After years of hard work and strategic planning, transitioning a business to a new owner – through sale or transfer to the next generation – marks a significant milestone.
Once the process of transitioning the business is complete, the focus shifts to planning for what lies ahead, which can be a daunting endeavor. The following questions may arise:
- How can I effectively minimize my tax liability throughout the transition?
- What will my cash flow look like once I exit the business?
- How can I ensure that I maintain my desired standard of living?
- What is the optimal strategy to ensure my family achieves its financial goals, considering potential financial market fluctuations and volatility?
- How can I structure my estate to effectively pass to subsequent generations?
Similar to the preparations made for the business transition, planning for the next stage of life requires meticulous attention to detail and thoughtful strategies.
Creating a Comprehensive Post-Transition Financial Plan
Building a strong financial plan extends far beyond the assets acquired after exiting your business. It requires a holistic approach that encompasses your goals, values, lifestyle, and individual needs. By considering all of these factors together, rather than addressing them in isolation, you can develop a long-term strategy that increases the likelihood of achieving what truly matters to you.
Your plan should include:
- Lifelong Objectives: Identify your long-term goals, including retirement plans, philanthropic endeavors, and inheritance objectives.
- Cash Flow and Liquidity: Ensure the availability of sufficient cash flows and liquidity to fund your objectives.
- Risk-Adjusted Returns: Set appropriate expectations for investment returns while effectively minimizing risks.
- Value-Based Investing: Align your investment decisions with your personal values.
To develop this plan, close collaboration with trusted professionals is essential. Working closely with a CPA, financial advisor, and estate planning attorney ensures all aspects are well-coordinated and optimized for your unique needs.
Planning for Retirement
A critical component of your post-transition financial plan involves securing your financial well-being throughout your lifetime. While the specifics vary for each individual or couple based on their expected longevity, it is encouraged to design a strategy that can endure until age 95 or even 100, considering potential advancements in medical care.
Personal visions for lifelong goals and expenses differ significantly, making it essential to collaborate with an advisor who can create a customized plan tailored to your desires. Establishing an advisor relationship early allows for a diversified investment strategy that aligns with your unique requirements for income generation and effective wealth growth while maintaining a level of risk that aligns with your family's comfort level.
Estate Planning, Philanthropic Goals, & Intergenerational Wealth Transfer
More than any other component, estate planning requires a collaborative effort between your estate planning attorney, accountant, and financial advisor. By involving each of these professionals, you can develop a thoughtful strategy that fulfills your philanthropic objectives, creates a lasting legacy for future generations, and considers the legal, tax, and financial implications.
Key considerations may include:
- Accurately estimating the value of your estate to inform the most effective and tax-efficient estate plan.
- Preparing the necessary documentation for creating, funding, and maintaining legal entities and trusts.
- Identifying a charitable strategy that is aligned with your values.
- Optimizing tax benefits based on the estate plan and charitable strategy.
- Filing accurate and timely filed tax returns with governmental entities consistent with your estate plan.
- Planning for the payment of any transfer taxes (such as federal estate or gift taxes) or state level transfer taxes.
- Determining the needs of loved ones.
This phase of estate and financial planning is often emotionally charged, as it involves turning a lifetime of hard work into a sustainable positive impact for your family and community. By aligning your estate plan with your values and long-term goals, you can create a legacy that resonates with your aspirations and leaves a meaningful imprint on the people and causes you hold dear.
Investment strategies are often considered early on during a transition, but their real importance becomes apparent in your broader wealth management plan. Once you have worked with your financial advisor to fully understand your life goals, investment portfolios can be thoughtfully constructed.
Remember, your financial success hinges on having a well-crafted investment strategy that adapts to changing circumstances and maintains focus on your long-term objectives. By working with professionals, you can navigate the complexities of investment management with confidence, ensuring that your financial resources are strategically deployed to secure a prosperous future for you and your family.
Plan for Life’s Journey & Leave a Lasting Legacy
A wealth plan is about more than just money. It’s the blueprint for how you will make some of the most significant choices in your life – from when to sell your business to how you want your assets to be maintained, passed down, and used to achieve your personal objectives.
At Eide Bailly, we help you create a clear, concise plan so you can obtain your financial, personal, and charitable objectives. Our goal is simple: We want to help you achieve your dreams.
Learn more about Eide Bailly’s transition planning services for family-owned businesses here.
DISCLAIMER: Investment Advisory Services offered through Eide Bailly Advisors, LLC, a Registered Investment Advisor. Insurance products are offered or issued under Eide Bailly Agency, LLC. Eide Bailly Advisors, LLC employees may also be licensed as insurance agents/producers of Eide Bailly Agency, LLC. Eide Bailly Advisors, LLC. and Eide Bailly Agency, LLC, are wholly owned and operated under Eide Bailly LLP. Not all products and services are available in all states.
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