Phoenix Family Business Law Attorney

Arizona lawyer guides closely held businesses toward success

Family businesses, while they might be simpler to manage than public corporations, have their own unique challenges requiring sage legal advice and effective assistance. Among the various issues faced by these companies include formation terms. succession of ownership and management responsibilities. Though family members might be inclined to work things out informally, it is wise to retain a seasoned Phoenix family business law attorney. At the Law Offices of Donald W. Hudspeth, P.C., we offer high-level advice and advocacy to avert problems that can disrupt operations and fracture relationships. 

Business formation and entity selection for Arizona family companies

Family-owned businesses may take a variety of forms, including:

• Corporations — This common form of business entity has a more formal structure than others, but limits owners’ liability to their investment in the corporation.
• Limited liability companies (LLCs) — These are less formally structured than corporations, but also provide liability protection.
• Partnerships — This is the simplest form of entity, requiring no formal structure, but its highly advised to create a thorough partnership agreement, even when all family members seem on the same page. Traditionally, partners were each liable for business debts and liabilities of the business, regardless of their own fault, but some types of partnerships provide limited liability to some or all partners.

Although corporations, unlike LLCs and partnerships, might pay income taxes separate from their stockholders, there are potential strategies for avoiding double taxation. If you’re at the stage where you’re creating a business in Arizona, we’ll help you determine which type of entity best fits your needs.

Drafting operating agreements and shareholder agreements

Once you decide on a business structure, you will need to draft a partnership, operating or shareholder agreement detailing important aspects of that structure, including ownership interests, voting rights and managerial roles of each person in the company. Another useful provision for protecting the company during ownership changes is a buy-sell provision allowing the surviving stockholders, members or partners to buy out, or otherwise assume, the interests of one who dies, retires or otherwise withdraws from the business. We are experienced at drafting effective agreements tailored to the unique concerns of family members who share control of a company. 

Resolving family business disputes in Phoenix

No matter how well-intentioned the parties are, disputes can arise within a family business. For the sake of the family and the business, the first step is negotiation between the parties or their attorneys. If that fails, parties can turn to mediation, in which a trained neutral party helps the parties reach an agreement. Litigation between family members can be difficult in many ways, you might want to set forth that when negotiations fail to work, conflicts are decided by an arbitrator. 

Succession planning for multi-generational Arizona businesses

A detailed, enforceable business succession plan can often be vital to maintaining continuity through generational change. It can prevent disputes among loved ones when an unexpected vacancy exists due to the death or disability. Early preparation can also help you train younger family members so that they are ready when it is time for them to assume control. You might also want to arrange the transfer of the business in a manner that minimizes estate tax liability. 

Protecting family assets and limited liability

It’s also important to protect the assets of your family-owned business, including real estate, equipment and merchandise from accidental damage or liability. This can be particularly critical in such high-exposure industries as construction and hospitality, which often involve high-value injury claims. Among the means you can use to protect you, your family and your business are comprehensive business insurance and some form of limited liability protection.

Contact a lawyer serving family businesses in and around Phoenix

At the Law Offices of Donald W. Hudspeth P.C., we help Arizonans establish and protect their family businesses. For an appointment, please call 866-696-2033 or contact us online. Our office is in Phoenix.