearly support one side over the other, a motion for summary judgement may be filed. “Hey, Mr. Judge, just take a look at these facts. It’s obvious what happened here. We don’t need to waste our time with a trial. Just make your decision.”

PRETRIAL HEARING(S)

The judge and both sides discuss the facts of the case, charges faced, and what evidence will be allowed at the trial. This phase can amount to one brief hearing or several lengthy hearings, depending on the complexity of the case. This is usually a final opportunity for the sides to come to a “settlement”.

TRIAL

Each side presents evidence. Judge / Jury deliver a binding verdict. Cases that go all the way through trial normally take well over one (1) year from “complaint” to “verdict”.

Appeal

Just when you thought it was over. If you or your counterpart doesn’t like the decision the judge/jury made, that decision can be brought to an “appellate” court. “Hey, I think the judge/jury made a serious mistake in handling my case. I want someone else to look at these facts.” You should know, once the judge delivers a verdict, you are generally facing very long odds to get that decision overturned in an appellate court. But… There is always a chance.

Thanks for reading! To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

Exit Planning: When to start?

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

A few weeks ago, we sent out emails to several business owners, inviting them to attend a presentation on Exit Planning. We met our desired room capacity pretty quickly, but we did get a few responses like this:

  • “I’m not exiting my business for 3 or 4 years, I’ll attend the presentation then.”
  • “We aren’t exiting until next year. Will you be doing this again in 6 months?”

Two separate business owners made a conscious decision to delay attending this kind of presentation until their exit is at arm’s length.

As a person who is very educated on what Exit Planning is and how much work it takes, let’s just say those decisions scare the s*** out of me.

Yes, I know, there is a certain contingent of business owners who simply cannot – and will not – mentally or emotionally handle the task of planning for their exit. In fact, we even wrote a blog about it: Exit Planning: Why Do Business Owners Avoid It? Bottom line: It’s just too much for them, so they stick their heads in the sand.

Those responses we got – you know, a few weeks ago after the presentation – those felt different. To my mind, it feels like those business owners actually think it is OK to wait longer than they already have. Like, with the rational part of their brain.

They weren’t being emotional, afraid, or willfully negligent.

It seems like they were just living their reality.

If that is the case, I have failed you all miserably.

Why?

The truth is, executing an Exit Plan takes a hell of a lot longer than 6-12 months. If you wait until then to even start LEARNING about Exit Planning, you are way behind the 8 ball. You are asking for disaster. I’m not saying you are S.O.L, but I AM SAYING that you have effectively put the ball in someone else’s court and left value – i.e. MONEY – on the table.

Really?

Yep.

Okay… So how long DOES it take?

Internal Transition

First of all, did you know there are really only four (4) practical ways that you can transition a business internally?

  1. Intergenerational Transfer: The transfer of a business to direct heirs, usually children. About 50% of business owners want to exercise this option; only 30% do it successfully.
  2. Management Buyout: Owner sells all or part of the business to the company’s management team. Management uses the assets of the business to finance a significant portion of the purchase price.
  3. ESOP: Company uses borrowed funds to acquire shares from the owner and contributes the shares to a trust on behalf of the employees.
  4. Sale to Existing Partners.

Here’s the deal: If I’m going to be your Exit Planner, and you are considering an Internal Transition of any kind, I want our initial meeting to be at least 10 years prior to your exit.

You heard me. 10 years.

Why? 2 Reasons.

  1. In all likelihood, you are not just GIVING this thing away. And you want cash at closing, not a promise to pay.
  2. In all likelihood, the person(s) you are selling it to can’t afford to buy it, and wouldn’t be able to secure financing.

If you come meet with me 10 years in advance, we can create a pot of money for your successor(s). The concept is simple: Money gets bonus-ed into the pot if – and only if – they achieve predetermined objectives that help you grow the value of the business. Pick your scenario:

  • Give successor(s) $0.00, have a company worth $2,000,000. In 10 years, receive a 20 year note and a $150,000 first year payment.
  • Give successor(s) $1,000,000.00, have a company worth $3,000,000. In 10 years, receive $2,000,000 and a 10 year note for the balance.

I know which one I’d pick.

If you come meet with me 5 years in advance, we cannot do that.

If you come meet with me somewhere in between, the numbers might work. They might not. It’s anybody’s guess.

External Sale

If you’re planning to pursue a sale to a third party, I will be thrilled if you give me a 5 year runway to work with.

You see, Exit Planning is a lot like flipping a house:

If you give me 5 years, we can update everything: new hardwoods, appliances, siding, and roofing. We can check the plumbing and electrical. We can remodel the kitchen and master bedroom. Hell, we can even toss on an addition. And the best news: All of that will be done in 2-3 years, giving us the opportunity to truly pick our spot and capitalize on favorable market conditions when they are present.

If you give me 3 years, we can still make a ton of updates. The house will truly be in great shape for buyers. Only problem: you aren’t giving yourself any time to play the market. Once the house is ready, you’re going up for sale, whether it’s a buyer’s market or a seller’s market.

If you give me 1 year, we can update a handful of things and slap on a fresh coat of paint. That’s it. Smart buyers – yes most of them are smart – are going to try and poke holes to drive the price down.

I know what you’re thinking: “Yeah, remodeling makes everything look great, but it ain’t free either. Is it really worth the investment?”

  • For most of you it’s going to mean the difference between a business that sells and one that sits on the market for 2 years before getting liquidated because nobody wants it.
  • We track ROI for our clients. We’ve never had someone come out in the negative. We generally EXPECT our clients to earn at least 30% on their investments in Exit Planning by the time it’s all said and done.

Getting Started

We generally kick off the process with a complimentary “exploratory” meeting. You’ll have the opportunity to ask questions and help us understand your true desires.

Assuming all parties agree to move forward, we jump into “Benchmarking” your business.

To stick with the remodeling analogy, it’s the basic equivalent of obtaining a real estate appraisal – on steroids. Yes, we deliver you with an estimate of value based on your financials. We also take it 5 steps further. We give you insight that says, “Hey, someone is going to fall in love with this house and pay 20% more if you gut the basement clean, paint the stairwell olive green and put a giant picture of Aaron Rodgers in the family room.”

At that point, whether you hire us to gut the basement and paint the stairwell, contract it out to someone else, or ignore our advice is entirely your prerogative.

 

Thanks for reading! To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

An Interview with Patrick Furman

 

Bachelor of Arts: West Virginia University

Juris Doctorate: University of Pittsburgh School of Law

Married: Yes; Tiffany

Kids: Yes; Mariah, Kyarra, and Alysia

Practice Area: Estate Planning

DiSC Profile: DC Style

 

Summary

“People with the DC style prioritize CHALLENGE, so they want to explore all options and make sure that the best possible methods are used. As a result, they may be very questioning and skeptical of other people’s ideas. They also prioritize RESULTS, so they’re often very direct and straightforward. Finally, they prioritize ACCURACY. Because they want to control the quality of their work, they prefer to work independently, and they may focus on separating emotions from facts.” – Excerpt from Pat’s DiSC Workplace Profile.

Key words and phrases: Explores all options, skeptical, direct, accurate, separates emotions from facts.

Dang. That’s good stuff right there. Definitely the kind of person I want handling my most important affairs. Here is what I will add: I would imagine that many people with this personality type tend to come across very dry, arrogant, or even rude because they have so much knowledge about topics that their clients – well – don’t. Pat manages to overcome that. I don’t know if it’s just a natural gift of his or if it’s something he’s worked on over the years, but he really has this great way of being relatable and knowledgeable, without making you feel dumb for not knowing nearly as much as he does.

 

Interview

KOD: “Thanks for doing this, I really appreciate it.”

PDF: “Are you kidding? It’s my pleasure!”

KOD: “So how long you been doing this for?”

PDF: “Being an attorney?”

KOD: “Yeah.”

PDF: “Since 1997. No wait… ’98. 1998.”

KOD: “So almost 20 years. Take me back through your journey, because if I remember correctly you started out in undergrad at West Virginia and then went on to Law School at Pitt?”

PDF: “Uh-huh“

KOD: “How did you end up here?”

PDF: “Took a wrong turn in Indiana.”

KOD: Laughs.

PDF: “What had happened was… My parents moved to WI at some point while I was going to school to work for Badger Mining. After I finished school, my fiancé decided we should follow them out there. So we did. And – funny story – the night I took the bar exam she told me she didn’t want to get married.”

KOD: In shock.

PDF: “But luckily I passed the exam on my first try, fell in love with the area, and met Tiffany somewhere along the way. It all worked out in the end.”

KOD: “Wow. Amazing how life goes.”

KOD: “Who’s your favorite NFL team and why?”

PDF: “It’s the Steelers. I grew up in Pittsburgh, around the greatest team that’s ever existed – the Steelers of the ‘70s. I met pretty much all of them in one shape or another – “

KOD: “– How did you meet all of them?”

PDF: “I went to training camp every year with my dad and we would wait around between their dorm and the field. A lot of the guys would stop and talk or say hi or whatever. It was really awesome. I always remember during one of the camps, Theo Bell, who was a wide receiver, took my hat and wore it around.”

KOD: “That is incredibly cool. What a great memory!”

KOD: “If you could go back in time and relive one Steelers moment, what would that be?”

PDF: “Super Bowl 40 when we beat the Seahawks. I was actually at that game, and it was a close game until the end. Really fun to be at. The stadium was mostly Steelers fans because it was played at Ford Field in Detroit, which obviously is pretty close to Pittsburgh. Just a great time. That would be a fun one to relive.”

KOD: “So as a die-hard Steelers guy, do you hate the Eagles?”

PDF: “Yes… I hate the Patriots too… … …”

KOD: “You gonna watch the Super Bowl this weekend?”

PDF: “Yeah. As a football fan I have to.”

KOD: “Who are you cheering for?”

PDF: “The Eagles. I want to see the upset. Also, this Eagles team is a lot more likeable than some Eagles teams of the past. They are the underdogs. If they win, it would be a miracle. So I’m good with that outcome.”

KOD: “Date 1 – Marry 1 – Punch 1: Tom Brady, Bill Belichick, Rob Gronkowski.”

PDF: “Ummm… Probably marry Tom Brady cuz he has all that money. Punch Belichick because we can’t beat him. And date Gronk because he would be a lot of fun.” Laughs.

KOD: “Truer words never spoken. Gronk would be fun to hang out with!”

KOD: “Did you watch cartoons growing up?”

PDF: “I was a big Scooby-Doo fan growing up, but I hate it now.”

KOD: Confused. “What? Why do you hate it now?”

PDF: “I don’t know. I think it’s the special appearances that they throw into the show. The cameos. Like all of a sudden KISS would show up on the show. It’s just annoying to me now.” Laughs.

KOD: “What’s your favorite ‘90s jam?”

PDF: “Can I pick an album?”

KOD: “Sure.”

PDF: “Radiohead: Ok Computer. Best album of the decade.”

 

Here you go >>> Radiohead – Airbag.

 

KOD: “How many pennies do you think would fit into this room?”

PDF: “None because there shouldn’t be any pennies. They should be discontinued.” Laughs.

KOD: “A penguin walks through that door right now wearing a sombrero. What does he say and why is he here?”

PDF: “He says, ‘I’m Sidney Crosby and I’m going to give you season tickets to the Pittsburgh Penguins games.”

KOD: “Wow. Greatest response ever. I love it.”

KOD: “Tell me about 1 person outside of your immediate family that you love.”

PDF: “Hmmm… Kevin Eismann – Epiphany Law.” Laughs.

KOD: “Oh brother. Barf.” Laughs.

KOD: “Why are you an attorney?”

PDF: “I like helping people. Usually they will come in with some sort of problem that they don’t think can be fixed, and when you can fix it for them it’s the best feeling.”

KOD: “What is one thing that you are proud of yourself for?”

PDF: “My kids. It sounds sappy maybe, but I’m really proud of the way they act. They are really well behaved and I’m proud of them for that.”

KOD: “Pretend I’m thinking about hiring you as my attorney to do some legal work for me. What do you bring to the table? What can I take to the bank? Something you know you will deliver on every time.”

PDF: “A great amount of knowledge. I’m going to genuinely care about your problem. And we are going to find a solution.”

KOD: “Pretend I’m a young attorney, fresh out of Law School. Tell me why I should apply at Epiphany Law.”

PDF: “The environment allows you to be yourself. It allows you to feel comfortable. And you get genuine support from others.”

KOD: “How is that different from other places?”

PDF: “It’s usually not a ‘real’ team at other places. People might work in the same building, but nobody is going to go out of their way to help you. It can be pretty cutthroat. Like, you’re on your own, figure it out. That sort of thing. It’s a lot easier to be successful at Epiphany, just because the culture is different.”

KOD: “Give me one thing that people miss or do incorrectly a decent amount of the time when they try to do Estate Planning on their own?”

PDF: “They gift things to their kids without understanding what the consequences really are. So… they don’t understand capital gains, or they don’t think potential liability they are creating by gifting.”

PDF: “The other thing is that when people create a trust or will on their own, they often do it with just one possible outcome in mind. For example, they create the trust assuming that the husband will die first, and the wife second, and that’s it. They don’t take the time to think through all the possibilities. So they plan it all for one scenario, and if things work out that way it will be fine. But if, for some reason the wife dies first, the plan doesn’t work.”

KOD: “That’s really smart advice.”

KOD: “Alright lets finish this off with a little rapid fire.”

KOD: “Cookies or Cake?”

PDF: “Cookies.”

KOD: “Cats or Dogs?”

PDF: “Dogs.”

KOD: “Coke or Pepsi?”

PDF: “Coke.”

KOD: “Superman or Batman?”

PDF: “Batman.”

KOD: “Blonde or Brunette?”

PDF: “Blonde.”

KOD: “Horror or Comedy?

PDF: “Comedy.”

KOD: “Bud Light or Miller Lite?”

PDF: “Absolutely neither.”

A huge thank you to Pat for taking some time to chat with me! A super smart guy, and clearly has an awesome personality! I am a bit skeptical of his Coke/Pepsi response, however. If you look closely you will see that he was drinking a Diet Pepsi during our interview…

Thank you once again to all the readers of this blog. [email protected] continues to march on! To subscribe to our weekly content, you can enter your email on our homepage. You can also follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

What is a B Corporation?

Legal matters, business strategy,

and life perspectives from the mind of a non-attorney.

 

Shown below are several different types of business entities:

C Corporation

Limited Liability Company

Municipality

Charitable Organization

Joint Venture

Nonprofit Corporation

Cooperative

Limited Partnership

Sole Proprietorship

General Partnership

Limited Liability Partnership

S Corporation

Holding Company

Massachusetts Business Trust

Series LLC

On November 27th, 2017, Wisconsin became the 34th state to pass Legislation allowing the existence of Benefit Corporations (B Corps). Wisconsin companies can begin filing the B Corp election on February 26th, 2018.

WHO CARES! Toss it on the pile, right??

WRONG.

B CORPORATIONS ARE CHANGING THE GAME.

How do B Corps change the game?

In the United States, for-profit Corporations are required to act “solely for the ultimate purpose of maximizing financial returns for shareholders.” In other words, the people pulling the strings are legally obligated to make as much money as possible for the people who have invested in the company. Profit. That is the only consideration that matters. If there is an opportunity to make money, the powers that be must take it, or face the wrath of disgruntled investors and cunning corporate attorneys.

B Corps, in the 34 states that allow them, are also for-profit Corporations. Their directors are also legally obligated to make as much money as possible for shareholders. However, directors are also legally obligated to consider the social impact that their decisions have on society.

Let me kick you two scenarios to help explain the point:

  • C Corp. Directors are faced with the opportunity to experience significant cost-savings by relocating a large manufacturing plant overseas. Their research into the opportunity shows extremely low risk and potential for significant returns for shareholders. 10,000 jobs would be lost, severely damaging the community where the plant resides. If the Directors choose not to move forward with the relocation, they would likely face significant public scrutiny, termination, lawsuit, and career damage. Why? Because their only legal obligation is to maximize returns for shareholders.
  • B Corp. Directors are faced with the same opportunity. This time, Directors are legally obligated to consider and balance the financial incentive of relocating with the social impact it would create for the community. They can choose to act on either side and can balance the negative social impact with the positive financial opportunity however they see fit.

Unless a basis is created by the company itself, there is no hard-and-fast rule that says how much consideration directors should give to financial return versus social impact. The B Corp structure simply gives Directors the latitude to make decisions that truly are in the best interests of shareholders AND society as a whole.

Do B Corporations get a tax break?

No. B Corps are taxed like other Corporations. They may elect the S or C treatment.

Is anyone actually going to use this election?

Yes. As of today, there are over 2,300 B Corps across 130 industries. Here are a few of the most popular B Corps:

Mission: Preserving and expanding Ben & Jerry’s social mission, brand integrity and product quality, by providing social mission-mindful insight and guidance to ensure we’re making the best ice cream possible in the best way possible.

 

 

Mission: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.

 

 

Mission: Since 1969, Natura’s mission has been to help build a better world through our commitment to transparency, sustainability and well-being.

 

What are some potential business benefits beyond the ability to “do the right thing”?

Access to talented workers. Young, talented individuals want to work for companies that are changing the world. Organizing as a B Corporation legitimizes a company’s cause as more than just lip-service. In today’s competitive environment, B Corps are an outstanding recruiting tool.

Increased employee retention and motivation. Similarly, a workforce is inspired by more than just a paycheck. Employees work with blood, sweat, and tears when they identify with their company’s cause.

Increased customer loyalty. Some customers are willing to pay more – and come back time and again – for brands that have a strong purpose. Socially responsible consumers are a real thing, and there are more and more of them every day.

What additional requirements do B Corps have?

Requirements change slightly depending on what state the company is organized in, but basically, B Corps have to create an annual benefit report that assesses their overall social and environmental performance. Most B Corps make this report available to the public – it’s generally a good marketing strategy to do so – and it’s a best practice to benchmark the company’s performance against a 3rd party standard. Reports can be generated for free from http://bimpactassessment.net/

Here is a sample report.

Want to get set up as a B Corp? I know a few good attorneys who can help with that…

Sarah M. Coenen

Kevin L. Eismann

Kathryn M. Blom

I appreciate those of you who continue to follow Breakfast at Epiphany’s. To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

Bitcoin: Explain it to me like I’m 6

Legal matters, business strategy, and life perspectives from the mind of a non-attorney.

Bitcoin. It’s all the craze.

Pretty easy to understand why… People are making MONEY. Not stacks – no, no – heaps and piles and truckloads of money. We’re talking life-changing, legacy-altering, never-have-to-work-again-if-you-don’t-screw-it-up kind of money.

But how? I mean… What is it? And… Are we all stupid for not jumping in?

These were all questions that my family was asking as we hovered over our meals on The Night Before Christmas.

I sort of knew what it was: This Virtual Currency thing that people somehow “mine” to acquire. I knew that “mining” it took a lot of CPU horsepower. I knew that some merchants accepted Bitcoin as a “legitimate” means of purchasing stuff. And finally, I understood that it was traded on Exchanges, just like any other stock/bond/currency.

Basically, I didn’t have much to offer that the #fam didn’t already know, so instead of jumping into the conversation… I kept quiet and let somebody else struggle through the difficult web of questions that inevitably accompany a Bitcoin conversation.

Damnit.

The one guy that had a legitimate background in finance and currently spends his days working with – arguably – very smart business minds came up with: nothing – zip – zilch – nada.

I blew my shot to look smart in front of the crew.

SMH.

Albert, you wise son-of-a-b****.

I don’t have any stats to support this, but my feeling is that maybe .1% of our population (300,000 Americans, for example) have an extremely intimate knowledge of everything Bitcoin. Certainly, many others “get it”. Maybe they can’t explain it to a child, but they know what’s going on. Well enough, at least, to have an opinion on whether or not they would ever invest in it. Then, there’s the rest of us. We’ve heard of it and we have no freaking clue what is going on.

If you read my first blog, you know THAT is why I write. To explain complex legal and business matters in a way that people can actually understand.

So, here is my shot at redemption.

What is Bitcoin?

It’s money. But you can’t put it in your wallet. You can’t hold it.

When did Bitcoin start?

January 2009.

Who started Bitcoin?

An alias named: Satoshi Nakamoto. This alias could represent a single person, or – more likely – a small group of people. Regardless, the true creator of Bitcoin has never come forward.

How did Bitcoin start?

In the beginning, the person – or small group of people – who created Bitcoin had to convince other people that this “thing” was worth something. A trade had to happen.

Allow me to repeat: they had to convince someone that a Bitcoin – this thing that you cannot see or feel or smell or taste or hear – was worth money.

How much money? In the beginning, one Bitcoin was worth about $0.00076 USD

In other words, 1,309.03 Bitcoin = $1.00 USD

Basically worthless, but still, it had to start somewhere.

Why did the first – and subsequent – trades happen?

Ideas are worth something. Ideas have potential. This “Bitcoin” idea promised – and still promises – the following:

  • Globalization. You don’t have to worry about crossing borders. Bitcoin is accepted anywhere.
  • Decentralization. It’s a fancy way of saying that there is no government authority – or any authority, really – that regulates Bitcoin. Nobody will “print” or “create” more of it on a whim, and nobody has the authority to declare it invalid.
  • Accessibility. Payments can be made at any time, to anyone, including on “holidays” when banks are traditionally closed.
  • Transparency. Bitcoin users will know if extra fees – no matter how miniscule – are being charged by merchants when they pay with Bitcoin.
  • Privacy. Payments can be made without personal information being shared.
  • Low Fees. The cost to process a Bitcoin transaction is currently much lower than the cost to process a credit card transaction.

The first users of Bitcoin were believers in that idea. They were willing to trade actual money – something that is universally accepted – for Bitcoin – something that would only be accepted among their own tiny network of users. They believed that as the idea spread, more people would be interested in using it. Eventually, real demand would be created and the cost of Bitcoin would rise.

What is Bitcoin “mining”?

It is HIGHLY complex and, to be honest, way beyond my capacity for understanding. It involves computers, algorithms, and really really smart people.

I will not attempt to describe the detail that goes into Bitcoin “mining”. Why? 1) I will fail miserably 2) It isn’t important. Here is what you need to know:

Bitcoin “mining” is the process that verifies a Bitcoin transaction is valid.

To best explain it, allow me to go back to the beginning again. We don’t know for certain, but let’s imagine it went something like this:

In the beginning, Satoshi Nakamoto had some Bitcoin. Let’s say it was 1,000 Bitcoin.

Satoshi sold some Bitcoin to another person. Let’s say it was 100 Bitcoin for roughly $0.08 USD.

Now, this is when “mining” happens. After a transaction is accepted, it must be verified. Computers talk to each other… Smart people do smart things… 10 minutes later… Approved!

What is the incentive for Bitcoin “mining”?

People that verify Bitcoin transactions are called “Miners”, and Bitcoin transactions are grouped together into a “block”. “Miners” are awarded Bitcoin for making sure the transaction data inside a “block” is legit.

In the beginning, “mining” a “block” of transaction data came with a reward of 50 Bitcoin.

It’s safe to assume that Satoshi was also the first “miner”. So, following the first transaction, the breakdown of Bitcoin looked something like this:

1st Investor: 10 Bitcoin

Satoshi Nakamoto: 990 owned + 50 mined = 1,040 Bitcoin

Total in Circulation: 1,050 Bitcoin

The reward for verifying transactions decreases over time. Every 4 years, the reward is cut in half.

The reward has gone from 50 -> 25 -> the current reward of 12.5 Bitcoin per “block”. Rewards will be cut to 6.25 Bitcoin per “block” in June of 2020.

As more and more users join the Bitcoin network, the transactions become increasingly difficult to verify. More difficult algorithms = more powerful computers = more energy consumption = higher costs for miners.

To tie that point together: As time passes, the benefit is going down and costs are going up for Bitcoin “miners”.

How many Bitcoin are there now?

As of the time of this writing, there are roughly 17 million Bitcoin in circulation. The maximum capacity of Bitcoin is 21 million. Once 21 million are in circulation, “miners” will no longer be awarded new Bitcoin in exchange for verifying transactions.

Most estimates indicate that all 21 million Bitcoin will be in circulation by the year 2140. At that point, the reward will be .00000042 Bitcoin / Block “mined”. Again, the current reward is 12.5 Bitcoin / Block “mined”.

Err… will “miners” still do the work to verify transactions if there is no incentive?

Nope. They will not.

At some point, the cost (primarily energy consumption by high-powered computers) of “mining” Bitcoins will outweigh the actual reward, and it will no longer be profitable to “mine”.

At this time – or much sooner – “miners” will start charging transaction fees to Bitcoin users who want to buy something with their Bitcoins.

The business that is Bitcoin “mining” – while HIGHLY profitable now – will likely become one of razor-thin profit margins at some point in the future. Small margins may be palatable, however, if millions of transactions are occurring daily.

What is one Bitcoin worth?

In January of 2011; about 7 years ago, one Bitcoin cost $0.35 USD.

In January of 2014; about 4 years ago, one Bitcoin cost $881.66 USD.

In January of 2017; about 1 year ago, one Bitcoin cost $985.56 USD.

As of January 5th, 2018 at 9:00 am, one Bitcoin costs $15,188.70 USD.

That’s over 4,000,000% growth in 7 years.

Conclusion

Straight facts homie. I’ll leave all the hot takes to the so-called “experts”. Show us some love if my shot at redemption was a success.

I appreciate those of you who continue to follow Breakfast at Epiphany’s. To subscribe to our weekly content, you can enter your email on our homepage. You can also follow Epiphany Law on Facebook and LinkedIn for regular updates from the Firm. Finally, you can follow me on Instagram (@kelton.official), where I regularly post links to new blogs, as well as random pictures of my life.

 

Credit:

https://www.buybitcoinworldwide.com/price/

https://coinreport.net/coin-101/advantages-and-disadvantages-of-bitcoin/

https://www.coindesk.com/information/how-do-bitcoin-transactions-work/

https://m.youtube.com/watch?v=GMOzih6l1zs

https://www.focus-economics.com/blog/tulip-mania-dutch-market-bubble

https://themarketmogul.com/bitcoin-tulip-mania/

http://www.bitcoinblockhalf.com/

An Interview with Sarah Coenen

Bachelor of Arts: UW – Stevens Point

Juris Doctorate: Valparaiso University School of Law

Married: Yes; Corey

Kids: No

Practice Areas: Business Law and Estate Planning

DiSC Profile: C Style

Summary

“People with the C style place a high priority on Accuracy. Because they want to ensure superior results, they tend to analyze options rationally and separate emotions from facts… they’re uncomfortable with quick or risky decisions and prefer to take time to make an informed choice.” – Excerpt from Sarah’s DiSC Workplace Profile.

Undoubtedly, you have to take Personality Profiles with a grain of salt, but COME ON… What else are you really looking for in the individual who is responsible for drafting your legal documents?? Sarah is an absolute tactician. Laser-focused. And for her age, she is a fountain of knowledge. Without question, she is one of the people I most admire in the office. Sharp and humble. It’s a dangerous combination. The kind of person that people will sleep on because she doesn’t sing her own praises, but trust me, her star is rising.

Interview

KOD: “Thanks for making some time to do this, what’s your billable rate? I’m trying to figure out what this is going to cost me…”

SMC: “We’ll put this on Epiphany Time, don’t worry about it.”

KOD: Laughs. “Well I appreciate that. I’ll do my best to get you some good PR out of this.”

KOD: “First question: What were you like in High School?”

SMC: “Very quiet and reserved.”

KOD: “Did you do pretty well in High School?”

SMC: “Yeah, I always did pretty well… Except for Calculus. I hated it.”

KOD: “In High School, did you know you wanted to be in law?”

SMC: “Yeah.”

KOD: “At what point did it become a desire for you?”

SMC: “When I was 12 years old I wrote a book report on Sandra Day O’Connor—“

KOD: “—Who is that?”

SMC: “She was the first female Justice on the US Supreme Court. She inspired me.”

KOD: “What was your favorite cartoon to watch growing up?”

SMC: “Rugrats.”

KOD: “Favorite character on the show?”

SMC: “Tommy Pickles.”

KOD: “You’re a new addition to the crayon box. What color are you and why?”

SMC: “I’ve been told before that I’m a yellow crayon –“

KOD: “—What shade of yellow? Like a gold or a soft yellow?”

SMC: “Are you telling me that this is the 64 crayon box instead of the 8 crayon box?? Jeez. I guess I would say more like a standard bright yellow. Like a sunny yellow.”

KOD: “Why?

SMC: “I try to always have a positive disposition and attitude toward my work and my life.”

KOD: “What’s your favorite ‘90s jam?”

SMC: “Everybody by the Backstreet Boys.”

 

Pause. Here you go.
Resume.

 

KOD: “How many pennies do you think would fit into this room?”

SMC: “1 Trillion… No 2 Trillion.”

KOD: “A penguin walks through that door right now wearing a sombrero. What does he say and why is he here?”

SMC: Laughs. “He says, ‘Where am I?’ and he is here because he is lost and is having an identity crisis.”

KOD: “OK, enough with the crazy questions, let’s get a little more serious.”

KOD: “Tell me about 1 person outside of your immediate family that you love.”

SMC: “I would say my cousin Miranda because she is like a sister to me. I can always go to her with anything. She is two years younger than me, but she has a lot of wisdom. And she brings a sarcastic tone to conversations that I really appreciate.”

KOD: “Why are you an attorney? Other than your inspiration from Sandra Day O’Connor.”

SMC: Laughs. “I enjoy the logical process. I enjoy helping people. And attorneys get a bad rap sometimes, so I accept and enjoy the challenge of changing that narrative.”

KOD: “What is 1 other career that interested you in the past?”

SMC: “When I was really little I wanted to be a firefighter… But I thought about teaching for a while in college.”

KOD: “What is one thing that you are proud of yourself for?”

SMC: “Wow, that’s a hard question Kelton.” … “I guess I’m proud of myself for not giving up all the different times I could have on my way to becoming an attorney. Being rejected. Undergrad. Law School. I just kept going.”

KOD: “You got rejected for Undergrad and Law School?”

SMC: “Yeah. So for undergrad, I really wanted to go to UW-La Crosse but I got wait-listed. That ended up being a blessing in disguise though because UW-Stevens Point was amazing. And then for law school, taking the LSAT was really hard. I had to take it twice to improve my score before I got into Valparaiso. And it’s really hard for me to talk about it, but let’s just say I didn’t pass the Bar on my first try. There were a lot of times I thought about giving up but I didn’t.”

KOD: “That’s amazing. I’m glad you didn’t quit.”

KOD: “Pretend I’m thinking about hiring you as my attorney to do some legal work for me. What do you bring to the table?”

SMC: “I am always upfront and honest with my clients. I like to think that I’m a pretty nice person to work with. And you’ll get a good product.”

KOD: “Pretend I’m a young attorney, fresh out of Law School. Tell me why I should apply at Epiphany Law.”

SMC: “Epiphany is a very unique environment in that – even though we have a ‘boss’ and managing partners and things like that – there isn’t the hierarchy that you find at most other firms. We are all willing to help each other and there is no “elitist” attitude that says ‘I don’t need you’ or ‘I’m better than you’ –“

KOD: “—Why is that a good thing for a young attorney?”

SMC: “Because you don’t know as much. Law School tries to prepare you, but there is no substitute for real world experience. Being here, I was able to learn a lot, very rapidly, because people were willing to share their real-world experience with me. The culture here helped me to have confidence even when I didn’t know all the right answers. I knew I had amazing people in my corner to help at any time.”

KOD: “Do you have any advice for someone that is in Law School right now?”

SMC: “Wherever you intend to practice law after you are done with school, go to that area during your breaks and make connections in that area the best that you can. Meet with attorneys, judges, business owners. Networking is absolutely essential and that is one thing they don’t teach you in law school.”

SMC: “Also, learn how to talk to clients. Clients ARE NOT stupid. They just don’t know the law like you do. It’s on you to learn how to explain things without coming across like you are arrogant. You have to learn how to explain things in a way clients can understand and relate in order to be successful.”

KOD: “I’m a new business owner. I don’t think I have any legal work for you… But I would like to establish a relationship with a good attorney because that seems like a smart thing to do. What should I do?”

SMC: “Call. You should absolutely call. I’m not going to try and give you any advice over the phone, but there are a few basic questions that I can ask to help me figure out if we should meet or not. You’re not going to get a bill for the conversation. I won’t push you into anything. We’ll figure out if we need to meet, and either way you will feel better knowing that you now have someone in your corner when you need them.”

KOD: “Give me one thing that people miss or do incorrectly a decent amount of the time when they try to do Estate Planning on their own?”

SMC: “Language. A good example of that is with a Power of Attorney. Power of Attorney’s can be ‘springing’ or ‘immediate’, and depending on how you word the language, you may be unintentionally giving someone else control over your decisions right now.”

KOD: “What is one thing that a new business owner might forget to do?”

SMC: “If someone sets up their business entity on their own, the State does not require them to provide a draft of their bylaws / operating agreement. So, if it’s not required, there are a lot of times when people just don’t have them altogether. Those documents are essential in laying out the fundamental aspects of how the business is to be run. It helps to protect the business owner when they have those documents.”

KOD: “How does it protect them?”

SMC: “If someone sues the business, and that business owner isn’t abiding by the fundamental rules of their organization, an attorney may be able to Pierce the Veil. It’s extremely easy to Pierce the Veil if that business owner never made fundamental rules to begin with.”

KOD: “Last question: Date 1 – Marry 1 – Punch 1: Lord Voldemort, Napoleon Dynamite, Austin Powers”

SMC: “Ugh…” … “Punch Lord Voldemort, Date Napoleon Dynamite, Marry Austin Powers.” … “Can’t I just punch all three?”

Thank You

A huge thank you to Sarah for taking some time to chat with me! She is truly a treasure to work with! Thank you once again to all the readers of this blog. Because of your great support I have been approved to continue to producing palatable legal and business content into and beyond the New Year!

From all of us at Epiphany, we hope you had a very Merry Christmas and we wish – but do not guarantee – you a Happy New Year!

 

Piercing the Veil

Legal matters, business strategy and life perspectives from the mind of a non-attorney.

Calling all business owners!

No personal stories this week. Let’s get right to work.

As a business owner, you have business assets and you also have personal assets. Duh! Duh! Duh!

I make that obvious statement for a reason, though. As I get into the “meat and potatoes” of this blog, I don’t want the IDEAS to distract from the BOTTOM LINE: This blog is only relevant because business owners want to maintain that distinction – that line – between business assets and personal assets.

How does someone obtain that line of distinction?

Here’s what you do: Grab a blank piece of paper out of your printer and begin thinking of all the things that your business owns – or will own once you start it. Now, organize those things into a list (on the left side of the page) from most expensive to least expensive. Then, on the right side of the page do the same for your personal assets. Now – this part is critical – find a Sharpie Fine Point Permanent Marker; and, with a ruler, draw a perfectly straight line in between your two lists.

Viola! One distinct line between your business assets and your personal assets.

If you really want to maintain distinction between your business assets and personal assets, of course you’ll have to set up a LEGAL entity (probably an LLC or Corporation).

Ok Kelton, you’re soooo funny. But why is it important to have that distinction between business assets and personal assets?

Boring answer: To protect your personal assets if your business should ever get sued.

Fun answer: Suppose Joe Schmoe is a really wealthy guy. He made his millions the old fashioned way: Struck it big on the lotto. Now he’s bored, so he decides to buy a very small mom ‘n pop bakery (Schmoe Sweets, LLC.), because he loves to bake desserts. He has no employees, it’s just him. One day, he mops the floor in front of the display case, and as he’s going to grab the “Caution Wet Floor” sign, a young boy slips and severely injures himself. The young boy’s parents sue Joe Schmoe. What happens next?

  1. The attorney representing the little boy is only able to come after the small amount of assets that the business owns.
  2. The attorney representing the little boy comes after the assets of the business AND a huge chunk of Joe’s lottery winnings.

*The answer is “a” if Schmoe Sweets, LLC. is set up as a perfectly legitimate legal entity, and Joe follows all the rules.

*The answer is “b” if Joe Schmoe did something wrong when he set up the entity, or if he is doing something wrong now!

Guess what? It is literally in the attorney’s job description to figure out if Joe did anything wrong. 

If the attorney finds something, they can PIERCE THE VEIL, and grab at Joe Schmoe’s personal assets (lottery winnings) – in addition to the “business” assets.

So… Now you know why business owners set up LLC’s and Corporations. You also know what Piercing the Veil means! If that’s all you came here for, class is dismissed.

If you want to know what those “things” are that attorneys use to Pierce the Veil, let’s KEEP ‘ER MOVIN.

Young boy slips in Joe’s bakery and severely injures himself. The boy’s attorney will ask the following questions to try and Pierce the Veil:

  1. Is the entity operating as a legitimate business?
  • FAIL: Joe bought the business and realized that he didn’t really know how to run a business – he just likes baking – so he only opens up the bakery on Sundays for members of his church to enjoy free treats and socialize before/after church.
  1. Is there commingling of assets?
  • FAIL: Joe took out a company credit card when he started Schmoe Sweets, LLC. The card earns him 4% cashback on all purchases, so he uses it for EVERYTHING, including personal expenses like dining out, groceries, and home repairs.
  1. Is there adequate record-keeping?
  • FAIL: Joe was having a lot of trouble finding a good assistant to help him run the business, and in the span of one year he ran through 6 different assistants before finding one that stuck with him. Joe didn’t keep ANY records of the individuals he hired/fired.
  1. Is the company undercapitalized, or was it undercapitalized at formation?
  • FAIL: Joe set up a bank account in the company’s name, but normally maintains the minimum balance of $100. Bank records show very little activity in the account since it was opened. Accounting records indicate that the business costs $2,000 per month to operate.
  1. Is the company a “shell” of the business owners?
  • FAIL: Joe’s business cards, email signature, stationary, menus, and website all say: “Treats by Joe Schmoe”. There is minimal effort to identify his entity: Schmoe Sweets, LLC.
  1. Does the company disregard Bylaws / Operating Agreement?
  • FAIL: Joe’s Operating Agreement states that all corporate records are to be held at his principal place of business. Joe, instead, keeps his corporate records at his cabin up north, for safe-keeping.
  1. Are assets used for non-company purposes?
  • FAIL: Schmoe Sweets, LLC. bought a “company jet”, but Joe uses the jet only for personal vacation.
  1. Is the business being used to defraud creditors or avoid legitimate claims of creditors?
  • FAIL: Joe knows he is about to be sued. He shuts down Schmoe Sweets, LLC and transfers all its assets to a new LLC: Joe Mama’s Bakery, LLC.

Understand that these are mere examples of situations that could lend a creditor to Pierce the Veil. In all judgements, it will be the task of the judge/jury to weigh the balance of the facts in question. This means that in most cases, business owners will need to fail more than one test to be exposed.

Finally, it is important to remember that fraudulent acts on the part of a business owner will automatically bypass the corporate structure.

Special thanks to Attorney Chris Klingman for his help in authoring this blog.

Chris specializes in litigation for the Epiphany team, and has represented both sides of “Joe Schmoe’s” scenario on numerous occasions.

It’s worth mentioning that when I asked Chris if he would help me to understand something for a blog I was writing, his immediate response was, “Yes. Absolutely. In fact, I have some time right now. Let’s do it.” It was the perfect representation of the culture that has been built here at Epiphany: A passion for going above and beyond to help others.

Allow me to reiterate some context, so that you can appreciate Chris’ attitude as much as I do:

  1. Attorneys don’t “have time”. Period. Chris had time for me.
  2. I AM NOT Chris’ equal in any way with respect to career experience, business acumen, or legal knowledge. In many-if-not-most firms, non-attorneys are treated like inferiors. Chris respected me.
  3. My most popular blog took a direct aim on the business model that Chris operates in. Chris didn’t hold it against me.

I’ve gotten used to having my opinions, thoughts, and ideas respected around here. But I don’t ever take it for granted. I know it’s not like this everywhere.

There is no doubt in my mind that Epiphany Law is the firm that you want to trust with your business’ legal needs. Whether you’re working with Chris or any of our other attorneys/staff, I am confident that your experience will be as positive as the one I have here every day. It’s just in our DNA.

Thanks to all for the continued support! If you have questions, comments, or topic suggestions for us, please direct those to:[email protected]