If you’re like most business owners, you probably have a million things on your mind on any given day. You may fill many roles, from CEO to sales to marketing to accounting and more. As a business owner, your task list is full every day, and there are likely many days where you never cross everything off.
Given how busy you are, it’s possible that you haven’t given much thought to one of the biggest challenges that business owners often face. It’s business succession, or the process by which you pass on the business to the next owner.
Many people assume that estate planning is only for the ultra-wealthy or for those who have enough assets to face estate taxes. That’s not true, though. Estate planning is an important piece in the financial puzzle for anyone who has accumulated assets and wishes to pass those assets onto their loved ones.
Even if you don’t meet the asset threshold to worry about estate taxes, there are still plenty of other costs that can erode your legacy. One is health care and long-term care costs at the end of your life. Another is funeral expenses. And yet another potential threat is probate.
April is National Financial Literacy Month. The purpose is to educate Americans on some important but often overlooked financial issues. The death of a parent may be one of the biggest threats that family can face, especially if there are minor children in the home.
Despite the threat posed by death, studies show that many households have little or no life insurance protection. A 2015 study from Bankrate found that only 60 percent of Americans had life insurance, and half of those had less coverage than they needed. Among families with children, 37 percent had no life insurance protection, while 32 percent had less than $100,000 in coverage.1
Thinking about one’s death may not be pleasant, but it’s important you take some time to figure out how your assets will be distributed in the event of your passing. Without a plan in place, it’s possible your assets could get distributed in a way that isn’t consistent with your wishes.
Have you recently get married? If so, congratulations! You and your spouse are probably enjoying your time as newlyweds and celebrating your new life together, so you may not want to take time right now to think about financial matters, especially with regard to estate planning.