A successful Business Exit Plan achieves three important owner goals:
A successful Estate Plan achieves three important personal goals:
Once owners see that the two processes share the same goals, they can appreciate how to leverage the time and money they spend developing their Exit Plans into the design of their estate plans.
For example, when owners engage in Exit Planning, they most likely determine their objectives and secure an estimate of value on their businesses before they start working to create greater business value. In securing an estimate of value, owners possess a piece of information that's critical to both their business continuity plans and estate plans.
Thinking of Exit Planning and estate planning in tandem allows you to ask relevant questions to bring your entire picture into focus:
While estate plans can manage these issues, owners must determine whether their estate plans address these issues.
Another goal of The BEI Seven Step Exit Planning Process™ is to protect assets from creditor attack during an owner's lifetime and minimize tax consequences upon a transfer of ownership. You must ask yourself the following: Does my estate plan work to minimize creditor risk for both me and my heirs? It is possible to achieve these goals through both Exit and estate plans.
It is worth repeating that owners must devote the same energy and analysis to lifetime transfers (benefiting themselves) as they do to a transfer occurring at their death (benefiting their families). Since planning exits from both business and life are based on the same premises, it can be relatively easy to develop a consistent outcome.
The following two facts may help you determine which plan to undertake first:
There isn't one categorically correct answer to the "Estate or Exit Planning?" question. In the end, you must act on both fronts, since a failure to act in either case creates lasting problems not only for you but also for your business and family.
We can help you decide which plan to approach first. Contact us today to get started.
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As a reminder, this Blog Post is for informational purposes only and is not intended as legal or tax advice.
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