download (1)Following is the most basic “must have” checklist of legal and financial planning our business owner and physician clients find indispensable in running their businesses in a safe and predictable way. Many of the most common exposures can be eliminated or well limited by working with top counsel to identify and manage these risks now, while you have the legal right and financial ability to do so. The days when all that success required was that you open your doors, work hard, do the right thing and simply run a cash register are long gone; things are now much more complex. KEEPING your wealth requires an experienced and sophisticated team and in some cases almost as much effort as MAKING it in the first place.  Who’s on your team? Do they have the skills and professional partners required to do the job or have you and your business outgrown them? We see recurring risk patterns and common planning needs across many successful businesses. We help successful clients all over the U.S. coordinate all or any of these issues with the team of professionals we have assembled to help maintain their hard earned success. Please review this list to see which areas you need to update or explore. As always, call us with questions about your specific facts, advice presented in this context can never be specific to your unique needs.

  1. Asset Protection Planning – Think of it as Net Worth Insurance, organizing and segregating your assets and protecting them from your personal and professional liability. This requires cost effective and pro-active planning today while you still have well defined legal options. There is little or nothing to be done, except paying defense attorneys, if you get caught in a lawsuit or have some other significant exposure before you do something and any moves you make after the fact may create additional legal jeopardy.
  2. Coordinated Financial Planning – You need a good financial adviser to help make sure the money you make is working as hard for you as you worked for it and that the investment planning you have in place includes both growth and loss prevention strategies that address the very real scenario of a down market. Those who planned only for an upside are still recovering from the 2008 crash.
  3. Disability Insurance – This commonly overlooked tool protects your cash flow against your own injury and illness, the times you need it the most. Large amounts of coverage with lots of sophisticated bells and whistles are available. The beginning of the year is a great time make sure that your cross-purchase or buy-sell agreements are properly funded. If your partner has a stroke or some other debilitating illness, how long will you (or he) be willing and able to make large monthly payments to a non-productive partner? If you can’t work and earn, how long will your cash reserves last before you are forced to liquate savings and other assets?
  4. Liability Insurance – Insurance alone can never be a complete asset protection solution, but it is ALWAYS the first line of defense on issues that we can actually insurance ourselves against. This means you must have advisers that understand the right kinds and amounts of insurance you need to have in place for risk management including a personal liability umbrella policy, professional liability insurance, employee lawsuit insurance, data breach insurance if you handle client financial or HIPAA data, and a variety of other specialty coverage. There is NO single policy that can cover all these areas.
  5. Life insurance – Make sure you have appropriate amounts to cover estate taxes, generate income for survivors and pay off debts you want settled. We also make sure that you are not paying too much and have the most flexible policy with the greatest number of benefits. Again, cross-purchase and buy-sell agreements must be carefully funded. I routinely see these agreements between our business owner clients that are either unfunded or under-funded. If your partner dies with no coverage or inadequate coverage in place you could easily find yourself across from their family in a courtroom explaining why the business should be liquidated to pay them the deceased’s share.
  6. Worker’s Comp Coverage – Make sure your employees are protected against on the job injuries and their rising costs and that you are protected against the significant liability for what happens to them.
  7. Employee Benefits Planning – From 401K to Executive Compensation planning, there are a number of ways to provide these benefits, some are more advantageous to you, the business owner than others. Many of these programs also have significant legal burdens and compliance risks, so get real help, unless you’ve been trained to do things like write an investment policy statement for a company 401K yourself.
  8. Employee Handbook and Dispute Resolution Policy – Governs their rights and your responsibilities, controls actions in the workplace and your employer policy. If you don’t define certain polices the courts (or worse your employee’s attorneys) will define them for you. This is one of the highest ROI investments you can make in your business in my opinion. These should be custom drafted, updated and reviewed regularly and should be state specific and uniformly enforced. Right now the average sexual harassment verdict, as just one example, is $530K. Your business is 5 times more likely to be sued by an employee than for any other reason. Have a plan.
  9. The Right Corporate Formation – Does your corporate formation (or lack of it) expose you and your personal wealth to liability and taxes? Will it hinder you in the case of sale? Do you have too many eggs in one basket? For example if your business or medical practice entity also owns the building it operates from you are needlessly exposing the real estate asset to unrelated professional liability. Simple fixes can save you millions if something bad happens. These documents should be reviewed and updated periodically as well.
  10. Professional Accounting Service – A top notch CPA? Taxes & payroll are just the beginning, you need a professional who proactively offers solutions and shows you legal tax avoidance options in addition to administrative and reporting functions we all rely upon them for. A good CPA calculates what you owe Uncle Sam to the exact dollar whereas a great CPA helps make that number as small as the law allows.
  11. Real Estate Depreciation / Property Tax Reduction Study – You can often get tax deductions for R.E. depreciation NOW when you need them, not just 30 years from now with professional help. Most of my clients own significant real estate and we see this as money left on the table time and time again. We also see that many R.E. owners are paying tax rates on their property that is higher than it should be and often suggest reviewing the tax rate with a qualified professional.
  12. Personal Income and Business Receivables Protection – If you were in the middle of a lawsuit would your income stream be protected? Make sure the cash flow you use to fund your family’s lifestyle and all these other things is safe. Your income can be assigned, managed and even  “equity-stripped” just like a piece of real estate and the value put within protected structures that grow them in a tax advantaged way. There are proven legal ways to own these assets that are almost always better than holding them in your own name.
  13. Tax Reduction and Retirement Income Planning Including Pensions – This is another area where having the right CPA and financial adviser makes a critical difference. Remember – it has to last at least 30 years and account for inflation! Instant lesson, compare the cost of an automobile or a loaf of bread 20 years ago to their costs today and see if inflation made a difference. Imagine dealing with that kind of cost increase on a fixed income 20 years from today.
  14. Estate Planning – What happens to your family and the fruits of your life’s efforts at your passing?  Should they get the assets outright or should they be held in trust? How will the assets be protected from your heirs own liabilities including their spouses and even possible bankruptcy? How can we avoid a fight over asset sand protect those we leave behind? These are just a few of the issues that every well drafted estate plan will help address.
  15. Exit Plan Strategy aka Succession Planning  – Ok you’ve been successful at what you do – now what happens? Make sure business is an asset when you are ready to sell it or retire and that the planning you have done minimizes your tax exposures on the sale or transfer. A little proactive work here can save you as much as 50% in taxes and help make sure that your legacy and this valuable asset is handled with the respect and care your efforts deserve. This can include selling it or passing it on to family or key employees and also requires that we address your asset protection planning. Remember, you are trading an income producing asset for a finite lump sum of money or stream of payments that needs to be protected from a variety of exposures, including the buyers themselves.
  16. Long Term Care Insurance – Aging and it’s costs are an inevitable expense as medical technology progresses. Those who handle the costs and their future needs proactively fare far better than those who do not, a full 40% of American bankruptcies result from medical bills and these costs are growing yearly by leaps and bounds. As always – call or email us for help or more information on any of these issues. No one planner can an expert at everything, but we have a tremendous list of national and local partner resources that we use to serve our clients and will be happy to point you to good help.