Awareness Series #6|Life Goes On|Succession Planning

5 Aug

The Beatles once sang Ob-la-di, Ob-la-da, Life Goes On…”

This song reminds me that a succession plan for your business after you retire is just as important as deciding what happens to your wealth after you pass.

Life Goes OnSuccession and estate preparation are two important last steps in a solid business and investment strategy.  While sale of the business should benefit us as owners, it also benefits our employees. Estate preparation is a final gift to our heirs because it avoids disputes over how our wealth is to be distributed.

Photo Source: Google Images

When I ran my businesses, I often asked myself how I would eventually sell them? Who would want what I had built?  As this was constantly in the back of my mind,  I occasionally took advantage of some opportunities, more for their long-term potential than for their immediate advantages.  Making strategic partnerships, having capable staff and ensuring that the businesses were healthy increased the probability that buyers would emerge when the time was right for me to move on to other ventures.

We normally don’t get the chance to choose when we will die. We can however, choose when we will plan. For example, writing a will and Power of Attorney, appointing a qualified executor and maximizing tax efficiency is critical.  More importantly, these actions allow us to hand things over in an organized fashion. Our beneficiaries deserve this planning in the same way our employees deserve a succession plan that minimizes disruption and impact.

Taxes are as inevitable as death.  It is important to plan on reducing these as much as legally possible.  For example, having a corporation means the business exists as a separate entity from us.  A holding company that owns the shares, opens up other tax opportunities and may help you build a retirement nest egg.  Ask your corporate lawyer or consult with me to see if experts at Assante can assist with this.

Many people don’t realize the amount of tax that will become due on their estate when they pass – your heirs may be shocked to learn that they may be required to pay up to 50% of the value of the estate in tax.  Organize your affairs well in advance.  If you don’t do this, you are creating more stress for the survivors:  they will pay more in probate fees, and the will may even be contested.  Even worse, if you die without a will, the government will decide who benefits from your estate.

Although we  may not be able to control when we will die, we can control how much tax our heirs have to pay.  Contact me at mheenan@assante.com or 416-939-2000 for advice on estate preparation and what insurance products can be used to cover taxes due on death.

It’s just good advice.