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Business Succession Planning
More than 40 percent of family businesses expect a
change in top leadership in the next five years, but
42 percent have not chosen a successor or lack a
succession plan. As a small-business owner, you've
likely spent some time thinking about your own
succession plan. In order to develop a transfer
strategy that meets your wishes and fulfills the
needs of your loved ones, consider three key steps:
(1) choose a successor, (2) reduce your exposure to
estate taxes, and (3) find a way to fund the
transition.
1. Choose a successor - Though it's tempting to
leave everything to a family member, there may be a
better choice. Carefully weigh the individual's ability
to keep the business running...to move it forward. It
may be a better choice to put an agreement in place
to sell the business to a partner and let your heirs
use the money from the sale to pursue other
interests.
2. Reduce exposure to estate taxes - In 2004,
estate taxes could claim up to 48 percent of the
gross value of your estate, including your share of
the business. In most cases, these taxes are due
nine months after your death. This could make it
necessary to dissolve or sell your business simply to
cover the tax bill. There are ways to reduce this
exposure using trusts, family limited partnerships, and
other arrangements.
3. Find a way to fund the transition - If you set up
an agreement to sell your share of your business to a
partner, you need a strategy to fund that
agreement. Otherwise, your passing could put undue
strain on the business's finances. Many people find
that a company-owned life insurance policy is an
ideal way to fund a buyout.
Like most entrepreneurs, you have probably spent a
major portion of your life building your business. With
proper succession planning, your business can
provide a financial springboard for your loved ones
even after you are gone.
Creating a Smart Succession Plan
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Greetings!
Lazy, hazy days of summer have finally appeared. We
hope that each of you are enjoying all the best that
summer has to offer from barbecue's with friends and
families to quietly reading a good book while swaying
in the hammock. Thanks to all of you who have taken
the time to share with us how much you appreciate
our newsletter. If you know someone who you think
would benefit from receiving it, please feel free to
forward it to them. Or contact us and we will be
happy to add them to the distribution list.
Time to Share. Create a Buzz. ACCESSAIL is
a program that offers recreational sailing and private
lessons for the disabled of all ages. Last year a young
lady who is blind won the ACCESSAIL racing regatta.
She used the wind on her check to steer
the boat to victory. The school is even equipped with
two Martin 16 sailboats, which are designed to be
accessible to all sailors with mobility impairments-
without specialized adaptation. Experienced
instructors accompany all sailors. ACCESSAIL is
offered through the Duxbury Bay Maritime School. To
learn more about the ACCESSAIL program click
here to visit their website or call
Matt Glauber, Program Director at 781.934.7555.
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| Dividend Payouts Take Center Stage |
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Thanks to the 2003 tax-law changes, many
companies are changing the way they operate and
paying more of their profits to their shareholders in
the form of dividends.
Early in 2004, 370 companies in the Standard &
Poor's 500 index were paying dividends to their
shareholders - 19 more than in 2002. And the size of
those dividends was increasing, too. The average
dividend yield for dividend-paying S&P 500 stocks
was up to 2.02 percent.
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| Important Birthdays to Remember |
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Certain ages represent turning points in life: driving
at 16, voting at 18, less-expensive auto insurance at
25. On the road to retirement, there are important
birthdays, too. Your tax situation, retirement
benefits, and health-care benefits are closely tied to
specific ages. If you are not aware of them, you
could miss out on potential opportunities and
deadlines.
You may want to mark these noteworthy ages on
your long-term calendar.
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| What's Ahead for the Second Half |
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The consensus of U.S. economists is for strong
economic growth during the rest of 2004. Wall
Street, on the other hand, appears worried
about the direction of interest rates, inflation, and
the upcoming election.
The Wall Street Journal's ongoing survey of more
than 50 economists revealed a mostly encouraging
outlook at the 2004 midpoint. Economic growth is
expected to continue; higher inflation rates due to
short-term factors may soon abate; unemployment is
expected to fall. Wall Street apparently sees things
differently. The S&P 500 was down 2% for the year
as of July 23, 2004.
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| What You Know About One-Year Performance Can Hurt You |
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Pick up a magazine aimed at do-it-yourself investors
and you are likely to see headlines like this: "Top 10
Mutual Fund Picks This Year" or "Add Last Year's Top
Mutual Funds to Your Portfolio."
Of course, when you add a new mutual fund to your
portfolio, you want one that has a top-notch
record - but performance is only one facet to
consider because past results are not indicative of
future performance. Ideally, your personal goals and
situation should be critical in the decision-making
process. To understand why, take this little pop quiz.
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| It's Never Too Early to Consider a Fixed Annuity |
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Only 13 percent of workers expect Social Security to
be their primary source of income in retirement.
Instead, most people are planning to fund retirement
through a combination of employer-sponsored plans
and personal savings and investments.
Increasingly, annuities are playing a critical role in
retirement planning. In fact, 44 percent of annuity
owners purchased their first annuity before reaching
50 years of age.
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| 7th Annual Women's Leadership Conference at Babson College |
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Scoping Out the Present. Mapping Out the Future.
It's about learning. About sharing. About connecting.
About moving forward.
Friday, October 15, 2004
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