Tag: finance

Should an Employee who was not issued with an Employment letter give a written Notice to Resign?

Posted on by admin in Capital, entrepreneurship, investment advisory, Personal Finance, rule of law, Small Businesses, strategy, succession, transaction advisory, Uncategorized, wealth

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Amaka started working as an analyst in a commodities brokerage located in Victoria Island. Shortly before her employment, the Human Resources manager had resigned due to a dispute with the senior management. Due to this state of affairs, Amaka was not issued with an employment letter by the company and this state of affairs continued unremedied for the next year as the company searched for another Human Resources manager.

Amaka being a hard worker, was not bothered by the non-issuance of an employment letter, believing that she would prove her worth to the company over time. Moreover, she had been jobless for 2 years after the completion of her national youth service, and she was not going to let a simple matter as the non issuance of an employment letter prevent her from enjoying the fruits of such a juicy job.

Fast forward, and Amaka had worked punishing hours  for 3 years under a continuously tense environment worsened by her nasty boss who had been pursuing a vendetta against her for not accepting his lascivious overtures. He had promised to ruin her career and make life difficult for her whilst she remained under his employment. Despite consistently delivering stellar work, she was repeatedly given low grades during performance appraisals and consequently denied promotions. Amaka felt like a slave and was treated almost like one.

A few months later, Amaka received an offer from another investment bank, with considerably better terms of service and benefits. She promptly turned in her 2 weeks notice of resignation and patiently waited for  her salary at the end of the month. On the 30th day of the month, she received a letter from the Managing Director informing her that her resignation had been rejected on the grounds that it was company policy that employees were to give 1 (One) clear month’s notice or forfeit their monthly salary in lieu of notice. The letter was delivered by her boss with a malicious smirk on his toad-like face.

Amaka was incensed!!! This was a travesty, and she was not going to allow it. She promptly sought out legal advice on her options against the company.

The position of the law is that an employee has the right to resign with immediate effect, and the rejection of his resignation is tantamount to forced labour, and also against the time-honoured labour law principle that an employer cannot force himself on an unwilling employee. Employees are considered to have given notice of their intention to resign if they unambiguously inform their employers that they will terminate the contract on a certain date.

Furthermore, the Labour Act states that an employer must give an employee a written contract within 3 months of the commencement of the employment. The Labour Act also makes it unlawful for an employer to deduct the salary of employee by way of penalty, except in situations where the employer suffers a loss as a result of the misconduct of the employee.

From the facts  there was a failure of Amaka’s employers to provide her with an employment agreement stipulating the terms of her employment, including the process for terminating the employment relationship. The necessary conclusion is that the attempt by the company to withhold her salary on the grounds of non-adherence to company policy falls flat on the failure of the company to comply with the provisions of the Labour Act. The absence of an express requirement for 1 month notice implies that the employment relationship could be terminated at will. Consequently Amaka’s resignation is valid at law, and she can enforce her right to the withheld salary against the company by a suit at the National industrial Court.

 

 

 

 

 

 

 

Investing in Renovating and Selling homes

Posted on by admin in Capital, corporate finance, Development, estate planning, International Investment, investment advisory, Personal Finance, real estate, Small Businesses, strategy, succession, transaction advisory, Uncategorized, upscale, wealth

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Balogun is  a banker approaching his 55th birthday. After a 30 year career as a banker, and seeing several people make their fortunes in real estate, he has decided to become a real estate investor.

His plan is to invest in underpriced property, with the objective of renovating the buildings and selling the individual units at a higher value than the amount at which he purchased the property.  Balogun is interested in understanding the risks and opportunities of this business and he comes to us for advice.

Some things to note:

  • Using this strategy, you purchase a building that needs fixing up for N2,750,000 and then you invest N500,000 in improvements (paint, landscaping, appliances, decorator items, and so on) and you also invest the amount of sweat equity that suits your skills and wallet. You now have one of the nicer homes in the neighborhood, and 2 years later you can sell this home for a net price of N4,000,000 after your transaction costs.

 

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  • Be sure to buy a home in need of that special TLC in a great neighborhood. With most properties, the long-term appreciation is what drives your returns. Consider keeping homes you buy and improve as long-term investment properties.
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  • This strategy is clearly not for everyone interested in making money from real estate investments. It is not advisable if you’re unwilling or reluctant to live through redecorating, minor remodeling, or major construction;
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  • You may not be experienced or comfortable enough with identifying undervalued property and improving it; so always make sure you get a professional opinion on each property .
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  • You should either have the budget to hire a professional contractor to do the work, or you should have the free time or the home improvement skills needed to enhance the value of a home.
  • You also need a financial cushion to withstand a significant downturn in your local real estate market, as this investment can be very cost intensive.
  • Mange your risks as much as possible!!! Make sure you do deep due diligence on the property in order to ensure that you have good title to transfer to a third party, especially since it may not make financial sense to perfect your title if you are not going to hold the property for a long period.

 

 

Why Lawyers Make Good Early-Stage Startup Hires

Posted on by admin in Compliance, Corporate Governance, entrepreneurship, International Investment, investment advisory, mergers and acquisitions, real estate, rule of law, Small Businesses, strategy, transaction advisory, Uncategorized, upscale, wealth

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By Daniel Doktori and Sarah Reed (culled From hbr.org)

It’s a startup shibboleth that entrepreneurship and formal education don’t mix. For icons such as Mark Zuckerberg and Bill Gates, so goes the lore, finishing a bachelor’s degree would have only stifled the creativity that fueled their companies to stratospheric success. PayPal founder Peter Thiel offers a $100,000 fellowship to “young people who want to build new things instead of sitting in a classroom.” Graduate degrees are thought to merely exacerbate the problem of too much thinking, too little doing. And while high-profile efforts by top business schools to teach and promote entrepreneurship have lessened the stigma around the MBA, the law degree continues to occupy a unique place of villainy among the startup set. After all, YouTube, Uber, and Airbnb, among many others, were founded on ideas that challenged, if not broke, laws and regulations. When it comes to a tech startup, lawyers are a bug, not a feature. Right?

Maybe not. Lawyers can add value in the obvious ways, helping to avoid early mistakes like issuing stock too late in the game, when the company has grown in value and the employees can no longer take advantage of favorable tax treatment. But more importantly, a lawyer on the early team can contribute to a thriving company culture by asking the right questions at the right times, providing perspective on crucial transactions, and getting smart fast on issues where the rest of the team lacks expertise.

Lawyers help startups deal with common transactions and avoid costly mistakes.

Issuing equity to the early team often triggers time-sensitive filings with the IRS. Successfully commercializing a product depends upon clean and clear lines of intellectual property ownership. Raising outside financing requires compliance with complex securities laws. A misstep on any of these items could mean an early exit for a startup company (and not the good kind). A corporate lawyer with a few years of relevant training can help navigate these and other common set-up requirements.

Moreover, lawyers, particularly corporate transactional lawyers, have repeated exposure to the types of deals — and the associated risks — that a startup will face. The dynamics between a CEO and the investors on her board are a function of the legal arrangements articulated in the financing agreements. The relationship between a company and its customers stems from a license agreement governing how users may interact with a product. Partnering with a larger company in a similar industry can, in the best case, open new markets or, in the worst, box a company into a corner, severely limiting options for growth and eventual acquisition. Lawyers understand these transactions and the perspectives of the negotiators involved.

And when the complexity of the particular deal exceeds the expertise of the lawyer on the team, she can play the savvy procurer of legal services, knowing how to target efforts and limit costs. Such experience comes in handy in managing other third-party service providers such as bankers, accountants, and consultants.

While these benefits are valuable, however, they don’t in and of themselves justify a startup hiring a full-time in-house lawyer. Early stage companies — at least those with founders sufficiently experienced or savvy to recognize that they walk a road pitted with legal potholes — tend to manage such standard risks by hiring outside counsel. And while the costs associated with that outside attorney often rank among the highest in a startup’s budget, they do not typically rise to the level of a full-time annual salary. To justify her presence among the first dozen employees, a lawyer must add something beyond legal knowledge to the equation.

Lawyers are trained to ask the right questions at the right times.

Counterintuitively, lawyers can add the strategic absence of knowledge. President Harry Truman famously longed for a “one-handed economist” when presented with the equivocating analysis of his advisers, but executives in politics and business need to understand opposing viewpoints in order to make informed decisions. Legal education and training includes a strong emphasis on questioning assumptions and probing for further information.

Rather than crippling the company through risk aversion and overanalysis, however, having a lawyer on the early team contributes to a data-driven, analytic culture of thoughtful decision making. Further, lawyers are trained as advisers and service providers. They can ask questions, explore options, and execute on answers, but they don’t expect to make the final call. This comfort with playing a supporting role helps avoid the egocentrism that can cripple any organization, particularly a nascent one.

The lawyer’s craft sometimes can be boiled down to a willingness to immerse herself within the “fine print,” offering to read what no one else will on account of complexity, length, or sheer dryness. Trained to ensure that even simple advice is backed by evidence, lawyers read closely to the point of comprehension as a matter of professional responsibility. Such a skill enables a lawyer to take responsibility for a wider variety of important matters. Fledgling startups inevitably have to rely on analysis over experience. Lawyers fit well in such situations.

Not every lawyer is well suited for the gig, however. A lawyer with the qualifications outlined above needs a tolerance for risk. For one thing, she must be willing to give up her plush office and lucrative salary for a computer station at a long table and compensation in the form of prayers, otherwise known as stock options. Her professional risk tolerance must follow suit. An essential attribute of a business attorney is providing “risk-adjusted” advice, and the level of tolerable risk for a startup generally far exceeds that for a Fortune 500 company. Lawyers at startups need to recognize that a workable answer today is often preferable to the perfect answer tomorrow; hand-wringers need not apply.

But risk tolerance must be accompanied by a stiff spine in situations where the company’s momentum (and the CEO’s vision) hurtles on a collision course with the law or the company’s outstanding commitments. In these cases, a willingness to speak up is one of the many things lawyers can bring to the table.

Daniel Doktori is the Chief of Staff and General Counsel at Credly, a digital credential service provider. He previously represented startup companies at WilmerHale, a law firm.

Sarah Reed is the Chief Operating Officer and General Counsel of MPM Capital, a venture capital firm that invests in early-stage life sciences companies. Previously, she was the general counsel of Charles River Ventures, an early-stage technology venture capital firm.

Managing Creditor Risk through Inter-Creditor Agreements

Posted on by admin in Capital, Development, entrepreneurship, International Investment, investment advisory, real estate, Small Businesses, strategy, transaction advisory, Uncategorized, upscale, wealth

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James is the CEO of  HOC Global Logistics, a company which provides shipping solutions to large organisations. Having become tired of leasing cargo ships from large vessel owners, the company desires to purchase its own ships which they can use and also lease to 3rd parties. James approaches Lakeside Bank for a Term Loan to finance the $50 million transaction.

The Bank after reviewing the loan proposal filed by HOC Logistics, informed James that the transaction was larger than Lakeside bank could comfortable handle. However they are able to loan him $20 million on the security of the purchased ship. James accepts the terms and applies for loans from Cityscape Capital Ltd , HSCB, Shanghai Bank  and Union Finance Ltd. The individual loans have different terms, interest rates and security interests. The complexity of the transaction is so mind boggling that James sets up an appointment with his Lawyers to advise him on how to manage the relationships between the multiple creditors in such a manner as to enable the company satisfy all its loan liabilities. He is advised to structure and negotiate an intercreditor agreement among the several creditors, thereby ensuring he has a more convenient financing process.

An intercreditor agreement seeks to govern the relationship between a range of creditors providing finance to the same borrower. An intercreditor agreement entered into by senior and junior creditors can be expected to rank the senior and junior security, subordinate the debt of the junior creditors to that of the senior creditors, restrict the junior creditors’ rights of enforcement for a specified standstill period and impose payment freezes on the junior debt in prescribed default situations.

In highly leveraged transactions such as leveraged buyouts and certain acquisition finance transactions, funding may be structured into a number of different tranches of lenders who stipulate slightly different lending terms and interest rates for the funds they advance. Senior lenders and mezzanine lenders usually take security over the assets of the borrower, over shares acquired and over the target group’s assets. In addition, guarantees will be given by the borrower and may also be given by the target group.

The senior creditors tend to have a stronger negotiating position than do the junior creditors, so it is usual practice for the senior bank lenders and mezzanine lenders to appoint a single security agent (or security trustee) to hold the security package on trust for the benefit of all the secured creditors. The intercreditor agreement contains provisions dealing with enforcement of the security, usually requiring the junior creditors (the mezzanine lenders) to desist from enforcement for the standstill period so as to leave the way clear for the senior creditors (the senior lenders and any hedge counterparties) to instruct the security agent as to when and how to enforce their right to the secured assets.

 

How can you transfer your music copyrights?

Posted on by admin in corporate finance, entertainment, entrepreneurship, International Investment, investment advisory, Personal Finance, real estate, rule of law, Uncategorized

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Wale is a music producer. Recently he composed music for a hit track which enjoyed substantial airplay for over 6 months. Consequent upon the success of his track, he was approached by an international music corporation, who requested him to transfer his copyright in the music to the company in return for a one off payment of $200,000 and royalties capped at 5% of  global sales for the next 2 years. They assured him that he would enjoy more concert appearances with the allied revenue streams. Wale is confused and requires advice on his legal rights.

Of all the forms of copyright protected works, music is perhaps the most restricted and licensed. Since music was first broadcast on radio, a vast mechanism for licensing music has emerged from the opposing forces of the recording industry and the radio and TV broadcasting industries.

Copyright ownership can be transferred like any other form of property. Copyright is transmissible by assignment, by testamentary disposition, operation of law, as personal or moveable property. however, to give legal effect to that transmission there must be a written agreement signed by the assignor. Any grant by the copyright owner binds every successor in title except a bona-fide purchaser for value without notice (actual or constructive).

This doesn’t however mean that a copyright cannot be transferred verbally, as it is trite law that a verbal agreement to which both parties have agreed all the terms (i.e. has reached completion) is legally binding. It follows then that a verbal agreement to assign, provided there is no dispute as to the terms of the assignment between the assignor and assignee, is valid and copyright is transmissible by operation of basic contract. It is however advisable that the parties sign a confirmatory assignment agreement which refers retrospectively to the earlier assignment.

The transfer could be partial or total, where the rights owner can transfer all of the exclusive rights his or her grants. In partial assignment, a music author may transfer his reproduction, translation and adaptation rights to a publisher. He may also decide to split his rights between different persons.

Copyright assignment agreements can be limited in terms of duration or territory. The author of a literary work could, for example, assign their right to reproduce it in the UK, Nigeria, Ghana and the Gambia for 4 years.

Copyright assignment agreements can be reversionary, in other words, the rights can revert back to the assignor on the occurrence of an uncertain event, such as an unremedied breach of contract. This protects the assignor from the loss of their rights in the event of the occurrence of certain events which may be vitiate the transfer contract.

The transfer of copyrights contains some knotty issues, which could become highly problematic if not properly managed. When faced with a decision on copyrights, it is best that you seek advice from a qualified legal practitioner, so as to ensure that you take the best steps in the circumstances.

Milton & Cross Solicitors provides advice to entertainers, rights owners, rights administrators and merchandisers. We help them make informed decisions that facilitate high value transactions. Contact us for a free consultation.

10 Reasons to Have an Employee Handbook

Posted on by admin in Capital, Corporate Governance, entrepreneurship, leadership, Small Businesses, strategy, transaction advisory, Uncategorized, upscale

Jacob runs a travel agency which caters primarily to individuals seeking overseas admission. After running the company  alone for a few months, Jacob hired Lucia to work in an administrative support role. A few months down the line, Jacob feels frustrated because Lucia has not been performing to his expectations. He periodically tries to tell her where she is going wrong, but she usually perceives his attempts as being overly critical and reacts defensively.

Jacob is confused. he is unwilling to fire Lucia, but he feels she is either incompetent or unable to understand his expectations of her. Lucia in turn feels stressed because Jacob has neither expressed his expectations of her, nor is there any handbook or documentation that could give her insight into his expectations. Jacob seeks legal advice on the way forward.

An Employee handbook provides the organisation with the following benefits.

Introduces employees to your culture, mission and values

Perhaps the most important aspect of your employee handbook is the introduction of new employees to your corporate culture. This helps to foster a sense of pride and belonging, which studies show will help employees become more productive in a shorter period of time.

Communicates to employees what is expected of them

A well-written handbook provides employees with a clear understanding of their responsibilities. The handbook also serves as a compass for the organization’s policies and procedures. For example, it advises employees what the procedures are for requesting time off or a vacation. It advises employees whom they should contact when they have an unscheduled absence (and what the timing should be). It tells employees whom to go to if they have questions about any of the specific policies in the handbook.

The handbook also communicates an employee’s general responsibilities regarding safety, timekeeping and reporting. By providing clear, accessible information, handbooks ensure companies continue moving in the right direction.

Educates employees about what they can expect from management and leadership

An employee handbook provides objectives and leadership styles, as well as management best practices, to foster healthy management-employee relationships. It also outlines logistics, such as timekeeping requirements, hours of work and pay periods.These clearly communicated policies help to eliminate confusion and inconsistencies that result when handbooks are silent on these topics.

Helps ensure key company policies are clearly and consistently communicated

No policy is effective if it is practiced inconsistently. A handbook will accurately communicate your organization’s policies regarding employment, conduct and behavior, compensation and other policies and procedures you follow. Most importantly, managers can refer to the handbook when answering questions or making decisions regarding your policies and ensure their answers and actions are consistent with your policies and best practices.

Showcases the benefits you offer

Does your organization offer vacations, investment plan, health insurance, paid parental leave or other benefits to employees? Make sure they know about these policies and the eligibility requirements by communicating them in the handbook. A robust benefits package can help you retain your best and brightest employees, so be sure they know about your full suite of offerings by communicating these in the handbook.

Ensures compliance with federal and state laws

No matter what state or country you do business in, or how many employees you have, you will be subject to state and federal employment laws. Your handbook not only communicates these various entitlements and obligations to employees, but is useful in demonstrating that your organization strives to be compliant with these regulations. you  will want to be sure they understand their rights and obligations .

Helps defend against employee claims

Employers should consider it a matter of when, and not if, they will face a lawsuit or similar challenge from a current or former employee. When this happens, one of the most useful documents you can provide your attorney will be a copy of your handbook.

A thorough and compliant employee handbook will help to show that the organization exercised “reasonable care” towards its employees. The employee’s signed acknowledgement page will show that the employee had an opportunity to familiarize themselves with the organization’s policies, a chance to ask related questions, knew whom they could turn to for help within the organization, and agreed to follow the terms and conditions of employment set forth by the organization.

Lets employees know where to turn for help

Ultimately, you want employees to feel comfortable turning to a trusted member of management for help when they want to report workplace violations, obtain workplace-related assistance and get answers to any other questions they may have.When a handbook not only outlines one or two management individuals for an employee to turn to in these situations, but also designates another individual to turn to in the event the employee disagrees with the first decision, they are more likely to keep their complaints in-house, and this is a good thing for employers.

 

 

 

 

ARE SALARY DEDUCTIONS LAWFUL?

Posted on by admin in Capital, Compliance, Corporate Governance, entrepreneurship, investment advisory, Personal Finance, rule of law, Uncategorized, upscale, wealth

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Donald owns a golf course business run through a company called Great Ltd. The business is performing poorly and there are significantly fewer customers than last year. Donald takes the view that this is the fault of his employees. He decides he will ‘make the business great again’ by firing staff or deducting their salaries.

Donald has never liked one particular employee called Bernard. As Bernard is doing his usual maintenance work on the golf course, Donald walks up and asks him aggressively why he is not working faster. Before he can answer, Donald states that he is going to deduct 20% of Bernard’s salary!!!

Fast forward to the end of the month, Bernard receives his pay check and notices that indeed 20% had been deducted from his salary, after taxes! he was so infuriated and reported the matter to this line manager, who after giving him the runaround, informed him that the order to deduct his salary came directly from Donald. Understanding that he can achieve no objective by working with the company hierarchy, Bernard seeks legal advice on his options.

As a general rule, Under the Labour Act LFN 2004,  all amounts payable to an employee in relation to the performance of work must be paid in legal tender and periodically. It should be noted that the Act does not not govern the amount or periodicity of wages, but merely stipulates that the terms should be reduced into writing by the employer.

There are very specific provisions in the Act regarding the circumstances when an employer can make deductions from an employee’s wage or salary and it is important for employers to understand their obligations.

S.5 (1) of the Labour Act provides that except where expressly permitted by law or where loss or injury has been caused to the employer by the wilful misconduct or neglect of the worker, no employer shall make any deduction or make any agreement or contract with a worker for any deduction from the wages or any other moneys to be paid by the employer to the worker, for or in respect of any fines. This suggests that the use of wage deductions as a punitive or disciplinary measure is to a large extent unlawful.

Allowable deductions include;

  • Pension
  • Personal Income Tax
  • Union contributions, where the worker has accepted in writing to make voluntary contributions to the trade Union
  • Over payment of wages, but only in respect of any such over payment made during the three months immediately preceding the month in which the over payment was discovered.
  • Deductions which have been expressly approved by the worker, e.g Cooperative contributions, judgment debts which have been duly garnished by the judgement creditor or loan payments due to a 3rd party. The written authorisation from the employee must specify the amount of the deduction and may be withdrawn or varied, in writing, by the employee at any time.
  • Deductions for goods or services provided by an employer, or a related party to the employer, to an employee in the ordinary course of the employer’s business, and which are provided on terms and conditions that are the same as, or not more favourable than, to the general public.
  • A deduction which is to recover costs directly incurred by the employer as a result of the employee’s voluntary private use of particular property of the employer, whether the use is authorised or not. e.g cost of items purchased on a corporate credit card for personal use by the employee, cost of personal calls on a company mobile phone

However, it is possible that a situation may arise where the salary of the worker is tied to their work product, in which case, the suspension of an employee’s employment may not be viewed as a salary deduction.

Employers need to be very cautious in effecting payroll deductions,understanding that there is a distinction between a “belief” that there is a right to recover money from an employee, a legal right to recover money from an employee, and the method that the employer can ultimately use to recover any money.

The Law does not simply permit an employer to take the easy option of making a deduction from the employee’s future wages or salary to recovery money which the employee owes the employer.

Further, employers should be cautious in simply seeking to rely on any general deduction wording in their employment contracts.  Despite such contractual wording, an employee’s express written authorisation of a specific amount will still be required, unless the deduction is properly authorised by an industrial instrument, legislation or court order.

In addition, employers are prohibited from requiring employees to spend any part of their payment in relation to the performance of work where the requirement is unreasonable.  Where employees are required to wear a particular brand or type of clothing and are required to purchase that clothing, then that requirement has to be reasonable to be enforceable and not be in breach of the Act.

Employers should seek professional advice if unsure about the lawfulness of a payroll deduction for the employer’s benefit, BEFORE proceeding, as an unlawful deduction may attract a civil penalty under the Act.

 

 

Estate Planning: Preparing for the Future

Posted on by admin in Capital, Compliance, corporate finance, estate planning, investment advisory, Personal Finance, real estate, succession, Uncategorized, wills

Thomas is a sound engineer, he makes a reasonably good income from his job with a prominent record label and he enjoys the benefits that comes from working with some of the biggest stars in the music industry.  Thomas is married to Mimi and they have 4 beautiful kids Kene (15), Ada(13), Chika (10) and Thomas Jnr (8). The kids mean the world to him. Life is good for Thomas and his family, they travel regularly and have properties in choice areas within Lagos, Abuja and Port Harcourt.

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A few months ago, Thomas starts from sleep with severe chest pains, the pain is so intense that he can barely speak. Luckily his wife is able to take him to the hospital where he gets emergency treatment for a heart attack. Whilst he is recovering from his surgery, his wife informs him that his relatives had approached her and requested for a list of all his assets and properties, just in case that he passed away after the heart attack. She also informs him that his cousin attempted to take away one of his motor vehicles in her absence, and was only prevented by the efforts of the security man.

Thomas is incensed, however he is unable to leave his sick bed and even if he was, his doctor would not permit him to leave for fear that the heart attack would happen again. He instructs his wife to call his lawyers. Whilst she is away, he lies back and wonders what could have happened if he had passed away a a result of the heart attack- what would have happened to his family? Who would have provided for his family? He realises that his wife and children would have been thrown into the cold by his extended family and there would have been little remedy for them because he did not have a Will.

When his Lawyer arrives, Thomas asks for advice on the ways in which he can plan the distribution of his assets, so as to provide for his family in the event of his sudden demise and to ensure that his assets would be properly distributed and administered for the benefit of his wife and children. His Lawyer proceeds to explain the elements and benefits of an Estate Plan.

An Estate plan refers to the collection of documents which enables an individual manage his current and future assets in preparation for their death or incapacitation.  Many people mistakenly believe that estate planning is only necessary for the wealthy. In reality, a basic estate plan is essential for everyone, regardless of income or net worth, because we all want to minimize confusion, unnecessary costs, and stress for loved ones after our death.

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Without proper preparation and documentation, assets like houses, retirement plans and savings accounts can end up in limbo for years, sometimes requiring expensive legal assistance to straighten matters out.

Some of the major estate planning tasks include:

  •  Creating a will:

    Wills are easy to create, but they require the distribution of assets to go through probate. Probate is a legal process that involves:

    • Validating or proving a deceased person’s will; 
    • Identifying, inventorying, and appraising the deceased person’s property
    • Paying debts and taxes; 
    • And ultimately distributing the remaining property as the will directs. 

    The probate process often requires a lot of technical paperwork and court appearances, and the resulting legal and court fees are paid from estate property, thus reducing the amount that’s passed on to heirs.

  • Limiting estate taxes by creating Trusts and setting up trust accounts in the name of beneficiaries:A trust can be more expensive to set up and requires professional assistance, but it provides benefits that a will cannot. First, when they’re structured properly, trusts will help avoid guardianship if you become incapacitated. Furthermore,  A will only works after you’ve died; a trust, by contrast, works all the time, including periods of incapacity before death. Trusts usually avoid probate, which helps beneficiaries gain access to assets more quickly as well as save time and court fees. Depending on how it’s structured, a trust may also reduce estate taxes owed and can protect an estate from heirs’ creditors.

  • Establishing a guardian for living dependents:If you fail to appoint guardians in your Will and your children are orphaned before they reach 18, the courts will appoint guardians instead, but they won’t necessarily choose the people that you would have preferred to take care of your children. If when you pass away the other parent of your children survives, the surviving parent will normally continue to have full responsibility for the children. However, if neither parent survives (as in some road accidents) then the guardians you have appointed will take on the responsibility for your children. By appointing guardians you can ensure that your children are looked after by the people that you have chosen as the best people for the job.
  • Naming an executor of the estate to oversee the terms of the will:
  • The executor is responsible for making sure all assets in the will are accounted for, along with transferring these assets to the correct party. He or she also needs to ensure that all the debts of the deceased are paid off, including any taxes. The executor is legally obligated to meet the wishes of the deceased and act in the interest of the deceased. The executor can be almost anyone but is usually a lawyer, accountant or family member, with the only restriction being that he or she must be over the age of 18
  • Creating and updating beneficiaries on plans such as life insurance:
  • Setting up Funeral Arrangements:Funerals can also be paid for using assets from the deceased’s estate; however, the funds may not be available directly, so someone else will have to pay the immediate costs. The arranger of the funeral can pay the expenses and later be reimbursed in full once the estate is settled. Representatives like trust officers and estate attorneys can also pay funeral expenses from funds held in trust or from other available accounts, and later be refunded by the estate.
  • Establishing annual gifting to reduce the taxable estate:
  • Setting up durable power of attorney (POA) to direct other assets and investments

EXECUTION OF BUSINESS IDEAS

Posted on by admin in Capital, corporate finance, Development, International Investment, investment advisory, Personal Finance, transaction advisory, Uncategorized

We all get business or project ideas from time to time, some of these ideas flit around within our minds like moths seeking the light, others run around like puppies seeking expression, and others still pound insistently upon the walls of our minds, giving us no respite until they find expression through our actions.

However, before you go hell for leather chasing each business idea which comes to mind, we have outlined some steps which may aid you in the successful and sustainable executions of your ideas. These tips will also work for the business manager who needs to implement some strategic or operational business objective, as well as the project or team leader tasked with delivering a stated objective.

  • ASSIGN PROJECT LEADERS WHO WILL DRIVE EXECUTION: This especially applies to medium to large businesses, but may be applicable to small businesses as well. Every idea needs to have a key person who is responsible for interacting with stakeholders and driving the execution of the idea and delivering strategic, operational and tactical objectives to project stakeholders in terms with parameters laid down by project stakeholders. That person needs to be empowered to implement strategies required to deliver tasks that will move an idea forward.
  • IDENTIFY AND EVALUATE AVAILABLE AND DESIRED RESOURCES: Capital is an indispensable business input, and to many entrepreneurs, it appears to be sole input required to build a business. However, knowledge base, market intelligence, proper product design and the right team are important aspects of the execution process. The business owner/manager/project leader should evaluate which resources are required to execute their strategic, tactical and operational objectives and identify whether they possess those resources in the appropriate quantities required to achieve their stated objectives.
  • IDENTIFY AND EVALUATE CHALLENGES: The Business owner/ manager/ project leader should strive to identify and evaluate external obstacles (Macro–economic issues, market dynamics, and government regulations) that may impede the successful implementation of the idea. They should also evaluate their internal resources and capacity (financial, operational, legal) to achieve their  objectives  and mitigate or obviate any detected weaknesses during the planning and implementation process. That will ensure that the idea gets properly executed in the face of foreseen or unforeseen resistance.
  • SET SPECIFIC TIMELINES: The problem with many new ventures is that they have to fit in among team members existing job responsibilities. Consequently, procrastination  project delays may arise as more pressing issues and challenges arise within and outside the project environment. To create time pressure for the new venture, the business owner/manager/project leader should define specific deadlines by which actions and tasks have to be executed and supervise the delivery of team objectives in terms of the laid down timelines. In laying down these timelines, the team leader should consider the critical path required to achieve defined objectives at the highest quality, with negative impact on team members or team resources.
  • CREATE A MASTERMIND NETWORK AND BRAINSTORM: As you go about your daily life and business activities, identify and cultivate individuals who possess the requisite knowledge base, technical skills, energy, edge, and entrepreneurial experience that you will need to effectively and efficiently deliver your present and future objectives to work with you and have fun while doing it, as the saying goes, no man is an Island.Your mastermind network can as an advisory board to your business or project.
  • BELIEVE IN YOURSELF: Informed Self-belief is an essential requirement for any business owner/manager or project leader. This requires gathering information sufficient to understand the key elements of the project, the project drivers, the project environment, your internal resources, strengths and weaknesses and how your available and obtainable resources will enable you successfully achieve your objectives.  Provision should also be made for the consequences of your decisions or situations where events that are uncontrollable or unforeseen negatively affect your expected outcomes. Anytime you assume the responsibility to create something that had not existed before an opportunity to become a reality, you become accountable for your actions.
  • ALWAYS HAVE A PLAN ‘B‘ AND BE READY TO START ALL OVER: Although we would always want to believe that all will be well, life sometimes happens. Sometimes, despite your best plans and efforts, your expected may not materialise. In such a situation, you may either take a breather, evaluate your mistakes and do it better, or where the cause of the failure was systemic (e.g a regulatory change, irreversible market evolutions, change in consumer tastes) it may be advisable to know when to cut your losses and jump ship or change your product or marketing strategy to fit the changing market.

Udoka

VALUATION OF VACANT LAND

Posted on by admin in Capital, International Investment, investment advisory, Personal Finance, real estate

 

There has been a boom in the volume of investment in vacant real estate over the past decade;this boom seems to be driven by certain misconceptions which have been fed by advertising campaigns and the mass media. This misconception is that land values appreciate at a rate which exceeds rates of return on alternative investments such as treasury bills, stock or other asset classes. These misconceptions have led to the growth of a speculative bubble which seems to have driven the costs of available real estate beyond reasonable levels whilst creating a surplus of under-developed real estate.
Property for sale. - stock photo

In general, by investing in developing the land you may destroy an option and at the same time you may create other options. Vacant land represents an option of retaining it in its vacant form and expecting an increase in value of the land, or turning the vacant land into a development, thereby increasing its intrinsic potential for value creation through the injection of capital.

 

The valuation of land requires the computation of risk-neutral probabilities that generate expected cash flows corresponding to various project outcomes. The computation of these probabilities requires the calculation of current and future construction costs, current and future market prices of real estate in the area where the land is located.

 

Prior to purchasing land, it is pertinent to have an idea of the use to which the land is to be put, including the proposed structures which are to be constructed upon the land and the market prices or rental values such structures would fetch in the future based on the surrounding properties in the area. In calculating the values of the property, provision should be made for the probability that the property may fall in value in the future.

 

We hope these tips will prove useful to you as you begin to navigate the world of real estate investment. For further information and consultancy, we may be contacted directly on +2348036258312, or by email on : miltoncrosslexng@gmail.com.