Step 01
Succession Planning

Everyone has heard the old saying "There are only two things certain in life: death and taxes." While true, that old saying is incomplete. It fails to mention that some people will be subject to 'Death Taxes.'*

One of the greatest benefits of what we do is help families save money on wealth transfer taxes and pass their money and/or businesses from one generation to the next. No matter how small or how great the tax savings may be, we take great pride in helping our clients hold on to what belongs to them.

Some people believe a person has to be a "multi-millionaire" to have an estate. That is incorrect. Misconceptions about estates are: 1) I don’t have enough money to have an ‘Estate,’ and 2) Life insurance is not calculated in the value of an estate.

Here is something else many people are not aware of: A plan for everyone’s estate already exists. It was created by Uncle Sam. However, instead of accepting the Federal Government’s plan, you can create your own estate plan, maintain full control of your assets while you are alive, and then, transfer your assets after death while incorporating charitable giving, when appropriate.

So, what is an estate? Your estate is the combined total of all of your assets. Assets include: cash, bank accounts, investments, retirement plans, homes, gold and jewelry, home contents, cars, boats, fine art, gun collections, businesses, life insurance, etc. As previously mentioned, when the IRS starts adding up your assets, the death benefit on your life insurance is also included in the estate, depending on how it is titled. Why? Because once you pass away, life insurance immediately turns to cash!

If your assets are over a certain limit and are not titled correctly then you may be subject to Probate. Probate may be avoided by charting your course and implementing your plan. Probate can be time consuming, costly and available to be viewed by the public because Probate is a public process.

If the value of your estate exceeds a certain amount, nine months after you (and your spouse) pass away, payment of the estate tax is due. Which asset do you want your family to liquidate in order to pay the taxes? If money has to be pulled out of a retirement plan, then your family will also have to pay taxes on the IRA distributions! To quickly understand the need for proper estate planning, one only has to examine the estate of the late Elvis Presley. He had a trust; however, it was not ‘funded’ so his assets went through probate. His estate was worth an estimated $10 million before he passed away [the first time]. Due to probate, estate taxes, attorneys, court costs, appraisals and people contesting his estate, Lisa Marie ended up with approximately $3 million! DO NOT let this happen to your family.

A very important subset of estate planning is Business Succession Planning. Do you have the proper documents and plan in place if you become disabled or die? Oftentimes, we see businesses that have its buy/sell agreement in place but do not have the buy/sell agreement funded or updated. How are you going to buy out your business partner if something happens to him/her? Do you want to be in business with your partner’s spouse, who may have very limited knowledge of the business operations? Or, what if you or your partner becomes disabled?

Another major concern when dealing with businesses and business partners is the estate plans of each partner. Does your partner have a trust in place? Is the trust funded to protect the business from Probate?

Do you have key-man insurance in place for your key employees? If something happened to one of these employees, have you considered the affect this loss would have on your business.

These are just some of the Succession Planning issues we address with our clients.

Let my team chart a course for you and your family. We can help you avoid probate and reduce, minimize, or even eliminate your estate taxes! We are here to help protect you and your businesses!

* Certain limits apply based on current law.
  We are not an attorney or CPA, nor do we provide legal or tax advice.

Robert L. Moshman, Esq., The King of Rock & Roll, published in the April 2008 issue of
  The Estate Analyst.

The opinions expressed here are for general information only and are not intended to provide specific advice or recommendation for any individual situation or security. Information is based on sources believed to be reliable, but its accuracy is not guaranteed. Investing involves risk including the potential loss of principal. Neither the information presented nor any opinion expressed herein constitutes an offer to buy or sell any security. The information provided is not intended as tax or legal advice and may not be relied upon as such. Estate planning requires a team of experienced professionals including experts in estate, legal and tax issues. Individuals are encouraged to seek advice from their own tax or legal counsel.