R&R Insurance Blog

Few people have more estate planning issues to deal with than the family business owner. The business may be the most valuable asset in the owner's estate. Yet, two out of three family owned businesses don't survive the first generation due to poor planning.

Following are three concerns all small business owners should address as that plan their estates.

Who will take over the business if you die?

Owners often fail to develop a management succession plan. It is vital to the survival of the business that successor management, in the family or otherwise, be ready to take over the reins.

Who should inherit your business?

This may not be an asset you should split equally among your children. For those active in the business, inheriting the stock may be critical to their future motivation. To those not involved in the business, the stock may not seem as valuable.

Perhaps you entire family feels entitled to equal shares in the business. Resolve this issue now to avoid discord and possible distaster later.

How will the IRS value your company?

Because family owned businesses are not publicly traded, it's usually impossible to know the real value of the business. The final value placed on the business for estate purposes is often determined only after a long and tidious battle with the IRS. It is critical that the owners plan ahead and make sure there is enough liquidity in their estates to pay estate taxes and provide support for their heirs.

If you think wills are only for the rich, you're wrong. A will is an essential part of any estate plan. It is the primary document for transferring your wealth upon your death. If you die intestate (without a will), state law controls the disposition of your property. Without a will, settling most estates is more troublesome - and more costly.

We can't cover all the critical elements of an effective will but there are three major provisions your will should include:

Guardian for your children. The will should name a guardian for your minor children in case both you and your spouse die. Selecting a guardian to care for your children deserves a lot of thought. Name someone whose ideas on raising children are similar to your. Also, be sure the person you select is willing to accept the responsibility.

Personal Property Memorandum. The will should reference your personal property memorandum. Wisconsin statutes permit you to detail the distributuion of personal property to your beneficiaries in accordance with intentions described in your personal property memorandum. The memorandum enables you to change the disposition of items of personal property without revising your will.

Creation of trusts. All a will can do is direct the disposition of your estate. To accomplish longer term goals, such as funding a child's education or providing for an elderly parent, you must include instructions for the creation of trusts. Throughout this article, we will show how trusts can be used to achieve various objectives.

One importand aspect to consider in any trust, however, is selecting your trustee. A good trustee shares many of the characteristics we discuss in the next section Keys To Selecting A Personal Representative.

Naming a Personal Representative. You personal representative has several responsibilities, including:

• Marshalling the assets and distributing the estate assets to your beneficiaries.
• Making certain tax decisions.
• Paying any debts or expenses of your estate.
• Ensuring that all life insurance and retirement plan benefits are received.
• Filing the necessary tax returns and paying the appropriate federal and state taxes.

Estate planning is an easy thing to put off. Maybe you think it's too early; maybe you think your estate is too small. Here are six good reasons why you should plan your estate now:

With a Plan:

• You decide who receives a share of your assets.
• You decide how ans when your beneficiaries will receive their inheritance.
• You decide who will manage your estate (executor, trustee, etc.)
• You can reduce state taxes and administrative expenses.
• You select a guardian for your child.
• You can provide for the orderly continuance or sale of a family business.

Without a Plan:

• State laws determine who inherits your assets - they could pass to an estranged relative.
• The terms and timing are set by law. Your children could be left unfettered control of a sizeable estate.
• The court appoints administrators whose ideas may not be compatible with your own.
• Costs are usually greater, due to required administrative expenses and unnecessary taxes.
• The court appoints a guardian for your child.
• Financial loss and family hardships may result from an untimely forced sale.

A powerful tool to help you control your destiny is the buy-sell agreement. This is a contractual agreement between shareholders and their corporation or between a shareholder and the other shareholders of the corporation. (Note: Partners also can enter into buy/sell agreements.) The agreement control what happens to the company stock in the event of a "triggering" event, such as the death of the shareholder. For example, the agreement might provide that, at the death of the shareholder, the stock is bought back by the corporation. As an alternative, the agreement might provide that the other shareholders buy the decedent's stock.

Benefits of a Buy-Sell Agreement:

• It provides a ready market for the shares in the event the owner's estate wants to sell the stock after the owner's death.
• It sets a price for the shares. In the right circumstances, it also fixes the value for estate tax purposes.
• It provies for a stable continuance of the business by avoiding unnecessary desagreements caused by unwanted new shareholders.

A well-drafted buy/sell agreement can solve several estate planning problems for the closely held business owner.

Did you know...

A Preferred Personal Umbrella insured with one house and two vehicles often pays less that $225 in annual premium for $1,000,000 of additional liability insurance coverage.

Did you know...

The frequency and cost of lawsuits has increased dramatically in the past decade. The following claims are real-life examples of lawsuits filed every day.

• Internet Blogger: The insured's daughter hated math class as well as the teacher. The daugher made several "disparaging" remarks about her teacher online. The teacher successfully sued the parents for $750,000.
• Faulty Furnace: The insured's tenant claims she became ill from carbon monoxide poisoning resulting from a faulty furnace. The tenant claimed permanent brain damage and demanded $750,000.
• Coaching circumstances: A teenager who was destined for greatness as a softball player, filed a $700,000 lawsuit against her former coach, alleging his "incorrect" teaching style ruined her chances for an athletic scholarship.

Did you know...

You family and your daily activities result in lawsuit exposures every day. You should conisder purchasing an Umbrella policy if:

• Your assests are greater than your insurance liability limits.
• You are financially responsible for your children.
• You frequently host guests on your property.
• Your residence includes a swimming pool.
• You own watercraft of off-road vehcles.
• You own rental or vacation properties.
• You paritcipate in volunteer activities.

Person Umbrella Inurance... A small price to pay for peace of mind!

It all started with the red team vs. blue team. The competition between employees seems to work!

Twenty-eight employees made a personal commitment to a healthy lifestyle for six weeks! Exercise, healthy eating, and a personal coach helped each member attain their personal goals. To make it even more fun, each Tuesday night, after work, a personal coach lead a grueling exercise program that included aerobic, weight lifting, and intense strength exercises. The end of the competition was Friday, November 4th.

In just six weeks, 100 % of the participants attained their personal goals!!! The group lost a total of 350 inches and 186.4 pounds! The "Blue Crew" won the challenge with the largest percent of body weight lost.

Peak Performance, who sponsored the challenge said; “We are proud to say R&R Insurance had the best results of any other Corporate Fit Challenge we have ever run!”

It’s no surprise that R&R employees excelled in this program. R&R strives to be recognized as a culture that promotes the health and well being of all its employees. The R&R wellness program continuously educates, supports and empowers employees to improve and maintain their overall health and well-being through healthy lifestyle choices.

Here are questions about long-term care insurance that you may have.

What’s the best age to start planning?

You will never be younger or healthier than you are today. That’s the reason to start planning now when you have the most options. The average age for new individual long-term care insurance applicants is 57; an age when many are able to qualify for good health discounts. This discount reduces costs and remains even if your health changes.

What are the odds I’ll need care?

Many people find it hard to see themselves needing hands-on assistance with basic living activities like bathing, getting dressed and eating. So they avoid thinking about it altogether. The U.S. government reports that 70% of people who reach age 65 will require long-term care services at some point in their lives.

We prefer to say that your real risk is either 0% or 100%. And, that the real question – and the bigger risk – relates to the length of time for which you may need to receive care services. Your plan must prepare for the risk of needing care that could last many years.

What does Medicare cover?

Medicare covers very little, if any, of the cost for long-term care and is restricted largely to specific illnesses and injuries and for short periods of time.

Medicaid is the joint Federal and state welfare program for those with low income and financial resources. Each state operates its own Medicaid program which ahs created major budgetary issues for many states. Other Federal programs, such as Veterans Affairs, do pay for some LTC services, but only for specific populations and in specific circumstances.

Why is it important for women to plan?

Long-term care is an issue of particular importance to women. Women are often impacted as providers of care for spouses and, ultimately, as recipients of care. Planning is especially important for women living alone (single, divorced or widowed).

Women tend to live longer than men and are far more likely to need long-term care. The majority of nursing home residents and those with Alzheimer’s disease are women.

Why buy something I might never use?

If you think about it, people hope to never file a claim on their homeowners, automobile, or life insurance policies. But that doesn’t stop people from owning coverage that protects against real risks. The same is true for long-term care insurance. The financial risks are too high and the potential burdens to loved ones are just too great to do nothing.

The two largest LTC insurance claims today each exceed $1 million. In 2010, the 10 largest LTC insurer paid over $10.8 million daily to 135,000 policyholders.

The families of claimants rarely talk about financial benefits. Instead they talk about how insurance allowed Mom to be care for at home… or how Dad was at a much nicer assisted living community located closer to the family.

There are also return-of-premium options and life insurance or annuities that provide benefits to those who are concerned about never needing care.

Can I get care in my own home?

Yes. Most long-term care insurance policies today enable you to receive qualifying care in your own home and that’s one of the key reasons to consider coverage. Most people with LTC insurance who start receiving care at home are able to remain at home, rather than needing to enter a skilled nursing facility.

How much coverage is the right amount?

That’s something to discuss with your insurance or financial professional, because there is no “one size fits all” solution. Your cost for insurance protection will be based on your age and health when you first apply, as well as how much coverage and what options your choose.

• Find out costs for care where you life or hope to retire.
• Be sure your coverage includes an inflation growth option so your pool of benefits increases each year.
• Ask about a “Shared Care” option that enables couples to link their policies in order to share benefits in the event one person’s benefits are exhausted.

In Phoenix AZ, The FDA issued guildlines to help prevent dangerous situations that occur with bed rails and the elderly getting trapped between them. The article describes ways that the elderly may be harmed and how to create a safer environment for them.

December 07, 2011 -- A few years ago, the U.S. Food and Drug Administration (FDA) issued guidelines to stem the growing numbers of elderly who had become entrapped and injured with bed rails. While these devices were designed to keep the elderly from rolling out of bed and preventing injury, they can also create equal harm. This happens when an elderly patient - particularly one suffering from Alzheimer's or another form of dementia becomes trapped between the mattress and the bed rail.

The FDA guidelines now instruct nursing home and hospital personnel how to make complex calculations to determine if beds are safe. Gaps in the assembly of a hospital bed can occur when different manufacturers make the separate parts - bed, rail, frame and mattress.

Prevention of Bed Rail Accidents in the Elderly:

By law, bed rails should only be used in a nursing home setting with a doctor's order. Mistakenly, some staff members believe that the use of bed rails are a protective device and use them arbitrarily without a doctor's order. Training is imperative for these staff members so that injury or accidents can be prevented. That training will have the staff member do the following:

- Push the mattress to one side to determine if a gap any more than four fingers in width can be made between the mattress and the bed rail.

- Monitor elderly patients, especially ones with dementia and Alzheimer's so that they don't climb over the bed rails and suffer an injury from a fall.

- Check that bed rails have been placed in the upward position prior to leaving the nursing home room.

The Most Common Bed Rail Injury:

Proper training helps prevent the most common bed rail injury - falling over the railing. This type of injury is more devastating than a simple fall from the bed, due to the extra height from which the senior may tumble. Another type of injury that is common with bed rail use involves falls after the bed rails have been lowered. Since those who are bedridden have muscle deterioration, a fall after the bed rail has been lowered is quite common. Other injuries from bed rails can include:

- Chest compression

- Suffocation

- Strangulation

- Death

To learn more about bed rail use and what can happen, if bed rails are not used properly, please visit the website of nursing home abuse attorneys Cullan & Cullan, M.D., J.D. in Phoenix and Scottsdale, Arizona at www.stopnuringhomeabuse.org.