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Four Reasons Millennials Need an Estate Strategy

September 10, 2020
Estate Planning, Guidance, Wisdom

You’re young, have little in savings, and might not have anyone relying on you, financially. So, why do you need to think about estate management?¹

Here are four great reasons:

Estate Strategies: They’re Not Just for the Elderly

You need a will. You may ask yourself why a will is important if you don’t have much to pass on. A will is not just about transferring assets. It can be used to accomplish other tasks, such as naming who should manage your social media accounts once you’re gone or inherit items you’ve accumulated, like collectibles or your car.
Don’t burden others with burial expenses. Funerals can be expensive, and if you don’t have the savings to meet those costs, that burden gets shifted to others.
Consider a medical directive. This important document states your wishes for end-of-life care. In the case of an unfortunate accident, a medical directive provides instructions about the level of care you want, e.g., palliative care only.
Create a durable power of attorney for health care. In the event that you are unable to make medical decisions for yourself, this gives the individual of your choice the legal power to act as a health care proxy for you.

A medical directive and health care durable power of attorney can ensure that you are provided the level of care consistent with your wishes. They can also prevent family discord in the event of differing opinions.

Though the multiple financial goals of many young adults often require more resources than present earnings can meet, these important planning steps can be accomplished at a small cost.

To further discuss the need for an estate plan or to speak with a CapSouth advisor, call our office at 800.929.1001 or visit our website at www.capsouthwm.com

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with CapSouth Wealth Management. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Copyright 2019 FMG Suite.

CapSouth Partners, Inc., dba CapSouth Wealth Management, is an independent Registered Investment Advisory firm. CapSouth does not offer tax, accounting or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences.

Succeeding at Business Succession

September 10, 2020
Financial Planning, Guidance, Wisdom

According to the Conway Center for Family Business, family businesses account for 64% of the U.S. Gross Domestic Product (GDP), yet 57% of family businesses have no formal succession plan.¹ While the number may shock you, it is not surprising that many small business owners are consumed by the myriad responsibilities of running their businesses.

Nevertheless, owners ignore succession planning at their peril and possibly at the peril of their heirs.

There are a number of reasons for business owners to consider a business succession plan sooner rather than later. Let’s take a look at two of them.

The first reason is taxes. Upon the owner’s death, estate taxes may be due, and a proactive strategy may help to better manage them.² Failure to properly plan can also lead to a loss of control over the final disposition of the company.

Second, the absence of a succession plan may result in a decline in the value of the business in the event of the owner’s death or an unexpected disability.

The process of business succession planning is comprised of three basic steps:

Identify Your Goals: When you know your objectives, it becomes easier to develop a plan to pursue them. For instance, do you want future income from the business for you and your spouse? What level of involvement do you want in the business? Do you want to create a legacy for your family or a charity? What are the values that you want to ensure, perhaps as they relate to your employees or community?
Determine Steps to Pursue Your Objectives: There are a number of tools to help you follow the goals you’ve identified. They may include buy/sell agreements, gifting shares, establishing a variety of trusts, or even creating an employee stock ownership plan if your desire is that employees have an ownership stake in the future.
Implement the Plan: The execution step converts ideas into action. Once it’s implemented, you should revisit the plan regularly to make sure it remains relevant in the face of changing circumstances, such as divorce, changes in business profitability, or the death of a stakeholder.

Keep in mind that a fundamental prerequisite to business succession planning is valuing your business.

As you might imagine, business succession is a complicated exercise that involves a complex set of tax rules and regulations. Before moving forward with a succession plan, consider working with legal and tax professionals who are familiar with the process.

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Conway Center for Family Business, 2019
2. Typically, estate taxes are due nine months after the date of death. And estate taxes are paid in cash. In addition to estate taxes, there may be a variety of other costs, including probate, final expenses, and administration fees.

Estate Planning Management Checklist

September 10, 2020
Estate Planning

Do you have a will?

Establishing a will is key in estate planning. A will enables you to specify who you want to inherit your property and other assets. A will also enables you to name a guardian for your minor children.

Do you have healthcare documents in place?

Healthcare documents spell out your wishes for health care if you become unable to make medical decisions for yourself. They also authorize a person to make decisions on your behalf if that should prove necessary. These documents may include a living will, a power of attorney agreement, and a durable power of attorney agreement for healthcare.

Do you have financial documents in place?

Certain financial documents can outline your financial wishes. If you become unable to make decisions for yourself, these financial documents can be structured to empower a person to make decisions on your behalf. These documents may include joint ownership, durable power of attorney, and living trusts.

Have you filed beneficiary forms?

In some cases, naming a beneficiary for bank accounts and retirement plans makes these accounts “payable on death” to your beneficiaries. In other cases, you will need to fill out a “Payable on Death” form.

Do you have the right amount and type of life insurance?

When was the last time you assessed your life insurance coverage? Have you compared the life insurance benefit with your financial obligations? Keep in mind that several factors will affect the cost and availability of life insurance, including age, health and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Have you taken steps to manage your federal estate tax?

If you and your spouse have more than $22.8 million in assets (for 2019), you may want to consider taking steps to manage federal estate taxes, which will be due at the second spouse’s death.

Have you taken steps to protect your business?

Do you have a succession plan? If you own a business with others, you may also want to consider a buyout agreement.

Have you created a letter of instruction?

A letter of instruction is a non-legal document that outlines your wishes. A strong, well-written letter may save your heirs time, effort, and expense as they administer your estate.

Will your heirs be able to locate your critical documents?

This can be one of the overlooked steps in estate planning. Your heirs may need access to the specific documents you have created to manage your estate. These documents may include:

Your will
Trust documents
Life insurance policies
Deeds to any real estate, and certificates for stocks, bonds, annuities
Information on your financial accounts and safe deposit boxes
Information on your retirement plans
Information on any debts you have: credit cards, mortgages and loans.

Note: Power of attorney laws can vary from state to state. An estate strategy that includes trusts may involve a complex web of tax rules and regulations. Consider working with a knowledgeable estate management professional before implementing such strategies.

To discuss this article further or speak with a CapSouth Financial Advisor about estate planning, call our office at 800.929.1001. To learn more about estate planning visit our website at https://capsouthwm.com/services/financial-estate-planning/

Four Reasons Millennials Need an Estate Strategy

Succeeding at Business Succession

Estate Planning Management Checklist

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