San Antonio, TX Estate Planning

Hot Market for Business Sales

The last big M&A wave happened in the early 2000s, according to Ward. A very active M&A period is usually accompanied by a lot of debate, both within families, and at the policy level, about the pros and cons of having families or professional investors control businesses.

Your business is likely an inherent part of your life. The decision to part ways with your business is complicated. It can't be easy to hand over your life's work. Nevertheless, there comes a time when it’s worth selling the business and also a time when the market is right. The M&A market is heating up, so is the time right for you too?

The M&A market is fickle, but currently seems to be on an upward swing. A recent article in Forbes reports that this swing seems to be catching even middle market companies. The article has a catchy title, too: “Why More Entrepreneurs Will Get A Phone Call Worth Millions.” 

As a business owner it’s important to think of the business as a business and (again) maybe your life’s work. On the other hand, it is also just as important to think of it as a marketable asset when it comes time to exit. After all, the business is likely to be your greatest asset and the cornerstone to your retirement, in one form or another. In addition, your business likely is part of your legacy to your children, whether as a family business succeeded into or as wealth transferred.

How will you choose to exit and when? How does this fit into your overall plan? Whether you pull the trigger or not, it’s worth watching the M&A market and ensuring that the business is appropriately structured for sale or succession.

Reference: Forbes (May 31, 2014) “Why More Entrepreneurs Will Get A Phone Call Worth Millions”

Retirement Uncertainties

Around 60 percent of those surveyed described themselves as “terrified” of what health care costs could potentially do to their retirement plans. But one thing they did not do was turn to their financial advisors for help with this issue. In fact, a solid majority - 59 percent – of the respondents said that most financial advisors are “not equipped” to discuss retirement health care costs with their clients.

Retirement is an important part of estate planning. The trick is knowing how much you'll need to save. This is no easy task, especially with so many uncertainties in the later years.

As reported in a recent article titled "Overcoming retirement fears" in LifeHealthPro, Legg Mason surveyed 500 affluent investors (those with at least $200,000 in investable assets) and found that 88% were confident that their money would fund their retirement comfortably. Nonetheless, they still had some doubts about retirement. According to the survey, the concerns included:

1. Having a catastrophic event that uses up my retirement funds;

2. Living longer than my retirement funds last; 

3. Government not following up on obligations; 

4. Not saving enough for my retirement; and  

5. Low interest rate environment.

The biggest concern appears to be a devastating illness, which would be the type of “catastrophic event” as mentioned above. Another survey of high-net-worth individuals (defined as those with at least $250,000 in household assets), conducted annually by Nationwide Financial, revealed that roughly 60% of those surveyed described themselves as “terrified” of how future health care costs could potentially impact their retirement plans.

Don't be terrified. Speak with an estate planning attorney and get some peace of mind about the future.

Reference: LifeHealthPro (June 5, 2014) "Overcoming retirement fears"

Time to Review Your Estate Plan?

Sometimes having a plan that isn’t current is worse than not having a plan at all.

Have you checked in on your estate plan recently?

The wrong executors or trustees can wreak havoc on even the best estate plan. Those whom you designate to act for you under either a financial or medical power of attorney also are critical choices. Review the choices in your plan.

This is particularly important if it's been a while since you've reviewed your estate plan. The executor, trustee, and agents are the keys to ensuring your plan is implemented as you intended, as reported in a recent Investing Daily article titled "Knowing When to Update Your Plan." Keep in touch with these individuals, and if you need to make a change, talk with your estate planning attorney.

Major changes in your life are the biggest motivator for a visit to your estate planning attorney. This can include marriage, divorce, the addition of a child, or if children are now adults. A grandchild or changes in your health or the health of a loved one also might necessitate some changes in your plan. A change in net worth or the sale of a business or investment real estate might also alter your strategies.

The original article also asks, "Where are you spending time?" That's because every state has its own laws governing estates, trusts, property ownership, and powers of attorney. Typically the state where you are considered to be a resident or domicile is the state where your estate will be probated—this governs your trusts and financial power of attorney.

A medical power of attorney and related documents must be valid in the state you’re physically in when medical care is needed. Your estate planning attorney should be aware if you moved or are spending more time out of state than you used to (such as a winter or summer home). Discuss this with your attorney, and he or she will determine which state is considered your current legal residence.

Real estate is subject to probate and related laws in the state in which it is located, regardless of where the owner lives. Some other property also might fall under the laws of another state instead of your home state. If you bought property in another state, your estate will have to go through probate in at least two states. There are ways to avoid this expensive situation.

The article suggests that if your plan is more than five years old, you probably should touch base with your estate planning attorney.

Reference: Investing Daily (June 4, 2014) "Knowing When to Update Your Plan"

Letter of Intent - Your Blueprint For Estate Planning

Since for most of us, our children are our foremost priority in life, a Letter of Intent can be a crucial document. And anyone who wants to ensure special care for their children should consider including one with their estate documents; there are no real drawbacks to writing one.

For parents, their children are the most important part of their lives. With that in mind, a Letter of Intent can be a very important document to ensure special care for your children. This estate planning "blueprint" was recently discussed in a LifeHealthPro article titled "Letter of intent: a useful component of an estate plan." Including such a letter as part of your estate documents can prove to be very beneficial.

The article advises that there's no drawback to writing one either. However, there are a few things to keep in mind.

Far from being a “silver bullet” for all of your estate planning “must-haves,” there are some things that a Letter of Intent can't do. For example, a Letter of Intent is really a "blueprint" for other estate planning documents. You can use the Letter of Intent to provide detailed instructions and preferences for the care of your child, and those wishes can then be reflected in your wills or a trust to guarantee that they’re carried out. Financial decisions should be a reflection of your vision of the child's care—not vice versa.

Another thing to note is that the letter can be drafted right now, regardless of where you and your child are in life. "It’s not just that you never know when disaster will strike, although that’s always a good reason to be prepared," the article says. Understanding a child—especially one with special needs—is a lifelong journey. Start the letter now and add to it as the years go on.

Get your child involved, as it is his or her life, and he or she should have a voice. The LifeHealthPro article confirms that the child will appreciate being permitted to be a part of the important decisions about his or her future.

One last thing to remember: this is your opportunity to record everything about your child.A Letter of Intent can do this and more—it can let others know about his or her personality, likes, dislikes, strengths, and weaknesses. This will be critical information for those individuals whom you entrust to potentially have an important role in the care of your child.

Reference: LifeHealthPro (June 3, 2014) "Letter of intent: a useful component of an estate plan"