BUSINESS SUCCESSION and ASSET PROTECTION / PRESERVATION STRATEGIES

Writer’s Website Address:  www.chipbrowder.com

Fax Number (205) 349-1552

 

 

BUSINESS SUCCESSION

and

ASSET PROTECTION / PRESERVATION STRATEGIES

 

Question:   Would you invest up to half of all your assets in an investment that is guaranteed to be a total loss?    Without an adequate, tax-wise estate plan, that may be exactly what you’ve done for your family!

 

I.          Reasons Your Estate Plan May Need Updating:

 

·      You don't have a written Will (but Alabama Legislature has one for you). 

 

·      Present Will executed prior to 1982, or if after '82 yet still not notarized (before enactment of Alabama's self-proving statute permitting simplified probate of Will) or has a 50% marital deduction clause. 

 

·      Newly married, divorced or relatives or other beneficiaries have predeceased you. 

 

·      Named executor/personal representative or trustee has died or your relationship with any of these people has changed. 

 

·      Mental or physical condition of any of these people has substantially changed requiring “special needs” planning considerations.

 

·      You have been blessed with more children or grandchildren; or children or grandchildren have entered or completed college; or, children or grandchildren have moved out of or back into your home, and you wish to make provisions in your Will to account for such events. 

 

·      You recently moved to Alabama, or are planning to move out of state. 

 

·      You have bought or sold a business, or added a partner to your business; or you have bought, sold or mortgaged a significant piece of real estate; or, you have acquired or expect to receive major assets (inheritance, etc.). 

 

·      Your business or financial circumstances have significantly changed.

 

·      Current Will might contain what we refer to as an Upjohn problem if you have made trust provisions for a minor child or grandchild or such a beneficiary still of college-age where the child's parent(s) obtained their own college degree and the individual whom you have named trustee happens to be the parent of that minor beneficiary, or one whom would become legal guardian for that trust beneficiary.

 

Question 2:  Would you jeopardize all you own (“betting the farm”   ---   “putting it all on the line” if the odds of losing everything were 3 out of 10, or even 1 out of 10?      Without an asset protection and preservation plan, that may be exactly what you are doing for your family!

 

Recent Statistics:  While over half of all surveyed business owners affirmed their belief that personal retirement and business succession planning were integral to their future success and, more importantly, for the financial security of their family, two-thirds of those surveyed admitted they did not have a retirement or succession strategy in place.

 

II.        Reasons A Business Owner Might Need an Asset Protection/Preservation Plan Implemented or Updated:

 

·      All your assets are in your name individually, or even jointly (JTROS) with your spouse; or, your spouse has recently passed away and the assets are now back in your name only. 

 

·      You own all your life insurance personally or your company owns a significant portion, even though you have designated your spouse or family as beneficiary. 

 

·      Your retirement account has grown significantly and will pass outright to your spouse or designated family member upon your death and there is a wish to protect those funds from potential future creditors, lawsuits, nursing home, etc. 

 

·      You have not executed a durable power of attorney and healthcare directive, or merely named you spouse as the only individual authorized to manage your business affairs in the event of a debilitating accident or illness (do you frequently travel together, even on short trips?). 

 

·      You have deeded property to your children or other family members; you have added your children to all your bank accounts, CDs, brokerage accounts, and other semi-liquid investments. 

 

·      You do not have a company buy-sell agreement; or, you are in business with your spouse or other close family member without taking such “family dynamics” into account; or, where you have such a succession plan, you have failed to provide an adequate and lawsuit-protected “funding” mechanism to implement that plan. 

 

·      You conduct or hold all your business and/or investment interests in your name personally or through a single entity and you own personally (sole shareholder or LLC member).