We have all come across this concept (or is it a term?) before, but now, let’s take the time to really understand this. Over the next few posts in this series, we’ll take a dive into the indemnification pool (pun intended) and break down the useful definitions and considerations to give you enough to have a conversation and lead you into more in-depth research.

In fact, Indemnification Caps (“Caps”) are essential to both buyers and sellers and draw on expertise from litigators and deal lawyers. Are they worth it? You bet, a botched indemnification negotiation could negate the entire value of the deal you just closed. Is it tricky? As you’ll see, the negotiators have their own language.

Let’s start with a broad definition that we can refer back to throughout the series: What is an Indemnification Cap?

When you form a company you need lots of legal documents in place. But how do you know what you need and when you need it? Look no further! We've created this handy legal document timeline just for startups. And as always, please give us a call at 765.423.7900 if you need help getting any of these documents drafted.

Let me start by saying this isn't our typical blog post. There won't be any complicated legal terms or examples. Instead, we want to take this opportunity to place focus on something our clients encounter all the time: networking.

Now I know what you're thinking, "this isn't related to law." And you're right, it's not exactly; but we're also in the business of advising. We'll do whatever we can to help your company grow, so we often go beyond the boundaries of law. After all, many of our team members own businesses themselves, so we know the value of things like networking.

But enough about us. Let's discuss the importance of networking for you as a business person.

Whether you're the "gifter" or the "giftee", it's no secret you want to make the most of a gift. But Federal Estate Tax Laws can make your ideal gifting process a little hard to navigate, to say the least. In recent years, the tax laws have increased the exemption amount (the amount someone can pass without paying any Federal Estate Tax) to approximately $11.2M per person, while the annual gift tax exclusion has increased to $15,000 per person.

While that's a change in your favor, I think it's important to talk through the implications of a gift versus an inheritance. An inheritance, which is a transfer that occurs upon death of the gifter, results in something called “stepped up basis.”  A gift made during the gifter’s lifetime results in “carryover basis.”

Let's take a look at a real-world example to help make sense of these two ideas:

When a new company's formed, the potential breakup is typically the last thing discussed, because let's face it, it's uncomfortable. Unfortunately, though, it happens often, and it can be quite problematic. Founders might leave the company for greener pastures, new opportunities, or they may simply graduate college and move on. In the world of fast-rising startups, an experienced attorney can save your high-potential ideas from a disappearing cofounder with an understanding of two critical concepts: vesting and the 83(b) election.