How Does Business Valuation Work? Here’s What You Need to Know

There are several methods and factors involved in determining the monetary worth of a business. Proper business valuation is important when buying or selling a business, adding shareholders, wooing investors, and applying for loans or other financing sources. Experienced business lawyers know what to look for and analyze when determining the value of a business. Understanding the various ways the valuation of a company may be determined can help you make sound decisions whether you are thinking of buying or selling a business.

Asset-Based Business Valuation

Also known as book value, asset-based business valuation totals all the investments in the company and can be determined in two ways. A going concern asset-based approach involves a review of the business’s balance sheet, lists the company’s total assets, and subtracts its total liabilities.

If you opt for a liquidation asset-based method, a value is placed on the company according to the net amount of cash that would be available if all assets were sold and all liabilities were paid. If you are selling a profitable, thriving business, you may be able to get more than book value for your company.

Market Valuation

This method determines how your business stacks up to comparable companies that have recently been sold. To a fair market value, research how much comparable businesses have sold for in the past two years and value your business at a similar amount.  Although you most likely want to price your businesses at fair market value, you can increase or decrease the cost, depending on the data that shows what buyers will pay.

Income Valuation

The income method looks at your past profits and cash flow to determine what your business is worth. Using your profit and loss statement, you can project future profits and debts. If you’re selling a small business, it is important to remember that buyers often take out a small business loan to purchase a company, so you want to demonstrate to the buyer that your business can produce enough profit to pay off the loan. Typically, the more effective your business is at paying debts, the higher its valuation will be.

How to Improve Your Small Business Valuation

Careful planning can help get your business off to a good start or improve the valuation of an established business. One key element of this is to have a business succession plan in place.

It is also vital to maintain accurate, up-to-date records, such as financial statements, profit and loss statements, and accounts payable/receivable. Having all this information organized and readily available can help buyers see the potential risks and profits buyers may face. Hiring a qualified accountant or diligently utilizing accounting software can enable you to keep track of your company’s finances.

Business valuation can be more complex when selling a sole proprietorship. While all assets in a corporation, LLC, or LLP are owned by the company and would typically be included in the sale of a business, separating business assets from personal assets in a sole proprietorship can be challenging.

Have a Professional Do Your Business Valuation

Although you can do your own business valuation, consulting an experienced professional is a must to ensure the number you put on your company is accurate. Our business lawyers in West Chester can offer valuable legal advice and help you get the most for your money whether you are buying or selling a business.

This blog was originally posted at https://carosella.com/blog/how-does-business-valuation-work-heres-what-you-need-to-know/

How To Confirm Ownership Of A Deceased Parent's Estate

Finding out that a parent has passed away is difficult, even if your relationship was strained or nonexistent. If your parent died and you have not been in recent contact with them, it can be challenging to locate all their assets and determine ownership. Probate and estate lawyers handle these types of matters frequently. If you are dealing with a deceased parent’s estate and need help confirming ownership of assets, hiring an attorney can ease the frustration you may be feeling and make the process more expedient.

Attempt to Locate a Will

Even if you do not think your parent had a will, one of the first steps to take is to try and find one. A valid will may be able to tell you much of what you need to know about the ownership of your parent’s estate. If your parent created a will, they most likely would have used an attorney from an estate planning law firm, which may have a copy of it. If you have access to your parent’s home or belongings, go through them to look for a will. If you find one and you were included as a beneficiary, the executor of the will should have contacted you and notified you of any inheritance. If necessary, you may be able to contest the will, depending on whether the probate and estate settlement process is completed.

Do Some Investigating

Regardless of whether you find a will, if you know who your parent’s attorney was, contact them to find out if they have any information about the estate and ownership of assets. You can also contact the probate court in which the estate was settled to find out which assets went through probate and who acted as the executor or personal representative. You may want to search public records of ownership, such as the county recorder’s office in the area to find deeds that were recorded for any real estate your parent may have owned.

Contact an Attorney

If it all seems too overwhelming, a family wills and trusts lawyer can do the investigating for you. Make sure to give your attorney everything you have related to your parent’s assets or estate, including the will, tax returns, account statements, any deeds or titles to property, and other financial information. There are different types of searches your lawyer can do to find vehicles, businesses, life insurance policies, annuities, retirement accounts and benefits, abandoned assets, and other assets that may be part of your parent’s estate. Your lawyer may work with a real estate attorney to search for any property your parent may have owned.

Laws of Intestacy

It is important to keep in mind that if you cannot find a will, the laws of intestacy of your state or commonwealth will apply to any assets your deceased parent-owned solely. If your parent has a living spouse, most of their assets will likely go to them. If your parent was not married or their spouse is deceased, any estate assets you find will be distributed equally among your deceased parent’s children. Even if you are able to locate and determine ownership of assets, if your parent’s estate was already settled and distributed, court litigation may be required to recover any share of assets you believe may be your rightful inheritance.

Do you need assistance with estate planning, probate or other legal matters? The experienced legal team at Carosella & Associates can help.

This blog was originally posted at https://carosella.com/blog/how-to-confirm-ownership-of-a-deceased-parents-estate/

Critical Estate Planning Documents You Need to Update After Remarriage

Whether it is due to divorce or a spouse passing away, many people end up in multiple marriages, often later in life. Having a blended family can come with challenges that may continue after you are gone. If you are getting remarried, it is important to make sure you update your estate plan to reflect your wishes and protect everyone’s interests. An estate law attorney can help you figure out which areas of your estate plan need to be changed and assist you with updating important documents.

Discuss Estate Planning with Your Spouse

It is critical for both spouses to change their wills when they remarry. If you have children the situation may be complex, so it is important to take certain things into account before creating a new will. It is a good idea for you and your fiancé or spouse to take an inventory of your own assets and debts and discuss how to handle them. Talking about your finances and being open and honest before you take any action can help you save a lot of headaches and help you avoid hurt feelings. Some important things to consider include:

• Life insurance polices
• Retirement accounts
• Investment accounts
• Real estate
• Other assets

You should also discuss what each of you would like to leave to any children you have, your wishes in the event of your incapacitation, and the arrangements you prefer after your passing.

Documents to Update

Once you and your spouse have talked it out, schedule an appointment with an estate planning attorney. Some of the vital documents that should be updated by both spouses include:

• Wills
• Trusts
• Powers of attorney for healthcare and finances
• Advance medical directives
• Beneficiaries on life insurance policies, retirement accounts, pension accounts, annuities, and any other accounts

Trusts and Other Documents

Even if you do not have a lot of assets, you should consider setting up a living trust, especially if you have children. If you have substantial assets, a prenuptial agreement may be a good solution to ensure your children receive the inheritance you intended. Living trusts lawyers can explain the benefits and drawbacks of different types of trusts and which ones may be best for your specific situation.

Special Considerations if You Are Divorced

If you are divorced and your divorce settlement agreement specifically names an ex-spouse as a beneficiary on certain insurance policies or accounts, you may run into problems if you try to change them. In this case, it is essential to speak to a divorce attorney. A lawyer can determine whether the changes you want to make will violate your divorce decree. If you cannot change beneficiaries, purchasing additional life insurance policies and opening new retirement accounts (depending on your age) may be advisable.

Dealing with estate planning after remarriage can be overwhelming. At Carosella & Associates, our divorce attorneys, estate planning lawyers, and wills and trusts attorneys can help you sort it all out and create a plan that works for you and your family.

This blog was originally posted at https://carosella.com/blog/critical-estate-planning-documents-you-need-to-update-after-remarriage/

What Is An Advance Directive?

Being prepared by creating an advance directive can help protect your interests and make it easier for your loved ones to cope in the event that you cannot make medical decisions for yourself. In Pennsylvania, there are two specific documents involved in creating an advance directive. A knowledgeable family wills and trusts lawyer can help you understand the purpose of them and draft an advance directive according to your specifications.

What is Included in an Advance Healthcare Directive?

Advance directives include two documents: a living will and a power of attorney for health care. While each one serves a different purpose, they are both critical if you become incapacitated and can’t make medical decisions for yourself.

Living Will

A living will enables you to state what type of medical care you want in the event of incapacity. Even if you have a spouse, relative, or friend you trust to make decisions for you, if they are unaware of your specific wishes, you may receive life-sustaining measures you may not want if you are in a coma, vegetative state, or incapacitated with no chance of recovery. Some treatments and issues to consider when creating a living will include:

• CPR to revive the heart or breathing
• Feeding tube or intravenous delivery of fluids
• Mechanical respiration
• Whether you want your doctor to withhold treatment that would prolong dying
• Whether you want certain pain relief medications even if they would hasten your death
• Organ and tissue donation

Having to make these decisions for a loved one when you do not know what they want can be heartbreaking, stressful, and cause family conflict. Ensuring you have a living will in place can take a burden off your family’s shoulders at an already difficult time.

Power of Attorney for Health Care

You will name an agent to make these health care and end-of-life decisions for you in a power of attorney for health care. You can appoint almost anyone you want as your agent, except for your physician or a health care provider who is unrelated to you. The person you choose as your agent should be dependable, trustworthy, and willing to stand up and assert your wishes if others protest certain treatment (or lack of treatment). Whether you choose your spouse, adult child, a friend, or another trusted person in your life, your agent should be stable and able to handle these situations in a calm and straightforward manner.

It can be quite challenging to set aside your emotions when creating an advance directive. Working with an estate planning law firm can help you make practical choices about what to include and who may be the best person to make these difficult decisions for you.

If you need assistance with estate planning, creating an advance directive or other legal matters, the experienced probate and estate planning lawyers at our full-service law firm in West Chester can help you make informed decisions and create a plan that benefits you and your family.

This blog was originally posted at https://carosella.com/blog/what-is-an-advance-directive/

Benefits of a Living Trust vs. Power of Attorney for Finances

Knowing the benefits and drawbacks of living trusts and powers of attorney can help you make informed decisions when creating an estate plan. If you are unfamiliar with the estate planning process, it is best to speak with experienced lawyers for wills and trusts who can evaluate your specific situation and help you understand your options.

What is a Living Trust?

Trusts are often an integral part of estate planning. A living trust is a type of trust that is in effect while you are alive. Like any other trust, assets and property in a living trust are administered by a trustee and are distributed to your beneficiaries upon your death. You may name yourself as the trustee so you can maintain control over your assets. You may also choose a successor trustee who will take over management of assets in the trust should you become incapacitated or pass away.

What is a Power of Attorney for Finances?

Power of attorney enables you to appoint a trusted friend or family member to manage all aspects of your finances if you become unable to do so yourself. This agent can pay bills, buy and sell property, manage your bank accounts, real estate, and investments and handle other financial matters on your behalf. Typically, a power of attorney for finances only goes into effect if you become incapacitated.

Differences Between a Living Trust and Power of Attorney for Finances

Both living trusts and powers of attorney are important estate planning tools. The big difference between the two is that you choose which assets go into your living trust. If you die or become incapacitated, the successor trustee may only manage the trust assets, not assets or property outside of the trust. That is why it is vital to transfer all assets you want to put in the trust while you are alive and functional. You can also specify how you would like your assets in the trust to be managed.

A power of attorney for finances gives the named agent the right to manage all of your non-trust assets. This can include social security benefits, retirement accounts, and other investments that aren’t included in the living trust. Generally, a designated agent of a power of attorney has much more freedom to manage all your finances and assets as they see fit. A living trust gives a trustee very little leeway for committing financial abuse, while a power of attorney gives an agent more power to manage all your finances as they see fit.

Other Benefits of Living Trusts

Depending on the circumstances and how your estate plan is set up, a living trust can help your loved ones avoid the often lengthy probate process. A trust may also provide legal protections against creditors and disputes or challenges to your estate. If you choose to include a living trust and power of attorney for finances in your estate plan, lawyers who provide estate planning services recommend that you make the successor trustee and the designated agent of your power of attorney aware of the relationship between the two. Being informed can help them understand what they will need to provide when engaging in certain actions on your behalf.

Do you need help with estate planning? Our full-service law firm in West Chester can help you create a plan that protects your interests and your family.

This blog was originally posted at https://carosella.com/blog/benefits-of-a-living-trust-vs-power-of-attorney-for-finances/

What Are The Different Grounds for Contesting a Will?

When someone is unexpectedly left out of a will, it is natural to question why and wonder whether it truly reflects their loved one’s wishes. Although it is possible to contest a will on several grounds, you cannot challenge it just because you do not agree with its terms. If you are considering contesting a will, an attorney can evaluate your case, explain the probate process to you and advise you of whether or not you have standing and valid grounds to challenge it.

What is Standing?

Before you can even contest a will, you must show that you have the standing to do so. This means you have to prove that you will suffer harm if the estate is divided up according to the last will and testament’s terms. For example, if your mother passes away and leaves you nothing in her will, you may have the standing to contest it because under Pennsylvania’s laws of intestate succession, children of the deceased inherit a considerable portion of an estate when there is no will.

Grounds for Contesting a Will

Once you show that you have standing, you must also demonstrate that you have grounds for contesting the will. Grounds for contesting a will include:

Forgery. If the testator (person who created the will) did not actually sign it, the will is considered invalid. Typically, the person contesting it or their wills and trusts lawyer argues that the signature was forged.

Fraud. If the testator believed they were signing a different document or couldn’t understand what they were signing, the will is not considered valid.

Undue influence. One of the most common grounds for contesting a will, undue influence involves someone who is close to the testator pressuring them to write a will that benefits them significantly. To contest a will on these grounds, you must show that a testator’s intellect was weakened and they were unaware that they were being influenced.

Lack of testamentary capacity. To contest a will for this reason, you must show that the testator lacked the mental competence to do so. Lack of testamentary capacity is not easy to prove. If you are contesting a will for this reason, an experienced estate law attorney can help you understand what type of evidence is needed and how to prove these grounds.

Improper execution. Each state has its own laws for how a last will and testament must be created and signed. According to Pennsylvania law, a last will and testament must be in writing and be signed at the bottom of the document. Although witnesses are usually not required at the time the will is signed, for a will to be validated by Register of Wills after someone’s death, two people must verify that the signature on the will is the true signature of the testator.

If you are considering contesting a loved one’s will, the experienced attorneys at our law firm in West Chester can help you understand your rights and guide you through the process every step of the way.

This blog was originally posted at https://carosella.com/blog/what-are-the-different-grounds-for-contesting-a-will/

Potential Consequences When Probate is Delayed

Many families feel overwhelmed by everything that must be taken care of after a loved one passes, with everything that needs to be done to properly settle their estate. Although there is no set time limit on how long you have to settle an estate in Pennsylvania, probate and estate lawyers can help you get it done in a timely manner and guide you through the process.

What if Probate is Delayed?

When an estate is not probated and closed in a timely manner, there are various repercussions that may have an impact on the estate, including:

• The statute of limitations for creditors’ claims may be extended
• The value of assets may decrease or they may be lost altogether
• The state may claim assets
• The executor or personal representative may face personal or criminal liability
• Intrest and penalties for late filing of Inheritance tax return

Statute of Limitations for Creditors

In Pennsylvania, creditors have one year from the date that notice of the estate is published in local newspapers to pursue any debts of the deceased. Failing to open an estate right away can result in an estate being in limbo or probate dragging on if a creditor shows up to collect a debt months or years later. If you are the executor or personal representative of an estate and find that you do not have the time or emotional energy to probate a will promptly, an attorney for wills and trusts can help take some of the weight off your shoulders and keep the process on track.

Devaluation of Assets

Assets such as real estate and vehicles are often uncared for when the probating of an estate is delayed. Any outstanding mortgage or loan that is left unpaid can lead to foreclosure or repossession by the lender. If a home is neglected and falls into disrepair, its market value can be significantly reduced. The same goes for a vehicle that is left unattended and unused. In addition, investments that are ignored or mismanaged can suffer serious market losses.

Valuable personal possessions may go missing or decrease in value as well. All these issues can lead to beneficiaries receiving much less than they would have if an estate had been probated and settled in a timely manner. In rare cases, when no heirs can be found, a court-appointed administrator may settle the estate and the state may claim its residual value.

Potential Personal and Criminal Liability

Neglecting to file a will or initiate probate is not a criminal offense in Pennsylvania, but consequences can definitely arise due to a delay. Inheritance taxes are due within nine months of a person’s death, and the estate is entitled to receive a 5% discount if they are paid within three months of the death.

If beneficiaries suffer financial losses due to an executor’s inaction or mismanagement of an estate, they can pursue legal action for damages against the executor or personal representative. An executor may be subject to criminal charges if it is proven that they deliberately avoided filing a will or concealed it for financial gain.

If you need assistance with probate or settling an estate, our estate law attorneys can help.

This blog was originally posted at https://carosella.com/blog/potential-consequences-when-probate-is-delayed/