Estate and Business Succession Planning
Estate planning strategies are an important part of the financial planning process. And it’s not just for those whose estate is of a size to incur an estate tax at death. Insuring that your assets pass to whom, how and when you want while avoiding the cost, delays and publicity of the probate process is integral to the process. Further, estate planning can provide professional management and asset protection for the benefit of your heirs. Functioning as a member of your advisory team, we will coordinate our recommendations with your tax counsel, to include your attorney and CPA.
As part of our process, we will review your:
- wills, trusts, property agreements and health care directives
- property titling and its coordination with your estate planning documents
- life insurance
- relevant gift and income tax returns
Of course, for our clients with taxable estates, we create strategies that are designed to help them reduce the impact of gift, estate and generation skipping transfer taxation. And our focus is not limited to the current generation but rather multiple generations, through a process that seeks to not merely move assets to the next generation but to remove the assets from the transfer tax system. Life insurance may be an important ingredient to help assure the presence of adequate liquidity to pay unavoidable tax.
As part of the planning process and integral to formulating our recommendations, we discuss the family legacy pyramid, ensuring that we mutually understand the implications at each level of wealth before moving to the next. For example, it would be imprudent to focus on insuring the family was “OK” by making wealth transfers, before insuring that you were financially “OK.”
A Model
A model for a wealthy family is to consider transfers during life: reducing “surplus wealth” held in a family trust and moving it into one or more specialized trusts or other vehicles providing tax, management and asset protection advantages. Examples include defective grantor, life insurance and generation skipping trusts, charitable lead and remainder trusts, grantor retained annuity trusts, family limited partnerships, donor advised funds and private foundations. We can even help with family governance. Engaging younger generations of family members in the planning process and on an on-going basis can instill stewardship skills for family assets on behalf of succeeding generations.
For our business owner clients, we offer our extensive expertise to assist them in clarifying their goals and formulating a strategy to optimize business value upon sale to a third party or facilitate a transfer to family members or employees. Strategies such as buy-sell arrangements, corporate recapitalizations, new entity creation, voting trusts, private equity, executive compensation and retention arrangements and employee stock ownership plans are often considered.
Questions to ponder:
- Have you discussed how you will use your wealth to benefit your family?
- Have you discussed how you will use your wealth to benefit society?
- Will your estate plan distribute your assets in accordance with your objectives as to:
- Family ________%
- Charity ________%
- Government/tax ________%
- Have you employed strategies to reduce your estate tax liability, consistent with the above goals?
We can be the catalyst to these conversations as we prepare your financial plan. We will ask questions to elicit constructive thinking, help reconcile differences, and reduce your philosophy and goals to writing. We will create a diagram depicting how your existing estate planning strategies would function. And, of course, we will make recommendations to help align your plan with your objectives.
Quality questions make for quality advice. If you’d like to hear more, contact us at advice@sagemarkpws.com.