The question of who will take over the reins, when the entrepreneurs and business owners of the 1970's and 80's reach retirement age, will be a major concern at every level of American business as we move into the 21st century. So says a survey of CPAs, conducted by the American Institute of Certified Public Accountants (AICPA).
More than 58% of respondents to the survey, which was sent to 4200 CPA/consultants in every area of the country, ranked inadequate succession planning as the biggest threat facing small to mid-sized businesses.*
A new insurance product has come onto the market within the past few years, and it may be one of the most important investments an individual can make. Long-term care insurance is a product that promotes "planning," not "crisis management."
Do you recall the statistic noted earlier in this chapter? Depending upon your age, you are four to seven times more likely to become disabled in any given year, than you are likely to die! Yet there are millions upon millions of life insurance policies existing in this country, and fewer than one million long-term care policies.
Most of us have given only passing thought to the subject of long-term care. Even when we have witnessed a friend or family member suffering through the complications of a long recuperation or rehabilitation, most of us still tell ourselves, "that won't happen to me!"
"I will never need a home care assistant!"
"I will rely on my children to help me!"
"I will stay in my own home, no matter what!"
"I will use government benefits to pay for the nursing home that I choose!"
The truth is that, in any given year, each of us (depending on our age) is four to seven times more likely to become disabled than to die! To put this in perspective, let's look at it this way: for every adult death, there are between four and seven adults the same age, who do not die from their illnesses, injuries or accidents, but become disabled and need some type of special care or rehabilitation.
How do you plan for the ultimate disposition of your business, including ownership and control, after you have passed away? Will it be run by your children, your spouse, valued employees? Will the business be sold to family or to outsiders? Will it fail because you are the glue that holds it together? Will your affairs be tied up in probate court indefinitely, leaving the business poorly supervised and in danger of failing?
The issues of planning the succession of ownership and/or management of your business are complex, and will present a continuing challenge for many years to come. You may feel overwhelmed by the choices you have to make, and because the business planning process is ongoing, your may have to revisit your choices as your life unfolds. Business succession planning is not a one-shot event, but requires your commitment to review and revise. Unless you develop and implement a plan, the law and taxes will act on your behalf, usually to the detriment of your heirs.
There are trusts and then there are trusts - good trusts and bad trusts. Good trusts are part of a process used by legitimate estate planners and their clients to control the disposition of assets, avoid probate, reduce administration costs, save estate taxes, and preserve family wealth for future generations. This article is not about good trusts. It is about bad trusts. There are two main categories of bad trusts: scam trusts and mill trusts.
A revocable Living Trust is a legal container, designed by you to take ownership of most of your assets.
This form will help you begin the estate planning process by identifying areas of special concern to you. You will be better prepared to work with a knowledgeable attorney specialist. Based on your current knowledge of estate planning, check those objectives which are of personal importance to you.
Ask your kids. You may be surprised. Personal property trumps money in most cases.
How "finished" is your personal estate plan when you leave our office, sign your funding documents, participate in your annual review sessions and update your trust as your estate changes and expands? The answer might surprise you!
A family limited partnership is different from any other partnership, because only family members can hold “limited” partnership interests. A limited partner is one who has an ownership interest in a business, but has no formal control over its operation. Limited partners may, as a matter of practice, be engaged in the day-to-day affairs of the business, even serving in management positions, but when it comes to the “last word,” the general partner(s) has exclusive control.
