A goal without a plan is just a wish.”
~ Antoine de Saint-Exupery
By: Mary Grace Musuneggi
Since I am the parent of one child, it sounds like my Estate Planning should be quite simple. But being the majority shareholder of a closely held family business means it just got more complicated.
If you are a business owner with no children, this should also sound like an easy Estate Planning arrangement; but if you would like to sell that business to add to your Retirement Income, the plan just got more complicated.
And if you have a child who wants to take over ownership of your business, planning could be easy…or seriously complicated if they have no funds, you have other children who want “their share,” or if you are the parent of the “wild child.”
Now the “wild child,” whether you have one child or five children, is not necessarily the one who is irresponsible. It could be that child whose ideas on running your business or handling your finances or using your estate assets are totally counter to yours. It can be that child who went through a divorce, lost a job, or somehow fell on hard times. It can be the child who has health or mental issues. But the fact is, unless you have one child who gets everything and he is as responsible as you, all Estate Planning can be complicated.
I have often seen responsible children feel very disappointed when parents use assets to support the child who is not. Or when I have heard parents say, “Well, Joe and Susan have lots of money and good jobs and a nice life, so we are leaving everything to Karen.” Karen failed out of college, never has been able to keep a good job, and is in debt up to her ears. But as parents, the concern is “if we don’t take care of Karen, who will?” This is understandable. But if Karen has never done well with her own planning, how will she survive on your assets?
All of these questions can be answered with some wise Estate Planning. Business owners can create Buy-Sell agreements; parents can establish trusts; life insurance can be used as a tool to compensate the “other children”; the “wild child” can receive restricted Required Minimum Distributions from IRA’s to limit their ability to spend; or assets can be allocated over a period of time or to provide income only. Parents can bypass the child and provide for education for grandchildren. In any case, these issues can-and should-be planned for.
Estate Planning is not the fun thing we do. Fun is planning for retirement, buying the summer home, paying for the great education, setting aside funds for travel. But Estate Planning is a necessity. When done correctly it provides peace of mind and the freedom to concentrate on the “fun” stuff.
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