Tuesday, July 31, 2012

The Dilemma of Disinheritance

The motives for cutting a relative out of an estate range from the most primal — hate, abandonment, regret — to the most rational.

Planning what to leave behind to loved ones can be a difficult matter since, even with taxes out of the picture, it means explaining your choices and your hopes. On the other hand, planning to specifically disinherit someone can be even more difficult.

Inheritance and disinheritance are emotionally charged concepts. The motivations that go into disinheritance are especially complex, as discussed in a recent article in The Trust Advisor titled Why Are Family Members Disinherited?.

Teaching point: If you are considering disinheritance, then it also is important to think about what that means, both for yourself and the excluded heir. There are many reasons to disinherit, some more reasonable than others and some worth abandoning upon meditative reflection.

Still, if you must disinherit, then consider explaining your basis for that decision. While it is your choice and right, your legal documents must be clear and withstand (oftentimes) inevitable legal challenge by the affected heir.

If you want to talk in more detail about a disinheritance issue, please contact me.  I’m available to answer questions and to meet with you.

Reference: The Trust Advisor (April 15, 2012) “Why Are Family Members Disinherited?


Thursday, July 12, 2012

Good Preparations create a Graceful Exit

The wealth of many boomers is tied up in businesses they own. And that can be a problem when it comes time to retire. The Wall Street Journal published a very good article on this topic, and my WealthCounsel colleague, Lizette Sundvick, added the below commentary.
If you’re a small business owner, then you probably speak of your business and your life in the same breath. There’s nothing wrong with that. In fact, you are in good company.
All told, your business is one of the biggest challenges and accomplishments in your life. That said, it’s rare that the business is the only fulfilling thing in your life. In addition, do you really want to continue working in and on your business until the day you die, with no retirement or with old-age eventually getting in the way?
With your life and your business so intertwined, it makes it all the more necessary to plan properly.
The Wall Street Journal took up this matter in a recent article titled Preparing to Leave. I recommend this article to your reading list because it both warns of mistakes and offers solutions.
To whet your appetite, here are the “mistakes” identified:
  1. Creating a business that’s too dependent on the owner.
  2. Ignoring the tax benefits of planning ahead.
  3. Incorrectly valuing the business.
  4. Rushing to accept a rich number.
  5. Hiring your brother-in-law to do the deal.
  6. Underestimating the emotional impact of selling a business.
Like those old movie matinees, I am going to leave you pondering the solutions to these “cliffhangers.”
In the end, only you know when to hold’em and ergo when to fold’em when it comes to the continuation of your business. However, don’t delay. You, your loved ones and others dependent on the business will be glad you didn’t.
Any one of these issues is well worth meeting and talking about, so I invite you to call me to set up a meeting.  Let’s make sure you’re prepared to “Exit Gracefully”.
Reference: The Wall Street Journal (April 29, 2012) “Preparing to Leave