Plan a legacy for your business and your family. (You Can ...).

Client:

Name: William Marshall

Profession: Owner/President--Marshall Enterprises, Inc.

Age: 55

Goal: Planning for the future of his business AND the future of his family

Net Worth: $3,500,000

Advisor:

Name: Jimmy McMillian

Education: BS Accounting

Designations: CPA, CLU, ChFC, REBC, RHU 

Experience: Small Business and Tax Consulting--12 years

Years at AXA Advisors: 16

Myth:

I'm not wealthy enough to need estate planning.

Reality:

Estate planning can help preserve the wealth you do have.

Even if your net worth is not at the level of William's, you may be surprised to learn how an estate plan can benefit you.

It is a common assumption that if you are exempt from estate taxes, you are exempt from needing an estate plan. However, estate planning can include managing the tax consequences of an inheritance, helping to protect the assets you've accumulated, and providing for your loved ones.

Even if you don't consider yourself to be wealthy, once you take into account your entire portfolio of assets--including employee benefits, retirement accounts, and insurance--your net worth may be much higher than you expected. And without an updated estate plan in place, as much as half of your assets could end up going to the IRS rather than your named heirs.

For business owners like William, an estate plan and business continuation strategy can help protect family assets from going towards business expenses, or forced liquidation of the business to cover family financial obligations.

Through tools such as a Unified Tax Credit, Irrevocable Trusts, and Charitable Remainder Trusts, you have more control over asset distribution and can potentially reduce taxes. With a current will, a durable power of attorney, and a health care proxy, you can determine who you would like to receive your assets--and who can stand in for you to make decisions if that should ever be necessary.

With all the issues you must consider, a planning team consisting of a financial advisor, CPA, and attorney is one of the most important tools of all in ensuring the validity of an estate plan. When it comes to your estate, being well prepared is not only for the wealthy.

CASE STUDY #3

William: Being an entrepreneur has been an extremely rewarding way to earn a living. But at times, I admit it's been stressful. As a business owner, any decision I make about my business can impact the financial security of my family. And I want both to be protected even after I retire as head of the company.

Jimmy: It's easy for most of us to make a distinction between work and family goals. For entrepreneurs, they can be one and the same. William wanted to eventually pass on the company reigns to his daughter Lana, while still leaving a secure legacy for the rest of the family.

William: The new estate-tax laws have sent a lot of my colleagues back to the drawing board to redo their estate plans, and for me, it's even more complicated with my business involved. I also have other family members to provide for--and have had a lot of questions about how to fit this all together.

Jimmy: I worked with William and his attorney to revisit the estate plan he had developed a few years ago. While the tax law changes have made it easier to pass on assets to the next generation, the classic estate planning tools are still important. We're reviewing his will, insurance and various types of trusts to ensure that William and his wife can retire comfortably while their children and grandchildren are provided for.

William: I'm certainly proud that Lana will someday be running the company, and I want a solid transfer plan in place so that she inherits a growing business, not a financial burden.

Jimmy: Since some of the tax laws also affect the transfer of a business, we updated William's business succession plan. He was concerned about managing business risk for Lana, so we made sure he had sufficient key person protection and a business continuation strategy.

William: Jimmy has become an unofficial "partner" in my business, as far as I'm concerned. He knows how hard I've worked and how important it is for me to preserve what I have created. And when Lana sees me meeting with Jimmy, she gets another lesson I want to pass on: how important it is to get the best advice!

AXA Advisors does not provide legal or tax advice. Be sure to consult your advisor for specific advice pertaining to your situation.