indicatorSuccession Planning

A look at estate and business transition planning

By ATB Financial 20 October 2020

Estate and business transition planning are both vital to ensuring peace of mind around your personal and financial affairs, through retirement and well into the future. Still, there are significant differences between the two, making them equally important in the planning process.

Estate planning

Your estate is everything you own, therefore everyone has some form of an estate. It can include things such as properties, your car, investments, life insurance proceeds, family heirlooms or art work. Thus, everyone should have an estate plan to address how you want these assets to be divided and distributed upon your death.

Business transition planning

Business transition planning is ensuring that business owners have a way to successfully exit their business when the time comes. Oftentimes the business is highly dependent on the owner working day to day in the operations so it can be a significant shift for the business to be able to operate without them. An exit from a business can be the result of a chosen retirement plan however all too often it is actually the result of an unforeseen situation such as death or a disability.

Having these detailed plans in place will ensure they are there when you need them most, leaving little to chance and allowing you to create a future of your own design, for both your business, and your future.

Here is a summary of the on-screen text in the video above for your review:

[0:02] What’s the difference between estate planning and business transition planning?

[0:11] Your estate is everything you own:

  • Properties
  • Vehicles
  • Investments
  • Your business life insurance proceeds
  • Family heirlooms
  • Art work

[0:09] What is an estate?

[0:17] Estate planning involves providing instructions on who will receive which of your possessions when you die.

[0:22] The person responsible for distributing those assets according to your wishes is called an executor.

[0:28] Good estate planning should also include

[0:30] Planning for the care of children, if you have them.

[0:33] Strategies to minimize taxes when distributing your assets.

[0:37] Your estate plan consists of three core documents.

[0:39] The will documents who you want to administer your estate as well as who you want to benefit from your estate. The will should be updated after any major life change.

[0:47] The enduring power of attorney is typically only activated only if you lose capacity and are no longer capable of managing your personal property and financial assets.

[0:54] The personal directive gives a person you choose the authority to make healthcare decisions on your behalf if you’re no longer able to.

[1:02] Business transition planning

[1:05] Business transition planning ensures a business owner has a plan to exit the business, well in advance of retirement, an unexpected life event or receiving an unsolicited offer to sell.

[1:10] Why is a business transition plan important?

[1:13] If a business depends on the owner working day to day, there may be a need for:

[1:18] 1. Hiring or training key management personnel in preparation of the owner’s exit. This could include family members.

[1:23] 2. Documenting processes that are in the owner’s head but not officially noted somewhere.

[1:27] 3. Entering into formal agreements with customers and suppliers that depend on relationships with the owner.

[1:33] Did you know?

[1:35] Business owners often have up to 80% of their wealth tied up in the business.

[1:41] A business transition plan also addresses how a business owner can get the wealth they need out of their business in order to fund retirement or the next phase of life.

[1:47] What is the value of the business?

[1:49] To whom should the business be sold? Family, a third party or management — and what are the pros and cons of each?

[1:53] On what timeline ideally would the business owner like to exit and what steps need to occur to make that possible?


Business Transition Guide

Learn the steps you should take to successfully sell and transition out of your business.

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