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What the LA Lakers Can Teach Us About Estate Planning

Posted on in Estate Planning

Will County estate planning lawyers, estate planning, Joliet family business succession planning lawyer, Bolingbrook Family Business estate planning attorney, business succession planningWILL COUNTY AND JOLIET FAMILY BUSINESS ESTATE PLANNING

JOLIET AND CREST HILL SMALL BUSINESS ESTATE PLANNING ATTORNEYS

It is not often that estate planning attorneys get the opportunity to capitalize on popular events, especially in the world of sports, to lecture on legal issues that have been presented. Fortunately, the situation surrounding the Los Angeles Lakers affords us that rare opportunity.

For those unaware the owner of the LA Lakers, Jerry Buss passed away in 2013 and made the surprising decision to leave the team to his six children. This decision, and the planning behind it, shocked the legal world. Yet strangely enough not so much the sports world. This is because the passage of the team was done surprisingly well and caused very little drama amongst the family or affiliates of the team. The ease of the transition quickly showed estate planning attorneys that several valuable lessons could be learned by watching the LA Lakers.

Jerry Buss was not the typical team owner or individual you would think would be the head of a franchise worth over $1,000,000,000. In truth, Jerry Buss came from surprisingly humble beginnings. He grew up in the depression area and frequently recalled stories of standing in a food line for hours just to bring food to his family. He was able to rise up despite his lack of fortune, and he ultimately wound up acquiring both a college degree and a Ph.d which was rare for the time.

Ultimately, with just $1000 in start-up money, he was able to become the owner of one of the biggest franchises in sports history. It is quite possible that the harshness of this upbringing allowed him to confront the sometimes less than pleasant realities that come with estate and business succession planning that reflected in his succession of the Lakers franchise.

The first of those decisions was, while giving the business to all of his children, Jerry Buss gave control of the business only to two, Jim Buss and Jeanie Buss. By all accounts, Jerry Buss began preparing them for this role while he was still alive. This is important as it reflects a valuable lesson in business succession planning within a family: pick who is competent to run the business.

In a perfect world, these decisions could be divided up equally amongst the six children or upon agreement of all six, but in reality the wiser choice is to give decision making authority to someone with the knowledge, experience, or wisdom to make competent decisions on behalf of the business. By grooming them while he was still alive, Jerry made sure that he had competent children who could handle control of the family franchise.

The second of those decisions was the decision to focus on taxes in his estate succession plan. While no one but the Buss family and their attorneys knows the details of the estate plan involving the Lakers, what we do know is that he was able to will down the franchise to his family, which is, in itself, a rarity.

Many times, franchise owners are forced to sell the franchise upon their death because of the estate taxes on the franchise. The highest exclusion allowed in 2013, when Jerry Buss died, was $5,250,000.00. Everything after that exclusion, which was very little of the worth of the team, could have been taxed at up to 40 percent! The tax bill could have approached $400,000,000 and could have crippled the franchise without planning and forced the Buss family to sell just to pay the taxes. The seeming lack of issue with passing the franchise off without issue is a testament to the solid estate planning behind the scenes.

The third is the separation of profit sharing and management. We know that all six Buss children own the Lakers and receive dividends from the franchise, while only two of the children make decisions for the business. We can only speculate as to the actual arrangement, but there is something to be said about this arrangement. In fact, it might be a strong idea for family business to split into two corporations—one to hold and manage profits and another to actually control and run the business, both owned by different family members. This would simplify the issue of who has control of which aspects of the business and both reduce family conflict over the business and protect the business in the event of family conflict.

Another possible split is to incorporate the business and the commercial real estate into two separate corporations as the commercial real estate might have strong cash flow by itself. Ultimately, the key is to have someone who is competent running the business who can make strong decisions even in the presence of family conflict. This can be a difficult decision in a family and many times an outside presence who can fairly evaluate the business and set up a strong business succession plan is needed.

The attorneys at the Robertson Legal Group, LLC have strong skill in business succession planning. We are always available for a free consultation and happy to work with clients to protect their businesses.

EXPERIENCED FAMILY BUSINESS ESTATE PLANNING LAWYER

SHOREWOOD AND JOLIET CLOSELY-HELD ESTATE PLANNING ATTORNEY

Sean Robertson and Robertson Legal Group, LLC concentrate in wills and trusts, business succession planning, and family business estate planning in downtown Joliet and South Naperville, Illinois. Robertson Legal Group, LLC frequently represent family-owned and closely-held business clients with their estate planning and business succession planning in and around Joliet, Lockport, Shorewood, Plainfield, Crest Hill, Bolingbrook, Romeoville, Mokena, Frankfort, and Homer Glen. Robertson Legal Group, LLC may be reached at 815-582-4990 or 630-780-1034. Our website is www.RobertsonLegalGroupLLC.com. Contact our skilled Will County estate planning lawyers today.

Source:

http://www.nba.com/lakers/history/buss/

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