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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Business Succession
Planning: Saving taxes in
ownership transfers and investing
proceeds wisely
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Presenters
Mary L. VanSkiver CPA, MBA, PHR, CEPA
Senior Manager
AREAS OF SERVICE
Transition Planning
Leadership Development
Organizational Development
Executive Coaching and Recruiting
Strategic and Succession Planning
Human Resources Outsourcing
AREAS OF SERVICEIndividuals
Trusts, estates and gifts
Not-for-profits
Income tax planning and compliance for trusts and individuals
Consulting
AREAS OF SERVICE
Comprehensive financial planning
Retirement income and cash flow planning
Investment portfolio design and analysis
Insurance planning and analysis
Corporate retirement and compensation plans
Jason Baum CFP®, ChFC®, MBA
Manager
Cathy Shoemaker CPA, MBA, MST
Principal
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Transition Options
ESOPsManagement Buyouts/Ins
Phantom StockStock
Appreciation Rights
Transfer Motives
Employees Charitable Trusts Family Co-Owners Outside
(retire)Outside
(continue) Public
Initial Public Offerings
Direct Public Offerings Reverse
Mergers Going Private
Consolidate Roll-ups
Buy and Build Recapitalizations
Negotiated One-Step Private
Auctions Two-Step Private
Auctions
Buy/SellRussian Roulette
Dutch AuctionRight of First
Refusal
OutrightGifts
SCINsAnnuitiesGRATsFLPsIDGTs
Charitable Remainder
TrustsCharitable Lead
Trusts
Transfer Channels
Internal External
Transfer Methods
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
What are my choices?
Personal Planning #3
Ownership Planning #1
Business Planning #2
Basics:• Will
• Shareholder agreement• Life insurance
• Tax plan• Retirement plan• Investment plan
Alternatives:• Employee ESPO/buyout
• Family• Financial buyer or recap
• Industry buyers• Initial public offering
• Close down• Bankruptcy
Basics:• Sense of current value
• Sense of potential value• Value creation plan
• Business plan/presentation
• Owner/manager succession
Transition Planning/Strategy Process
How much is it worth?
How much do I need?
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
DISABILITY DIVORCE DISAGREEMENT DISTRESSDEATH
The Five D’s
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Agenda
Where will my money go?
Getting the most to my family
Planning after the sale
Expectations in retirement
Variables to consider & their impact on you
Charitable trusts
Obstacles & opportunities
Rehmann advisors & Wealth Path
Business wisdom delivered
Questions & discussion
Why Have an Estate Plan
Income tax considerations
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Where will my money go?
1 FAMILY
2 CHARITY
3 GOVERNMENT (TAXES)
If the sale of your business is successful enough to leave you with more money than you expect to need, there are three places it can go:
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
• If there is no estate plan in place prior to sale; 40% federal estate tax will likely apply to proceeds transferred to the next generation that exceed the exclusion amount (currently $11.4 million per person).
• Depending on what state you live in there may also be a state estate/inheritance tax due.
Why have an estate plan?
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
A B
Yes No
Polling question #1
Do you currently have estate planning documents in place?
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Planning opportunities prior to the salethat can help maximize wealth transfer to the next generation is key.
• Gift business interests to next generation
• Income tax considerations
• Estate/gift tax considerations
• Sale of business interest to Intentionally Defective Grantor Trust (IDGT)
• Grantor Retained Annuity Trust (GRAT)
Getting the Most to My Family
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Income Tax Considerations
What is the tax picture if you are selling your business?• Top capital gains tax rate – 20%• Top ordinary income tax rates – 37%
Don’t forget about…• Net investment income tax rate – 3.8%• State income tax rates
Depending on where you live you could pay over 50% in income taxes when you sell your business.
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
2 31 4 5
Section 1202: Small business stock capital gains
exclusion
Installment Sale
Treatment
Stock vs. AssetSale
Allocation in the Purchase Price
ESOP: Employee Stock Ownership
Plan
Income Tax Considerations, cont.
What should you be discussing with your tax advisor prior to the sale to helpdefer or mitigate the income taxes to be paid?
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Planning After The Sale
What are the opportunities and obstacles that someone may face during this transition?
Is the financial impact of selling your business in-line with your expectations for life during retirement?
What might someone be unaware of when planning for their future after the sale?
What to do when sales proceeds must be converted to cash flow?
How to address the risks associated with converting to cash flow?
Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
• Finding ways to spend time now that significant effort may not be required to run the business.
• Having a pre-constructed plan in place that incorporates the variables associated with “post-sale” life.
• Incorporating your most significant asset value into the context of retirement.
• The period of time leading up to this event opens up the possibility for significant planning opportunities related to investing, charitable endeavors and retirement planning.
• The opportunity to pursue other interests and activities can be an exciting time.
Obstacles & Opportunities
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
B CA D
At least $500,000
Between $250,000
and $499,000
Less than $250,000
I have no idea
Polling question #2
The amount of money I think I need in retirement to live comfortably but not run out of money is:
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
When making the transition from business owner to retirement, financial decision-making can be overwhelming, especially when juggling a number of competing priorities. The development of a financial plan is the best step in understanding the impact that spending, taxes, inflation and financial markets can have on your retirement goals.
Did you know?
• 1 in 4 Americans have a written financial plan. Those that do exhibit positive investing and saving behavior and feel financially stable relative to those without a plan.
• 48% of workers report they and/or their spouse have ever tried to calculate how much money they will need to have saved so that they can live comfortably in retirement.
• 46% percent of workers think they need to accumulate at least $500,000 by the time they retire to live comfortably in retirement. 19% say they need between $250,000 and $499,999, while 25% think they need to save less than $250,000 for a comfortable retirement.
• 19% of pre-retirees thought they could withdraw 7-9% per year from their savings. An additional 19% thought they could withdraw 10-15% per year.
Expectations in Retirement
Source: 2015 Retirement Confidence Survey, Employee Benefit Research Institute and Greenwald & Associates
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Variables to Consider
Should you rollover your company retirement plan to an IRA? What are the advantages/disadvantages in doing so?
Is a Roth conversion appropriate for you?
How should proceeds from a business sale be invested and how is investment risk accounted for?
How do I go about producing an income stream from my assets? What are the implications in doing so?
Do I need life insurance during retirement? What are my options for any existing policies?
What is the appropriate amount of investment risk in my portfolio so that I don’t run out of money in retirement?
Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
• It could make sense to rollover your retirement plan to an IRA.
• Be aware that rules regarding distributions from a qualified retirement plan account and an IRA do differ.
• Example: Discrepancy between age 55 vs. 59 ½
• Depending upon your income tax situation, a Roth conversion of retirement plan assets may be suitable for you.
• Amounts converted to a Roth IRA are generally subject to ordinary income tax; however, future earnings are distributed tax-free when made as a qualified distribution.
• Developing a diversified investment portfolio and investing strategy is of paramount importance. Recent studies have confirmed that mistakes in this area can cost investors nearly 4% per year.
• Investment avenues exist that offer the potential for guaranteed retirement income, tax-deferral and principle protection while incorporating estate planning and wealth transfer goals. How and when withdrawals are taken from various accounts can have a significant impact on the sustainability of your financial resources.
• If life insurance was put in place as a business continuation approach - review the available options before canceling any policies outright after sale of the business.
In Summary
• The risk of outliving financial resources is greater than many people realize. Developing a plan that accounts for your personal risk tolerance and capacity while accomplishing your income and wealth transfer objectives is vital to achieving the life in retirement that you desire.
The Impact on You
Source: Society of Actuaries, “Reaching Guaranteed Lifetime Income”. https://www.soa.org/Search.aspx?q=guaranteed+lifetime+income
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Competitors Comparison
VS
Charitable Lead Trusts
Balance to family
Charitable Remainder Trusts
Balance to charity
Charitable trusts can be established in the year of sale to help mitigate the current income tax, future estate tax, and provide a current income stream for you or your family.
Income stream to you or your family during
life
Income stream to charity for a certain numbers of years
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Wealth Path
Real-time Modeling Net Worth Statement Secure Vault
We have the capability of modeling real-time
changes of variables to illustrate the impact on
your financial and estate plan.
Informative Reports
Add financial assets including investments,
property & business values, liabilities and more to produce an
accurate picture of your net worth.
You will have access to your complete financial
picture along with an online “Vault” for
important financial documents and
information.
Generate comprehensive reports illustrating cash
flow, investment analysis, net worth and insurance
coverage… just to name a few.
Rehmann Advisors & Wealth Path
With the assistance of a Rehmann Financial Advisor and our comprehensive financial planning tool, Wealth Path, all of these questions and more can be answered.
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Rehmann
CPAs Assist you with
forecasting and planning to reduce the
income tax impact.
Estate PlanningAssist you with
reducing transfer tax consequences.
Financial AdvisorsAssist you with retirement and
investment management needs.
Business Wisdom Delivered
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Questions?
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Please send any questions to [email protected] view more of Rehmann’s resources at:
rehmann.com/succession-planning
Thank you for joining!
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Jason Baum offers securities through Rehmann Financial Network, LLC, member FINRA/SIPC. Investment advisory services offered through Rehmann Financial, a Registered Investment Advisor. Insurance services offered through Rehmann Insurance Group. Certified Financial Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Thank you!
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