Estate planning is a crucial aspect of ensuring the long-term success and continuity of any business, but small business owners face unique challenges that require careful consideration and planning. Whether you're the sole proprietor of a local shop or the founder of a growing startup, understanding the estate planning strategies tailored to small businesses can safeguard your hard work and provide peace of mind for the future.

Succession Planning: Passing the Baton Smoothly

One of the primary challenges small business owners face is ensuring a smooth transition of ownership and management in the event of incapacity, retirement, or death. Succession planning involves identifying and preparing successors who can step into key roles and continue operations seamlessly. For family-owned businesses, this may involve grooming the next generation or arranging for a buyout of non-family members.

A comprehensive estate plan should outline clear instructions on how ownership and management responsibilities will be transferred. This often includes drafting buy-sell agreements that dictate how shares or ownership interests will be valued and transferred among partners or family members. Buy-sell agreements can prevent disputes and ensure fair treatment of all stakeholders involved in the business.

Minimizing Tax Liabilities: Maximizing Returns

Another critical aspect of estate planning for small business owners is minimizing tax liabilities. Business assets, including intellectual property, equipment, and real estate holdings, may be subject to estate taxes upon transfer to heirs. Strategic estate planning can leverage tools such as trusts and gifting strategies to minimize tax exposure while maximizing the value of assets passed down to beneficiaries.

Trusts, such as grantor-retained annuity trusts (GRATs) or irrevocable life insurance trusts (ILITs), can be particularly beneficial for small business owners. These trusts can help shield assets from estate taxes, provide liquidity for estate expenses, and ensure that business operations continue smoothly without disruption.

Ensuring Business Continuity: Protecting Operations

Small business owners often play a central role in day-to-day operations and decision-making. In the event of unforeseen circumstances such as incapacity or death, ensuring business continuity is crucial to maintaining profitability and preserving the business's value. Estate planning should address contingency plans and designate successors or key employees who can step in to manage operations temporarily or permanently.

One effective strategy for ensuring business continuity is creating a business continuity agreement or plan. This document outlines procedures for transferring management authority, accessing business funds during transitions, and maintaining customer relationships and supplier contracts. Small business owners should also consider establishing a power of attorney that designates a trusted individual to make financial and operational decisions on their behalf if they become incapacitated.

Secure Your Business's Legacy with Expert Estate Planning Guidance

Navigating estate planning challenges as a small business owner requires proactive planning and careful consideration of business-specific needs and goals. Succession planning, minimizing tax liabilities, and ensuring business continuity are essential components of a comprehensive estate plan tailored to protect your business and provide for your loved ones.

At Donohue, O'Connell & Riley, we understand the unique estate planning needs of small business owners. Our experienced attorneys specialize in crafting personalized estate plans that safeguard your business's future while minimizing tax exposure and ensuring smooth transitions of ownership and management. Whether you're just starting your business or planning for the future, our team is here to help you navigate the complexities of estate planning with confidence.

Contact us today to schedule a consultation and take the first step toward securing your business's legacy and ensuring peace of mind for you and your family.

For many people, the thought of creating a will can be daunting and easily postponed. It's often associated with old age or vast wealth, leading individuals to believe it's unnecessary until later in life. However, the reality is quite different. A will is a fundamental legal document that everyone should consider, regardless of age or financial status. In this article, we'll explore why having a will is crucial, what happens if you pass away without one, the benefits of creating a will, and what essential elements should be included.

Understanding the Consequences of Intestacy

When someone dies without a will, they are said to have died "intestate." In such cases, the distribution of their assets is determined by state intestacy laws rather than their own wishes. This can lead to unintended outcomes where assets are distributed in ways that may not align with what the deceased would have wanted. In addition to potential disputes among family members, the intestacy process can be time-consuming and costly, eating away at the estate's value in legal fees and administrative expenses.

The Benefits of Creating a Will

Creating a will allows you to take control of your estate and ensure your wishes are carried out after your death. Here are some key benefits:

1. Control Over Asset Distribution: A will allows you to specify who will inherit your assets, whether it's family members, friends, or charitable organizations. This ensures that your estate is distributed according to your preferences.
2. Appointing Guardianship: For parents with minor children, a will is crucial for appointing guardians who will care for the children in the event of both parents' death. Without a will, the court will decide who takes care of your children, which may not align with your wishes.
3. Minimizing Family Disputes: Clear instructions in your will can help minimize potential disputes among family members regarding asset distribution. This can provide peace of mind knowing that your loved ones will be taken care of without conflict.

Essential Elements of a Basic Will

While wills can vary in complexity based on individual circumstances, a basic will should include the following elements:

1. Executor: Designate an executor, also known as a personal representative, who will be responsible for carrying out your wishes as outlined in the will.
2. Beneficiaries: Clearly identify who will inherit your assets and specify the portions or specific items each beneficiary will receive.
3. Guardianship: If you have minor children, appoint a guardian who will be responsible for their care and upbringing.
4. Assets: List all your assets, including bank accounts, real estate, investments, vehicles, and personal belongings, and specify how you want them distributed.
5. Special Requests: Include any specific instructions or wishes you have, such as funeral arrangements or charitable donations.

Secure Your Legacy Today with Expert Estate Planning Guidance

Whether you're just starting your career or enjoying retirement, having a will is essential for protecting your assets and providing clarity for your loved ones during a difficult time. It's a proactive measure that ensures your wishes are legally recognized and followed, offering peace of mind knowing that your legacy will be preserved according to your intentions.

At Donohue, O’Connell & Riley, we understand the importance of estate planning and the impact it can have on your family's future. Our experienced attorneys are here to guide you through the process, offering personalized advice and crafting a will that meets your specific needs and goals. We are committed to providing you with the knowledge and support necessary to make informed decisions about your estate.

If you have questions about creating a will or would like to discuss your estate planning needs, we invite you to contact us today. Let us help you take the necessary steps to protect your assets and ensure your loved ones are cared for. Planning ahead is not just about preparing for the inevitable—it's about securing peace of mind for yourself and your family.

Take control of your future today by reaching out to Donohue, O’Connell & Riley. Together, we can create a comprehensive estate plan that reflects your values and safeguards your legacy for generations to come.

Charitable giving is a meaningful way to leave a lasting legacy while also benefiting causes that are important to you. Beyond the immediate impact on the organizations you support, charitable giving can also play a significant role in your estate planning. In this article, we'll explore how charitable giving can impact your estate plan and why it's an essential consideration for many individuals.

Understanding Charitable Giving

Charitable giving involves donating money, assets, or property to nonprofit organizations, charities, or other philanthropic causes. This generosity can take many forms, including one-time donations, regular contributions, and planned giving strategies. Regardless of the method, charitable giving allows individuals to support causes they are passionate about and make a positive difference in their communities and beyond.

Tax Benefits of Charitable Giving

One of the key benefits of charitable giving is the potential for tax savings. When you donate to qualified charitable organizations, you may be eligible to receive a tax deduction for the value of your contribution. This can result in lower taxable income and potentially reduce your overall tax liability. Additionally, certain types of charitable gifts, such as donations of appreciated assets or contributions to charitable trusts, may offer additional tax advantages.

Estate Planning Considerations

Charitable giving can also play a significant role in estate planning. By including charitable provisions in your estate plan, you can support causes you care about while also achieving your financial and philanthropic goals. Common estate planning strategies involving charitable giving include:

• Charitable Bequests: Including charitable organizations as beneficiaries in your will or trust, allowing you to leave a portion of your estate to support their work.
• Charitable Trusts: Establishing charitable trusts, such as charitable remainder trusts or charitable lead trusts, to provide ongoing support to charities while also benefiting your heirs or yourself during your lifetime.
• Donor-Advised Funds: Setting up donor-advised funds, which allow you to make contributions to a charitable fund and recommend grants to specific charities over time.

The Impact of Charitable Giving

Beyond the tax benefits and estate planning advantages, charitable giving offers the opportunity to make a meaningful impact on causes that matter to you. Whether you choose to support education, healthcare, environmental conservation, or other charitable endeavors, your generosity can help organizations thrive and make a difference in the lives of others.

In Conclusion

Incorporating charitable giving into your estate plan can have a profound impact on both your financial legacy and the causes you care about. By working with an experienced estate planning attorney, you can explore various charitable giving strategies and develop a plan that aligns with your values and goals. 

If you're interested in learning more about how charitable giving can impact your estate plan, we invite you to contact Donohue, O’Connell & Riley today to schedule a consultation. Our team is here to help you navigate the complexities of estate planning and create a plan that reflects your wishes while also supporting the causes you believe in.

Losing a spouse is devastating. To help reduce stress on the legal and financial front, we are sharing practical tips to consider for a surviving spouse. You can start by gathering important documents including your spouse’s death certificate, will, marriage certificate, property deeds, vehicle titles, tax returns, bank account and credit card statements and insurance policies. Having these documents ready will help make the most of your time with our attorneys.

1. File the Will

It’s always a good idea, and in some states a legal requirement, to file the will of the first spouse to pass away with the the local court. Even though the will might not be probated, having it on file with local court ensures its safe-keeping if assets are later discovered which require probate. Some examples might be an unanticipated income tax refund, an inheritance, or a life insurance policy or retirement account without a beneficiary designation.

2. Who’s in First?

It’s a good idea to update existing planning documents and remove a deceased spouse from first position on such documents as a will, healthcare proxy, and power of attorney. This can avoid the need to present a death certificate of the deceased spouse when these documents are used; and save time, hassle, and money. A fresh set of documents can also provide for a backup to the person who is now named first.

3. What is the Basis?

Adjustments to cost basis may be available for investment accounts, real estate, and business holdings owned by the decedent. It’s always good practice to obtain appraisals for any businesses or real estate assets, even if jointly owned, as this will provide clear documentation of cost basis adjustments due to the death of a spouse that may end up saving substantial amounts in capital gains taxes, whether that be from repositioning securities in a portfolio, or from the sale of a closely held business interest or real estate. IRS regulations require an appraisal of business or real estate interest to be done by a qualified appraiser; a broker valuation or property tax assessment are not sufficient.

Particular attention should be paid to LLCs and partnerships as a timely, section 754 election may need to be made to allow assets owned by the company to benefit from a step up in tax basis.

4. Change in Tax Status 

Surviving spouses should be able to file as a qualifying widow or widower in the year of their spouse’s death, but thereafter, may be looking at a very different set of tax brackets. Thought should be given as to whether or not assets can be sold, or retirement accounts converted to Roth IRAs in the year of the first spouse’s passing so as to avoid bracket creep when the surviving spouse files as a single taxpayer.

5. Spousal IRA

Spouses often name each other as beneficiaries on their retirement accounts, so the surviving spouse will need to roll over any such retirement accounts and designate new beneficiaries. The rules that govern required minimum distributions for surviving spouses can be complex. Your attorney, accountant, or financial advisor should be consulted to make sure that that minimum withdrawals are taken annually in a timely fashion.

Also, spouses often name each other as beneficiaries on their life insurance, annuities, and other accounts that may flow via beneficiary designation. These beneficiary designations should be updated to reflect the death of the first spouse, and consideration may be given to cashing in accounts and closing or consolidating them if the account is of relatively small value, for example, $10,000 or less.

6. Social Security Benefits 

Surviving spouses who receive a lower Social Security payment than their deceased spouse may be eligible to take the greater of the two benefits. Adjustments may be made, however, if the surviving spouse took his or her benefit prior to reaching full retirement age. You should consult with your regional Social Security representative to determine the substantial benefits to which you may be entitled.

7. Time to Simplify  

As attorneys, we often tell clients that whether an account has $5,000, $50,000, $500,000 or $5 million in it, the work needed to be done to close out the account is about the same. The reality is that each account requires interfacing with financial institutions, each of which have their own rules and forms, and then subsequently accounting for the funds in that account to beneficiaries and the tax authorities. 

We estimate that each account incurs somewhere between $1,000 and $2,000 in legal and accounting fees to close and report the account. Thus, if you have a number of accounts at different institutions, consider consolidating them to the greatest extent possible. 

Ideally, we like to see clients having one retirement account, one after -tax investment account, and a checking account. Other than insurance products, such as life insurance and annuities, this is all that is necessary for 99% of our clients. Having multiple accounts at multiple institutions only makes executor’s task more complex, and often unnecessarily so.

them. 8. Involve the Next Generation  

When your spouse dies, recruit help from the next generation to assist you with day-to-day tasks. Having a second set of eyes to help avoid senior scammers, keep tax records straight, and assist with paying bills can be a godsend in your golden years. It’s also a good idea to have paper statements mailed, even if there is a small fee, as this will help assist your family members if they need to step in on an emergency basis.

9. Avoid Risks and Potential Scams

Family members need to pay particular care when a senior remarries later in life, or brings in a live-in romantic partner, or hires more help around the house. Unfortunately, in our experience, seniors often fall prey to those who aim to exploit the elderly. It’s always a good idea to make sure that personal financial and electronic records are secured in a locked room; that finances are not discussed with people who are new in the senior’s life, and that easily movable valuables, such as the family silver or valuable jewelry, are placed under lock and key.

Similarly, if major work or renovations are to be undertaken, contractors should be carefully vetted, and insurance certificates obtained prior to any major work being commenced. Having a child nearby to check in on the senior, or having a trusted friend or neighbor stop by on a regular basis can be a great way to make sure that your newly single family member is not being victimized.

 

 

 

 

 

 

Life is a journey marked by significant milestones: marriage, the birth of children, career advancement, and retirement, among others. Each of these milestones not only represents a personal achievement but also prompts a need for financial reassessment and planning. One critical aspect that often goes overlooked in this process is the regular review of beneficiary designations. At Donohue, O’Connell & Riley, we emphasize the importance of keeping these designations up to date to ensure that your estate planning aligns with your current wishes and life circumstances.

Why Beneficiary Designations Matter

Beneficiary designations are a crucial component of financial and estate planning. They dictate who will receive the assets of accounts such as life insurance policies, retirement funds, and brokerage accounts upon your death. What makes beneficiary designations unique is their ability to bypass the probate process, allowing for direct transfer to the named beneficiaries. This immediacy and simplicity underscore the importance of ensuring that your designations are always current.

Life Changes and Their Impact

Changes in your life can significantly affect your financial planning. A marriage or divorce, the birth of a child or grandchild, the death of a previous beneficiary, or changes in your relationships can all prompt a need to update your beneficiary designations. Failing to do so can result in assets being distributed to someone other than your intended recipient, potentially leading to family disputes and legal complications.

For example, in many jurisdictions, a divorce may not automatically revoke the designation of a spouse as a beneficiary on a life insurance policy or retirement account. Imagine the potential conflict and distress this could cause if the assets were inadvertently passed to an ex-spouse instead of the intended heirs or current spouse.

Reviewing and Updating Designations

Given the potential consequences of outdated beneficiary designations, it's advisable to review them regularly—at least every few years or following any significant life event. This review should encompass all accounts with beneficiary designations, including:

• Employer-sponsored retirement plans like 401(k)s
• Individual Retirement Accounts (IRAs)
• Life insurance policies
• Annuities
• Payable-on-death (POD) and transfer-on-death (TOD) accounts

When reviewing your designations, ensure that each reflects your current wishes. If updates are necessary, contact the account custodian or insurance company to request the appropriate change forms. Additionally, consider the benefits of naming contingent beneficiaries, who will inherit the assets if the primary beneficiaries are unable to do so.

Coordination with Your Estate Plan

It's also vital to ensure that your beneficiary designations align with the broader goals of your estate plan. Discrepancies between your will or trust and your beneficiary designations can create confusion and potentially undermine your estate planning objectives. Working with an experienced estate planning attorney can help you navigate these complexities, ensuring a cohesive and comprehensive estate plan.

Professional Guidance

The process of reviewing and updating beneficiary designations, while seemingly straightforward, involves careful consideration and planning. At Donohue, O’Connell & Riley, we are committed to providing our clients with the expert guidance needed to navigate these decisions. Our team can help you understand the implications of your choices, ensuring that your estate planning reflects your current life situation and future goals.

In Conclusion

Regularly reviewing your beneficiary designations is more than just a best practice; it's a crucial step in safeguarding your legacy and ensuring that your assets are distributed according to your wishes. Life’s changes are inevitable, and your estate plan, including beneficiary designations, should evolve to reflect these changes.

If you have questions about your beneficiary designations or any aspect of estate planning, Donohue, O’Connell & Riley is here to assist you. Contact us today to ensure that your estate planning needs are met with professionalism, compassion, and expertise. Together, we can ensure that your financial legacy is protected and passed on according to your wishes.