Business Succession and Estate Planning [Feb 25, 2018]

As the baby boomers, the largest and most influential generation ever, now enter their seventies, death rates, not surprisingly, are climbing.  Our own mortality is something that most of us would rather not think about, and as a result, estate planning and plans for business succession tend to be put on the back burner. Unfortunately, procrastinating does not delay the inevitable, it simply makes it loom larger in the background. For many people, worries over estate planning and business succession can become a major source of stress, and guess what. Stress is a major contributor to the rising death rate.

Procrastination often comes from feeling overwhelmed, and not knowing how to attack a problem. Some of the key questions you will want to think about to begin the process of deciding what to do with your assets upon retirement or death are:

  • What are your retirement goals and objectives, and how will you fund them?
  • Who will take over your business or farm when you are ready to retire?
  • What is likely to happen to your asset when you die? Will it be sold, transferred to your children, transferred to a partner, or will it be liquidated?  If you have a preference, how can you ensure that your wishes are followed? Statistics show that most businesses will not survive to a second generation, often due to insufficient planning.
  • Do you have a current and adequate will in place? If your last will was written before you had children, owned a business, got married or purchased property, it is probably not adequate.
  • In case of a partnership or jointly owned property, do you have a partnership agreement in place which will protect your share for your heirs? Does your agreement address how the partnership will be terminated upon retirement?
  • How will any tax liabilities for your estate be funded? What insurance is in place? Are you even insurable? Most companies have age limits, so procrastination may prevent you from coverage if you wait too long.
  • Do you have a Power of Attorney and Representation Agreement in place, should you become incapacitated?  Most of us believe that we will go out with a bang, but sadly that is no longer the most likely scenario.

They say the two things in life that are guaranteed are death and taxes. Recognizing the inevitability of the former, and working to reduce the latte,r is what estate and succession planning is all about.  It is never too early to put your affairs in order.  You can make changes along the way, as your circumstances change, but starting today will help to protect you and your family in the future.

Lindsey Cox, MBA can be reached at lindseycox [at] coxandcompany {dot} ca