Sitting down for "that conversation" with family members is never an easy thing when it comes to planning for the next generation to take over the family business, especially when the business is a farm. But succession planning for farm families is a critical piece to ensure that the land and the business continue for another generation.
An international survey of 336 middle-market family businesses recently reported in Forbes,"Most Family Business Owners Should Update Their Estate Plans," found that more than 90% of senior executives with equity in the family business have estate plans, which is good news. Unfortunately, only 22% of these plans have been updated within the last two years, and a quarter of those have been updated within two and five years ago. Nearly half of those have not been reviewed in more than five years. That means they are likely out-of-date with changes to the law, out-of-step with changes in the family, and that their heirs are out of luck.
While few of us ever feel that we have enough money for retirement, strategies to help ensure that your nest egg lives longer than you do are addressed in The Boston Globe article, "Can you afford to live to 100?"
Financial planning should be a part of every couple's wedding planning, whether they are just starting out or if they are coming to the marriage with substantial assets. When the couples are not economic equals, this becomes even more important. In "When financial planning meets wedding planning" from Reuters, experts advise couples to work with an estate planning attorney and financial advisor to objectively evaluate assets, review insurance coverage, discuss retirement goals and analyze estate plans already in place. This should take place before the wedding to prevent larger problems later on. Questions to ask:
For farmers, land is far more than an asset to be valued and sold. Land is a legacy to be protected, a resource that generates income and, if land has been passed down from generations, the cornerstone of their family's heritage. The goals of estate planning for farm owners involves planning for the needs of all family members, even those who may not be actively involved with its operations. It must also address the challenges of high inheritance taxes, prepare for settlement problems and foster a transition of ownership and management when the owner passes on.
Adult children worry about their parent's finances, but whether they are worried for the right reasons is sometimes hard to determine. Are they concerned about a spendthrift parent becoming their responsibility, or that a scam artist will defraud an elderly parent? Seniors who are eager for companionship are perceived as vulnerable. Families worry about the triple whammy of a volatile stock market, large withdrawals and newly-arrived romantic interests whose intentions may or may not be sincere. But experts report that many of the worst financial abusers are the adult children or relatives themselves. Are they protecting their elderly parent, or their inheritance?
Death is truly our final frontier. Most of us like to imagine a story-book ending: lying in our bed at home, surrounded by those we love, with a skilled hospice worker tactfully hovering in the background. Sadly, 70 percent of Americans die in a hospital, nursing home or long term care facility. Why don't we get the death we want? Sometimes circumstances or medical needs get in the way, but often, it's simply because we never tell anyone what we want.
Unlike people who work for an employer and can set automatic deductions for their IRA accounts, self-employed people need to set up and contribute to retirement accounts. Two of the most frequently used accounts are the Simplified Employee Pension (SEP-IRA) and the Solo 401(k). Contributions to both are tax-deductible, allowing the entrepreneur to obtain tax-deferred growth and cut taxes.
Consider your will as one last chance to let your heirs know how much you love them - because you thought enough of them to plan for your eventual demise. Any adult with minor children or assets of any kind needs to have an estate plan. And if you have complicated life - second or subsequent marriages, business ownership, etc. - your estate planning becomes even more important.
Life is about changes, both good and bad. Children grow up and marry and have children of their own. Families experience the pain of divorce. New families are created when divorced parents remarry. Many of these changes require revisiting and making changes to your estate plan. Even when your family life is stable, laws change and can impact the best of estate plans. An estate plan needs to be reviewed and changed as family situations, laws or other factors change. Here are some common points when estate plans need to be reviewed.