Personal Wealth and Estate Planning
Business owners are unique in the world of personal wealth and estate planning because their businesses typically represent a significant portion of both their personal net worth and their annual income. If you have children active in your business, your planning is even more complex.
Create a well-balanced plan that addresses:
- protecting personal assets;
- managing wealth both now, and in the future; and
- promoting harmony in the family.
The third question that we hear from many owners: "I can live on a lot less income once I leave the business."
This issue uses a case study to introduce readers to concepts critical to Exit Planning, including the importance of knowing how much an owner will need to enjoy a successful financial future, and what their business will be expected to contribute to that success.
One of the primary decisions every business owner makes when transferring wealth to children is not how to accomplish the transfer, (that’s the estate planner’s job) but how much wealth to transfer to the children.
While there isn’t one right answer, owners who see that the two processes share the same goals begin to appreciate how they can leverage the time and money they spend on their Exit Plans into the design of their estate plans. To help make the choice about where to start, we urge owners to consider two issues: 1) Estate taxes are (currently) easier to avoid than income taxes, and 2) estate planning techniques often involve funding from life insurance proceeds whereas exit planning techniques often involve the owner’s own funds.
This case-study-based issue examines important considerations for any owner thinking about transferring ownership interest to a child active in the business. We examine the issues of Equal vs. Fair, the value of using experienced, unbiased advisors, and offer a framework owners can use to make their own decisions.