As a business owner, it is important to plan for the future of your company. Over the next couple of months, the team at Muncaster Financial Group will be releasing newsletter articles discussing crucial financial planning topics centering around estate planning and succession planning for your business. We have found that many business owners are so entrenched in running the day-to-day operations of their businesses that they haven’t taken the time to properly plan for their company’s future to make sure it can run effectively with or without them.
Estate planning is a crucial step for business owners to ensure that their assets are protected and their wishes are carried out in the event that the owner(s) are no longer able to run their business. A well-thought-out estate plan will not only protect your family but the families of your employees who follow your leadership every day. Here are some of the benefits of estate planning:
- Protecting your family and loved ones: Estate planning allows you to designate who will inherit your assets and how they will be distributed. This can help avoid family disputes and ensure that your loved ones are taken care of.
- Minimizing taxes: Proper estate planning can help minimize estate taxes and other taxes that may be incurred upon your death.
- Continuity of your business: Estate planning can help ensure that your business continues to operate smoothly after your death or incapacity. This can include designating a successor or creating a plan for the sale of the business.
- Privacy: Estate planning can help keep your affairs private and out of the public eye.
Life is full of surprises. It is never too early or too late in the lifecycle of your business to implement an estate plan. When the unexpected happens, you want your loved ones and those you trust in your company to be prepared. Here are some tips to help get started.
Create or Update your Estate Documents. Personally, some of the documents (but not limited to) can include your Wills, Trusts, Durable Power of Attorney, and Medical Power of Attorney. It can also be helpful to review your business-related documents like your Operating Agreement and Buy/Sell Agreements to make sure your wishes are reflected in those documents.
Take Inventory of Your Assets. Regardless of how much you think you have, it is a valuable financial exercise to take an inventory. You can start by looking around your house and/or business–it may be surprising when you tally up the total of your finds! During the process, some things to consider are your primary residence, other properties, the value of your business, machinery and inventory, collectibles, art, coins, vehicles, boats, and any other valuable, tangible possessions.
Next, consider the intangibles. These can include life insurance policies, retirement accounts (IRAs, 401(k)s, 403(b)s, SEP IRAs, pensions, etc.), checking accounts, savings accounts, stocks, bonds, mutual funds, health savings accounts, and more.
Once you have all of these things accounted for, it’s time to put a value on them. You can do so for things like real estate or coin collections by ordering appraisals. At a minimum, do your research so that you can have an approximate value on each asset. By doing so, you can obtain peace of mind knowing that your assets will be distributed according to your wishes.
After you have a complete inventory of your assets, you should make sure that your documents are well-organized and stored securely. These documents include insurance policies, deeds to real estate, titles to vehicles, boats, wills, trusts, bank account information, retirement account information, safety deposit boxes, debt statements, funeral plans, and anything else relevant to your situation.
Beneficiary Designations and Updates. Make sure your beneficiaries are up to date on your financial accounts. These can include brokerage accounts, IRAs, life insurance policies, bank accounts, and more. Consult with your attorney about ways to transfer accounts to your beneficiaries (known as TOD – Transfer on Death) – this could enable funds to skip the probate process. Moreover, updating your beneficiaries will ensure that your assets are distributed to the right people later. While your will may name certain people, be sure that your beneficiaries are updated on your investment accounts to avoid confusion down the road.
Consult with Your Trusted Advisors. Estates come in all different sizes. Regardless of the size of your estate, we suggest that you consult with trusted advisors like an estate attorney, CPA, and Financial Advisor to ensure everything is in place and working together efficiently. Taking these steps can alleviate any doubts you may have about the probate process, taxation, or distribution of your assets. An estate attorney can help you create a plan or determine if your planning is adequate for your circumstances.
Living trusts, your will, revocable trusts, business succession arrangements, inherited properties of minors, and POAs are all additional things that you should discuss with your attorney. If you do not already have a trusted estate planning attorney, we are more than happy to connect you with a firm that may match up well with your current situation.
At Muncaster Financial Group, we specialize in helping business owners create comprehensive estate plans that protect their assets and ensure their wishes are carried out. Feel free to contact us to schedule a consultation and learn more about how estate planning can benefit you and your business.
Disclaimer: This article may be incomplete and is intended for informational purposes only and should not be taken as legal/tax advice or opinion. Muncaster Financial Group provides tax and legal guidance but is not a legal advisor. Consult with an attorney, CPA, and financial advisor for estate planning needs specific to your situation.
Investment Advisory Services are offered through Investment Advisor Representatives of Cambridge Investment Research Advisors, Inc, a Registered Investment Adviser. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of AL, CO, FL, GA, NC, SC, TN, and VA. Cambridge and Muncaster Financial Group are not affiliated.