The BUSY CEO / Businessowner

Oftentimes the CPA or bookkeeper is just too busy or does not have the knowledge, or worse, the desire to help in this area. Tax planning involves not just AI generated suggestions to lower one's income taxes, but to see if the overall income taxes over time, is reduced over many years, and not on a year-by-year basis. Tax planning is planning in conjunction with financial and retirement planning. A good tax plan does not hamper one's estate size to grow. Similarly, assets which create unnecssary tax consequences and not within the overall plan of good long-range retirement and financial planning should be deployed carefully and deliberately. Having a financial advisor team who have advanced degrees in taxation and who are CPAs allows one to do that. At Sentigent Financial, that's what you will get.

Oftentimes this is a product of ORGANIZATION, and CONSOLIDATION, to see everything in ONE place, in one portal, with one firm. If investments are spread out between several accounts and advisors, institutions, or if there have not been enough meetings with the advisors who helped put you into those investments, then there might be a chance you just don’t know where everything is, least of all how they’re performing. Some accounts might even be at old 401K plans you have not cashed out or rolled over, and inside insurance policies whose subaccounts you either forgot to check or lost track of (Index Universal Life insurance policies, or variable universal life insurance policies, variable annuities, etc).

There may or may NOT be an attorney involved in the process to sort of bring everything together – like a business attorney or an estate planning attorney. If there is, they may have created several LLCs or other trusts, but may not have finished the process, or worse, offer to finish the process in retitling all your assets to those legal instruments (a process called “funding.”) However, even if that process was carried out, how to then maintain those protective assets, what the pitfalls are, how they can be unravelled may not have been discussed at length and no fullproof plan to safeguard those assets and legal instruments in which those assets are owned. Finally, new assets come into the picture and old ones sold off, and thus certain legal instruments which own those assets or need to own those assets need to be wound down or absorbed into the entire asset protection strategy. Maintenance and strategy requires an ongoing advisor, and not just a one-time meeting with an attorney. The attorney can be the advisor, but requires ongoing consultations each year or whenever family assets shift.

Having everything situated still requires adequate access to cash. Having a dedicated one-stop where liquid funds are available and a financial consultant team which can give you access to those accounts with liquid cash can be a part of the strategy to safeguard assets, and recalibrate the need for cash in ongoing financial plans. Taking a $100K today for a discretionary expense should be done with ease, from one of your investment accounts, but then that should then be updated in real time in the financial plan to update the longevity risk.

What is your estate tax exposure to the IRS and to your state, if any? Many people forget about the state they live in might have estate or inheritance taxes and they have to plan for that. What specialized trusts have been set up? What is the funding strategy for those trusts that live outside the estate to pay estate taxes? If nothing, then what assets from inside the estate should go to pay for such estate taxes? Are there instructions in the trust to do that? These and other things are very important, including but not limited to guardianship of any minor children.

What are the plans for monies after death? To whom or what will monies go to? What is the funding strategy? Leaving monies behind is not always as important as what to do with those monies and thus good legacy planning leaves behind solid, unambiguous instructions as to what the plans should be for final sums of monies at death. Legacy can meet many things, such as, how to leave assets responsibly to the spouse and kids. Is a spousal lifetime access trust (SLAT) a good idea? What about gifting strategies into children’s ROTH IRAs? How much would you like to leave to kids in the family trust without exposing such assets to estate taxes? Do the kids and the surviving spouse have competing interests in the assets’ investment style once the initial spouse has passed on? These are questions to be asked and discussed.

Many times a CEO and business owner has quite a lot riding on the business strategy he/she has invoked. But if he or she has an early demise, and if the surviving spouse is not a working spouse, then there needs to be enough assets for the surviving family members to continue living without running out of money (longevity risk). But it’s more than just that. If there is a business involved, the surviving shares of the business the business owner owns, can end up going to the surviving spouse due to state inheritance laws (or if there is a basic trust or will), at which point, the surviving spouse would step into the shoes of his/her deceased spouse who owned the business. In order to mitigate the complexities of handling the business of a deceased spouse, where quite often the other business owners do not want to do business with a surviving spouse, a buy-sell agreement is put into place, to buy out the shares of the deceased business owner from the surviving spouse at a stated value. The funding mechanism is usually insurance. Other risk mitigation issues involve investigating if family assets are enough to whether a period of disability for an overworked business owner/CEO. A disability insurance policy, either via his/her workplace or owned individually might be looked at. End of life concerns involve looking at long term care, and the heavy costs that would exact upon family assets. Is an insurance policy there warranted? Medicare does NOT pay for long term care. Medicaid does, but is for the indigent. Risk mitigation also involves proper estate planning, and making sure assets pass when they are intended to pass, and to the intended parties. This is especially important when there are children from multiple marriages and surviving ex-spouses. Risks can also exist with businesses, rental properties, etc, so a good advisor will look at what liability insurance policies and legal structures are in place to shield from outside liability, and if those insurance policies and legal structures are being properly used.