As a fellow business owner I know we miss things, it’s part of running a business. Granted, there are lots of surprises when it comes to running a business but if you’re like the majority of owners, you figure it out and move on. But it’s always nice when you can “avoid” something so you don’t have to figure it out. This is one of those things I want you to avoid because figuring it out later usually doesn’t end very well.
The ONE THING I am talking about is with regard to “alignment.” Alignment of your business with your personal Estate Plan. I see this being out of alignment most of the time and the consequences can be minor or all the way to devastating.
Take for example the business owner, Bob, (anonymous name) who was running a very profitable, solid growth manufacturing business. It was doing well and had been for a number of years. They had expanded into new areas, added some new facilities, and were very profitable. In fact, they were so profitable that he decided to offer an employee stock plan to reward employees and to help spread out some ownership to his loyal employees. Sounds like the perfect scenario.
Bob also had an estate plan and had done his homework years ago to put one in place to protect his family and his assets…the right thing to do for sure. But here’s the One Thing Bob (like others) missed. His plan was created 5 years ago. His business today didn’t look anything like it did 5 years ago. His plan was written to include that business in his assets and how they should be distributed to his family. But things changed significantly, especially since there was now an employee stock ownership plan.
I happened to run into Bob the other day and we got to talking about his successful growth and where his business was today. It struck me that we hadn’t talked about this for a few years and that his plan wasn’t going to do what he thought it would. Sure enough, I went back and reviewed his plan and it essentially was irrelevant because of his current business situation. It’s the One Thing he missed and forgot about.
I suggested we sit down and review where he was with regard to his plan to it could be in “alignment” with where he was today with his business and assets. After the review and update, Bob had one thing to say, “WOW, I really missed this one…and it is a super critical miss. If you hadn’t gone through this and suggested we check out the current “alignment” I would have done a very big disservice to my family. This was a huge miss…and I need to let my business owner friends know about this miss. Thank you for being proactive about it…I never really thought about it but sure am glad you did.”
It’s an Easy Fix…
Like Bob’s situation, this is something that gets missed all the time and can have devastating consequences to your family if not addressed. And unlike many other fixes that need to be made in a business, this is pretty straightforward to address and with a little time, can be brought back into alignment for you and your family. It usually involves simply understanding where you are today and looking at what you created years ago. Figuring out this gap and how to make sure the gap is filled is really the simplification of this process. Granted, there are lots of questions and some discussion that needs to occur but it can be done relatively.
What you created years ago is a great foundation to build upon. But business changes frequently for most business owners. As the business changes, your plan needs to change to reflect these changes. And time is not the determining factor…the amount of change is what should determine how often you need to review your plan. For example, one client who owns a business changes his business significantly about every year. So once a year we sit down and make the necessary adjustments to allow it to be in “alignment” with his current situation. Yours could be longer or shorter…only you know how much change is happening in your business…this should be your guide for when to review your personal estate plan.
What to do next…
If you are not sure if your plan is in “alignment” with your business, just let us know and we would be happy to meet with you and let you know if you are in or out of “alignment” with your business. Then you can decide if you need to do an update or not at this time. And even if we aren’t your estate planning lawyers, we’re still happy to meet with you since we are business law lawyers. We can give you a perspective from being a business owner and what areas you need to make sure and have covered in your estate plan.
Also, if you just want to better understand how you can minimize and lower your risks (which every business owner wants) then please read some more about risk management and how you can help determine your own risk. I’d also be happy to meet with you (complimentary of course) to discuss your own personal situation further and give you some insights about how you might want to proceed.
I hope you have found this helpful and given you a different way to look at your business. If it has, please share this with others inside your company and your colleagues who are running or leading other businesses. Our primary mission at Generations Law Group, LLP is to help everyone find productive ways to lower their business AND personal risk. This is just one way you can start to do this…but it will tell you a lot about you and what has happened over the past few years with regard to your business risk. Let’s make sure your risk is as low as it can be while you continue to grow.