If you think life∇and death∇in the country is simple, consider the story Harry, my barber, told me recently as he trimmed away at my hair.
Some time back, Harry’s now-deceased brother had given him a pie-shaped piece of property adjacent to my neighbor’s. It was a useless piece of property. Most of it sat in woods between other properties and offered poor drainage for a septic system. Nonetheless, he had kept the deed and property survey in a drawer at his time-frozen barbershop.
Being the good neighbor, I put Harry and my neighbor together to work out a deal because my neighbor was interested in the property. But then an odd thing happened on the way to what was supposed to be a simple sale agreement.
As they worked out a deal, Harry discovered an unsettling reality: He didn’t truly own the property. It seems his long-deceased father had owned it, at least in part, and had never officially turned over his ownership to his son (Harry’s brother). So Harry, with an attorney’s help, had to get permission from his father’s estate, or Harry’s surviving siblings, to transfer ownership. He did that. Now he was ready to deal. Or so he thought.
When Harry and my neighbor tried to close the deal, Harry then found out that the ownership had not, in fact, been transferred to him, but rather to the brother who gave him the property. And now he was deceased. Confused yet? So was Harry, who then had to talk to those who controlled his brother’s estate.
All that confusion over a useless piece of property which, as the now-deceased brother used to say, was more hassle than it was worth. Then again, that’s what usually happens when you introduce death into the wheeling and dealing of your assets, commercial or personal∇and you’re not really prepared for it.
If you think such bewilderment can happen only out in the country, where land means more to some than real teeth, then you haven’t met entrepreneur Phil Young, this month’s cover subject.
Young grew up in his father’s Greensburg-based restaurant-equipment business, Morris Young Co. For years, he and his siblings understood that he would inherit the business when his father died, while his two sisters would get their father’s real-estate holdings. Everything seemed in order, right up until their father died unexpectedly.
Like many business owners, Phil’s father wasn’t prepared for the inevitable. He hadn’t taken into consideration such basics as estate taxes and the fact that his business and real-estate holdings were so intertwined. He used the properties as collateral for business loans.
As a result, Phil inherited an enterprise that almost had to be shut down to pay the taxes∇as well as the estate. Phil persevered and has managed to turn things around∇lessons he discusses in this month’s cover story. But it cost him much time and aggravation, not to mention hundreds of thousands of dollars more than it would have if his father had planned properly.
Certainly, no one likes to think about the fact that, someday, they will die. But if you’re hoping to pass your business on to your children, think about this: Do you really want to put your children through an expensive, time-consuming, bureaucratic hell just because you don’t want to think about the inevitable? Why not pass on an unfettered legacy?
My barber’s father and brother evidently didn’t think about it, either. That’s why he’s still talking about it∇and why the property still sits there, unsold.
