The Wealth Plan addresses issues around:

• implementing a savings plan;
• ensuring liquidity for taxes;
• keeping the business operational; and
• creating a plan on how to settle the estate.

The plan should include a current savings plan. There should be recognition of what will be best for the ownership of the business and a plan to ensure that the children are treated equitably. This is fair, not equal. There will be a need for some form of permanent insurance to support either a payment of income taxes or a buyout of the non-participating family members in the event of Mom and Dad’s death. The Estate Plan can also deal with passing the future growth on to those family members who are participating in the business. This area should include the shareholder or partnership agreements and the Wills. This plan, after consultation with Mom,Dad and ideally, competant adult children to find out what is important for them and the results they want to achieve, should be funded by the business and supported by the family.

As with the Business Plan, the Wealth (or Estate) Plan needs to be laid out in a way that is useable by the owner. The difference between an Estate and a Wealth Plan is usually determined by the age of the entrepreneurs. For any business owners or entrepreneurs who are younger than 55, a Wealth Plan is appropriate. An Estate Plan is more appropriate for those owners who are 55 or older. The components of these plans are similar, if not identical, but the name is very reflective of how the entrepreneurs are looking at themselves and their businesses. It is understandable that people younger than 55 don’t seem to have a desire to plan their estate, but planning wealth creation and creating maximum choice in the long term is very interesting to them. Those who are 55 or older are usually okay with the concept of having an Estate Plan. Again, the principle behind this is to develop strategies and plans that are practical and understood by the family business.

Surrounding all of this is the need for a Succession Plan, which is the combination of a contingency plan and a continuity plan. A plan that sets out who should take over in the event of death or disability is vital. Once such a plan is in place, it becomes a great foundation for determining what needs to be done, and what training or education will be required to move the business along.

In actual fact, every business already has a Contingency Plan - although not necessarily one that is suitable. Even if an entrepreneur doesn’t have a Will, there are rules that automatically affect the estate when the owner dies. It is beneficial to identify, discuss and share the details of this 'default' contingency plan, or any other plans already in place, with the family unit. Once everyone understands the implications of an unsuitable Contingency Plan, they are willing and anxious to make the necessary changes.

To find out more about how The SuccessCare® Program can help you prepare for the future, contact Ed Rosenfeld at (212) 579-2613 or click here to email him.