Follow Dallas Linkedin
Email Dallas Email
Financial
Mar 15, 2018

Estate Planning: A Small Slice of a Bigger Pie

Sponsored Content provided by Dallas Romanowski - Managing Partner, Cornerstone Business Advisors

Business owners commonly associate exit planning with estate planning, and they aren’t too far off.

Good exit plans and estate plans both aim to ensure that the owner’s family is provided for after the owner is gone. Both an exit plan and an estate plan might address a transfer of ownership to an intended recipient following the death of the business owner. 

But one thing that owners may overlook when committing to estate planning is the notion of transferable value. While transferring ownership can be relatively straightforward, creating transferable value so that an ownership interest carries the benefits the owner hopes for can be a greater challenge.

Transferable value is the value a company has without its owner, and it’s incredibly important to consider when we are looking at what ownership is expected to provide once it’s transferred through an exit plan or estate plan.

It’s this aspect that makes estate planning a small but significant slice of a larger planning pie.

Estate plans focus on transferring assets upon an owner’s death. They typically assume that the owner will live past his or her expected exit date and thus have the opportunity to transfer all assets as planned.

But what happens when an owner dies prematurely? What happens when the business - which is most likely the most valuable asset to be transferred - relies so heavily on the owner’s presence that its value plummets when the owner dies? How can you help your family receive real value rather than just ownership rights?

That’s where exit planning picks up the slack, because exit planning focuses on three key elements that estate plans often overlook:

  • Transferable value: Exit plans include action items to help ensure that the business runs smoothly whether the owner lives, dies or becomes incapacitated.
  • Financial security: Exit plans implement strategies to give owners the best shot at financial security regardless of the unexpected.
  • Choice of successor: The exit planning process encourages owners to choose a successor long before the business needs that successor.
Estate plans may presume survival and integrity of business value, whereas exit plans anticipate the unexpected. When the unexpected occurs, businesses with strong transferable value (i.e., those businesses that don’t rely entirely on the owner’s presence) usually position themselves to deliver greater value to the owner’s family.

Businesses without transferable value tend to die along with their owners, which can cause much-needed financial security for the owner’s family to evaporate. For owners who derive most of their wealth from their businesses, the exit plan’s emphasis on transferable value can be a critical component of a successful estate plan.

If you’d like help incorporating your estate plan into the larger pie of exit planning, contact us today. We have experience in helping owners establish the processes they need to give themselves and their families an opportunity at financial security, regardless of the circumstances.

© Copyright 2018 Business Enterprise Institute, Inc. All Rights Reserved

As a member of the Business Enterprise Institute (BEI), Cornerstone Business Advisors is an authorized distributor of BEI’s content and Exit Planning Tools.

The Cornerstone team includes former C-Level executives, successful entrepreneurs and advisers who offer unmatched experience in delivering advanced, custom-tailored, results-oriented solutions for business leaders. We developed the Performance Culture System™ to help clients implement best practices and drive high performance throughout their organization. For more information, visit www.launchgrowexit.com, call (910) 681-1420 or email [email protected].
 

Other Posts from Dallas Romanowski

Bizjournalblockad
Ico insights

INSIGHTS

SPONSORS' CONTENT
Aaeaaqaaaaaaaaidaaaajdhiztrkodm0lte2yjetngrkmy1hotrmltawmdvlmwqyztmymw

In The (New) Beginning…Genesis Block

Diane Durance - UNCW Center for Innovation and Entrepreneurship
Brochurepicture 7312020434

Five Money Myths To Ignore

Creighton Hayworth - Ameriprise Financial
Dallas headshot 300x300

The Process Of Selling Your Business Has Already Begun

Dallas Romanowski - Cornerstone Business Advisors

Trending News

Wilmington Company Acquired By McKim & Creed

Cece Nunn - Oct 26, 2020

Realtor Opens My Sister's Cottage At Mayfaire Town Center

Cece Nunn - Oct 27, 2020

Wilmington Port Reaches Major Container Ship Milestone, Making History

Christina Haley O'Neal - Oct 27, 2020

State Legislators Voice Opinions On Port Project

Christina Haley O'Neal - Oct 26, 2020

Port City Produce Rebrands, Prepares To Move To New Market St. Location

Jessica Maurer - Oct 27, 2020

In The Current Issue

Health Care Heroes: Health Care Professional

The Health Care Professional category honors any health care providers other than physicians or nurses whose performance is considered exemp...


Health Care Heroes: Health Care Executive

The Health Care Executive category honors an individual whose job performance is considered exemplary by people within their organizations,...


Health Care Heroes: Nurse Practitioner / Physician Assistant

The Nurse Practitioner/Physician Assistant category honors a nurse practitioner or physician assistant whose performance is considered exemp...

Book On Business

The 2020 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2020 Leadership Accelerator: Virtual Workshops for Real Leaders
2019 Health Care Heroes
August 26, 2019 Power Breakfast: A Healthy Sale?
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`