San Antonio, TX Estate Planning

Planning Your Business Exit Strategy

You already may have resolved to create and monitor your business plan and develop a succession plan for your business.  The first part of the resolution is fairly easy to achieve.  After all, everyone with a business needs a business plan.  But few of us really consider what would happen to our business – and our families, our employees and their families – if something happens to us.

What will happen to your business when you pass away? If you don't have a business succession plan, you better get on it!

A recent National Law Review article, titled "Five Steps to Business Succession Planning,"lists some simple steps you can take to build a successful exit plan.

Some of these steps include:

Plan Now for Yourself and Your Family. Determine your planned exit strategy, retirement date, and the amount of income and resources you and your family will need after that date. An estate planning attorney can help you in articulating your objectives and creating a strategy to achieve those goals. The original article states that your ultimate goal is financial independence, so that you do not have to depend on the government or other individuals for your well-being.

Determine How to Exit Your Business. If the business is being sold to an outsider, you have settled on a straightforward and hopefully uncontroversial exit plan. But if the business is being transferred within the family, there are other issues. The original article gives an example of the situation in which one of your children is heavily involved in your business to the exclusion of the other children. In that scenario, you might want to even things out by making gifts or bequests of other property to your other kids. If more than one of your kids is involved or if you want to control the behavior of these children, another idea is to transfer your business ownership interest into a trust for the benefit of these kids or for all your children. Drafting these types of trusts and the succession planning relating to the trusts is really complex when you want to keep control of the business until your death or your spouse’s death. Talk to your estate planning attorney and examine potential estate taxes and income taxes when transferring the family business—you do not want your children to be forced to sell to pay the taxes at your death (or during your life in the case of gifts).

Work with your estate planning attorney to create the necessary business succession documents, and remember that it is never too early to start your succession planning!

Read more basic steps about a well-thought-out exit strategy in the original article, and talk to an estate planning attorney about the steps you need to take.

Reference: National Law Review (October 14, 2014) "Five Steps to Business Succession Planning"

Financial Impacts of Elder Abuse

According to the new survey, the most common types of financial loss reported: funds disappearing from accounts (reported by 33%); unauthorized purchase of products or services (reported by 23%).

Are you or anyone you know a victim of elder abuse? With the occurrence of elder abuse largely underreported, there is likely someone you know that could be impacted.

A recent article in USA TODAY, titled "Retirement: Financial abuse costs victims avg. $30,000", reports that 19% of people ages 40 to 64 say they have an older family member or friend who has been the victim of elder financial abuse. This is according to a survey of 2,248 U.S. adults ages 40 and older conducted for Allianz Life. Elder financial abuse is defined as when someone takes advantage of an older person. This can include using their money improperly or without their consent or taking it for personal gain.

The original article estimates that about 52% of elder financial abuse victims report that they were taken advantage of by a family member, a friend, or their caregiver, with 22% saying it was a stranger. Others say it was the work of companies, churches, salesmen and other individuals.

Can you believe that the average amount lost is about $30,000, with 12% report missing over $100,000? Financial abuse can lead to shame and embarrassment on the part of the victims— a reason they tend not to report it, and there is a natural reluctance to report a family member or friend, along with a disbelief that it is happening.

Speak with a qualified elder law attorney to get more information about elder abuse and the answers and care you need.

Reference: USA TODAY (October 15, 2014) "Retirement: Financial abuse costs victims avg. $30,000"

Caring for Your Parents: Where Do You Begin?

There is no one right way to be a caregiver; everyone’s situation is different. You will find that, among a host of things, family dynamics, financial resources and the ability of your parent(s) to provide guidance for the support that they desire will shape your situation.

If you've been tasked to set up care for an aging parent or loved one, where do you even begin? What is the right way to go about this important task?

Luckily a recent PBS article, titled "How to care for your aging parents from a distance," assures us that there is no one right way to be a caregiver, as everyone’s situation is different. Caregiving responsibilities can entail at least information gathering and the coordinator of services.

One step is to ask your parent(s) to provide you with information to locate their important records, phone numbers, email addresses and other essential contact information.  This includes legal documents like a Durable Power of Attorney for Health Care and Durable Power of Attorney for financial matters. These should be created before a health condition makes it impossible.

The original article suggests that to keep things in order, long-distance caregivers will benefit from keeping a Care Notebook. This is a central place to maintain all critical information and can be digital or just a regular old three-ring binder with pocket dividers. Do not forget current info on your parent’s prescriptions. Also, if you hire professional caregivers for your loved one, keep a separate notebook to document medication administration and other basic physical and mental health status information. Instructions to paid caregivers should be in writing.

PBS provides a few other important suggestions, such as: 

Communicate. Whenever possible, include your loved one in the decision making process—especially choices on care and housing. Consider his or her expressed preferences and respect their values, even if they are not yours.

Education. Read up on the available care and services. Every region and location is unique in the types of services that are available, but some are found throughout the U.S.

Take Care of Yourself. Caregiving can be stressful, and you should have a support network for yourself.  Hire help and get other family members involved. Attempting to do it all yourself is not healthy or safe for you or your loved one.

Changing Needs. Remember that your loved one's care needs may change over time, and original article stressed that it is never too early to consider possible future needs. There are many options to be considered; making informed, well-thought-out decisions about your parent’s care are vital, and your elder law attorney can help.

The realization of your new role as a caregiver can be stressful. The good news is that you can contact a qualified elder law attorney to get more information and the answers you need.

Reference: PBS (October 9, 2014) "How to care for your aging parents from a distance"

The Basics of Estate Planning

Are you childfree? Are you planning with an elder parent? Do any of your potential beneficiaries have special needs that must be taken into consideration? Are any of your beneficiaries minors? The first step of planning is to take a moment to consider what makes your situation unique.

Although estate planning has many aspects, it's good to start with the fundamentals.

A recent NASDAQ.com article, titled "Estate Planning Guide 101: A Basic Guide To Establishing Your Estate," gives some basic estate planning instructions that can help get you started.

Outline Your Estate. It is important to outline your current net worth. Forbes describes this equation as:

Net Worth = Assets – Liabilities

 

The original article explains that assets include information detailed in bank statements, investment statements (such as from mutual fund accounts and retirement plans), trust assets and business interests. Also, include personal property and real estate. Liabilities include debts reflected on credit cards, mortgages, tax bills, student loan statements, business loans, and other indebtedness.  Once you account for your living expenses, you can then see what can be passed to your beneficiaries, and whether you should gift during your life.

Name Your Beneficiaries, Divide the Assets. Next you need to decide who will be the recipients of your estate. This can be very personal and needs to be handled with care, as it is this point in the planning process when you need to think about how much of your estate will go to family and how much will go to charity.

Name Your Trustee. Naming your trustee needs to be handled with the same amount of care that you used when divvying up your assets. Selecting the person to be in charge of your affairs is no small decision, the original article cautions. Naming your trustee takes a significant level of trust, responsibility, and foresight.

Hire a Lawyer. As you work through theprocess, engage a qualified estate planning attorney.  Do not leave planning your will or estate for later. Do It Now!  Take the time to speak to your estate planning attorney and map out the details of your legacy now.

Reference: NASDAQ.com (October 15, 2014) "Estate Planning Guide 101: A Basic Guide To Establishing Your Estate"

Lasting Charitable Giving Options

With a little research, a family should be able to find a suitable home for their estate and leave a lasting legacy — whether they are rich, Bill-Gates-rich, or not wealthy at all.

Leaving an ongoing charitable legacy is not just for the wealthy. You do not need to be Bill and Melinda Gates with a foundation that gave away $3.6 billion last year. Foundations offer trustees greater control over investing and distribution of gifts, but they can be expensive to create and maintain, with strict compliance rules.

However, one idea from a recent Timearticle, titled "Give to Charity Like Bill Gates…Without Being Bill Gates," is to amend your trust so that upon your death your funds go to a DAF—a donor-advised fund — a type of investment that manages contributions made by individual donors. With a DAF, you could map out a lasting legacy of continued giving beyond your own life. Also, since there is no organization named in the trust documents, you can change your mind about what charities you want to benefit.

DAFs are a simple and relatively low cost alternative with a built-in advisory board which makes them an ideal instrument for securing a financial legacy. Unlike foundations, there is no cost to create, and there are some tax advantages. The IRS allows greater tax deduction for gifts of cash, stock, or property to a donor-advised fund, compared to a foundation. Foundations must give away 5% of their assets annually; there are no distribution requirements for DAFs.

The original article explains that all DAFs have a board of directors, and many are willing to maintain the gifting goals of a donor after their death and insure that the recipient charities are eligible for annual grants. You have many options, and DAFs come in a variety of shapes and sizes. Independent brokerage firms have their own funds with minimum initial contributions typically as low as $5,000.

You can easily find a suitable home for your estate and leave a lasting legacy with the help of an estate planning attorney. Make an appointment today.

Reference: Time (Oct. 14, 2014) "Give to Charity Like Bill Gates…Without Being Bill Gates"