Kansas and Missouri Estate Planning

Does Every Business Owner Need an Exit Strategy?

Long-term business success takes planning.

No business finds a magic formula for success.

Building a business takes hard work.

It takes dedication.

It takes careful planning.

According to a recent The San Antonio Business Journal article titled “Plan your exit even if you never plan to leave your business,” your business will not magically succeed after you die.

You will need to make plans.

Why?

Planning can help minimize taxes.

Whatever your goals for your business, you probably want to keep as much money for your loved ones and yourself as you can.

How can exit planning help?

Let us say your business value increases.

Your estate could benefit from a step-up in basis should your business transfer according to your estate plan.

Creating an estate plan could also help you keep you from owing estate taxes.

By minimizing taxes, you will set your business up better financially after you are gone.

Planning can help protect your values.

You pride yourself in your work culture.

Your work is rooted in your character and your integrity.

You believe in what you do.

You support your community.

You value your employees.

Planning for your business succession can preserve your mission and protect your loyal employees after you are gone.

Planning can help grow your business.

You built your business.

You want to it to grow in value.

What if you hit a ceiling that keeps you from growing?

You will more likely do just that if you simply keep doing what you have always done.

An exit plan can help you focus on building the value of your business.

It will help you recognize the potential in your business and emphasize value drivers.

This will make it more attractive to potential buyers.

It will also allow you to focus on what you enjoy about the business and delegate other tasks to employees.

Exit planning is important to protecting you, your family, your business, and your employees.

Do not put this off.

Your business will not survive on luck or hope.

Reference: The San Antonio Business Journal (October 16, 2018) “Plan your exit even if you never plan to leave your business”

What are Some Key Considerations to a Successful Business Exit?

Helping your business thrive after you leave will take planning.

You started your own business.

You sacrificed to build it from the ground up.

You have nurtured it and grown it.

Now you want to retire.

According to a recent Forbes article titled “Eight Factors To Consider Before Retiring From Your Business,” you need to do some groundwork to set your business up for success.

What does this entail?

Plan ahead.

You likely did this while building your business.

You had to be forward-thinking to be successful.

Business succession is now different, but the same.

You still need to begin with the end in mind, but the end is your eventual exit from your business.

Identify a successor.

Who do you want to take over the business?

Is a relative or an employee?

Either way, you should set them up for success.

Grant more responsibilities and mentor them as they face these new challenges.

Make your business sustainable.

You should design a business to be able to continue to thrive after you leave.

Ideally, you would have designed the business to continue without you way back when you first started your business.

If you did not, do not worry.

There is no time like the present.

Start now to implement an infrastructure that can survive without you.

Prepare an exit strategy.

Your business is your income.

Without panning properly, your income source could be at risk.

Work with a legal and financial team as you create an exit strategy.

Make an educated decision rather than an emotional one.

Keep working after you transfer control.

By staying on a few years, you will set your buyer or successor up for success.

This could help them grow and also structure better buyout terms for you.

Develop systems.

What do these include?

Set up Standard Operating Procedures (SOPs) and Key Performance Indicators (KPIs) for company performance.

You should also clearly define who has the authority to make which decisions.

Clearly organize roles and responsibilities.

By taking these steps, you will be setting your business up for success.

Start now.

Reference: Forbes (August 27, 2018) “Eight Factors To Consider Before Retiring From Your Business”

What Inheritance Problems Can My Father's Remarriage Cause?

Your question touches on a very real and present danger whenever you form a "blended family" in this "Modern Family" era.

The unforeseen legal consequences lurking behind every second or even third marriage can (and do) upset a family's estate planning apple cart, leaving behind disenfranchised and bitter heirs.

This is the warning to the wise in an On Wall Street article titled “Estate planning mishaps: How even the family bible is at stake.”

So, what is an example of a commonly encountered conflict?

Who gets the personal belongings of a deceased parent? After all, how do you prove "title" to personal property which has no "title" by definition?

That is right, there is no title to an heirloom like the family civil war sword.

While your father can "say" the sword should go to you as his eldest child, it can be difficult to prove actual ownership of the sword (especially after your father dies and your stepmother changes the locks on the home they shared).

And what if your stepmother dies a week after your father?

Think you will have fun going through the household contents with your stepsiblings sorting out what is yours and theirs from the personal belongings left behind?

I think not.

Expect your stepsiblings to claim their mother inherited all of the personal property in the house when your father passed.

In fact, do not be surprised when your "family" civil war sword shows up on eBay.

Contrary to popular belief, possession is often 10/10ths of the law, not 9/10ths.

Solution?

Did your father and his then-fiancé sign a premarital agreement before exchanging vows?

This negotiated agreement can set the terms on everything from what happens to each party's assets upon divorce or death.

Retirement funds deserve special attention, however, because rights to ERISA retirement plans (e.g., 401k and profit-sharing) can only be "waived" by a "spouse" to be effective. While your father is yet living, now might be a perfect time to consider a "post-marital agreement" to address issues of mutual concern.

Be mindful when it comes to how state laws can impact inheritances, too.

There are some states that would allow your stepmother to continue living in the home shared with your deceased father. As a result, you may be waiting for some time before receiving your inheritance.

Note to file. This can create an awkward situation if a significant amount your father's wealth is tied up in that very home ... and your stepmother's age is relatively close to your own.

This has been a 30,000 foot look at a few of the landmines created whenever a blended family is formed.

An experienced estate planning attorney can help avoid them.

Having a comprehensive estate plan coordinated with a binding premarital agreement are essential.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: On Wall Street (Sept. 14, 2016) “Estate planning mishaps: How even the family bible is at stake”