succession planning untimely death

Business Succession Planning: Unexpected Death

While planning for retirement is a fun part of the succession planning discussion, we must also cover the less pleasant subject of planning for an untimely death. Most of this information also applies to a permanent disability as well. According to Forbes, three out of five business owners are left vulnerable to consequences of an unexpected tragedy.

It’s April 30 and a business owner client of mine (Bill) has passed away and his spouse calls me. The spouse (Maria) is in a panic. She has never been active in the software Bill owned. Bill died of a stroke just 3 days prior. Maria just came to the realization that she didn’t know if there was money in the bank for payroll on May 4.

Together, we went through a series of discussions that day. I was able to give her all the contacts Bill and I shared with the law firm and financial planner. I was also able to provide information for his payroll service, banker, and the bookkeeper that worked on Bill’s software company. Bill’s management team shared the same concern. Who would run the company, oversee decision making, and make sure clients did not leave?

Planning for this situation, is a challenge as people do not like planning for these unfortunate events. However, there are a number of basic questions and scenarios to consider now. This will help make the situation easier on your surviving family members and employees.

Questions and Scenarios to Consider
  • Do you have life insurance in place that goes to the business to provide a boost to the company’s cash flow should something happen to you?
    • These funds could be used to hire a CEO or consultant to run the company while things are figured out.
  • Have you thought about what you want to happen to the business if you pass away?
    • If so, have you documented it in writing and shared it with your spouse, advisors, and/or management team?
      • Things like:
        • Would you want the management team to use life insurance to buy shares from your estate and run the business as owners?
        • Do you want to leave the business to your children and have them run it? Or hire a CEO to run it?
        • Should the business be liquidated and sold through an M&A transaction? If so, how do you incentivize the management team to stay during this time?

It is impossible to plan for every scenario a business could go through but it is helpful to consider a few possibilities. It is a business that you have built and no one knows better what you want the next phase to be of your legacy, than you. Begin this process today. Have discussions and documentation to help build a succession plan that stands up to many scenarios but provides flexibility as your life and business grow and change. Let us know if you need help with your business succession planning – set up a no-cost consultation today!

What Changes Are Coming To Your Social Security and Retirement Plans in 2018?

The Internal Revenue Service (IRS) recently released cost of living (COLA) changes for 2018.  From 401(k) plans to individual retirement accounts to Social Security, the federal government has been busy in recent weeks adjusting numbers for 2018. Whether you’re an employee or business owner, senior management or nonexempt staff, these changes may affect how you approach retirement in the coming months and years.

401(k) elective deferrals:

Employees who participate in 401(k)’s, 403(b)’s and certain 457 plans can electively defer up to $18,500 of compensation in 2018, up from $18,000 in 2017.

Individual Retirement accounts:

Eligible individuals will be able to contribute up to $5,500 to their IRA in 2018, unchanged from 2017.  The deduction phase out at certain AGI levels for individuals covered by employer plans will increase as well as AGI levels for allowable Roth contributions, depending on filing status.

Catch-up contributions:

Eligible individuals age 50 and above may continue to make contributions to IRA’s, 401(k)’s and other savings arrangements in 2018.  The amounts of $1,000 for IRA’s and $6,000 for 401(k)’s, SEP’s, 457’s, and 403(b)’s remain unchanged for 2018.

Annual compensation limits:

The maximum annual compensation counted for an eligible employee participating in 401(k)’s, SEP and certain other qualified plans will increase to $275,000 in 2018, up from $270,000 in 2017.  The total amount that can be contributed will increase from $54,000 to $55,000.

Social security and Supplemental Security Income (SSI):

Social Security and SSI beneficiaries will receive a 2% increase in their benefits in 2018 based on the increase in the Consumer Price Index for the year ending September 30, 2017.  However, beneficiaries having the Medicare Part B premiums deducted from their benefits may see an increase in the amount of monthly premiums by the lesser of $3.00 or their COLA increase in monthly Social Security benefit.

Other Social Security related changes for employees and employers:

The maximum taxable earnings for Social Security taxes will increase to $128,700 in 2018, up from $127,200 for 2017.  The Social Security withholdings will continue at 6.2% on the maximum earnings and the Medicare tax withholding will continue at 1.45% on all compensation.

In 2018 individuals under full retirement age who have filed for Social Security benefits can earn $17,040 per year or $1,420 per month before $1 in benefit will be withheld for every $2 of earnings above these limits.  In the year the individual reaches full retirement age, they may earn $3,780 per month during the months prior to attaining full retirement age

Please contact us if you have any questions on these changes or the new phase out levels.

LBA Haynes Strand Wins Top Wealth Management Excellence Award

North Carolina CPA firm, LBA Haynes Strand, PLLC has been awarded the 2015 Top Wealth Management Excellence award from HK Financial Services (HKFS). LBA Haynes Strand earned this award by helping clients with strategic wealth management planning.

LBA Haynes Strand was founded on the belief that personal attention, trusted advice, and quality services are key elements to helping clients succeed. In order to further clients’ success, the Firm decided to designate HKFS as their preferred service provider of wealth management services.

This strategic partnership with HKFS provides independent and objective financial services to all clients. HK Financial Services is a Registered Investment Advisor, managing over $1.7 Billion for the clients of its 65+ CPA firms, while providing insurance, brokerage, and retirement planning for its CPA affiliate clients. LBA Haynes Strand is proud to be a part of this partnership.

To learn more, visit our Wealth Management page or contact any of our three office locations!

How Much Should You Save For Retirement?

It’s never too early to save for retirement! While it may sound a bit cliche, it’s true! No matter how long you’ve been in the workforce, determining a retirement plan and regularly reviewing your strategies is of vital importance.

Deciding how much you should be saving for retirement each month can be confusing. Check out the savings plan below for a helpful guide on how much to set aside for retirement. Keep in mind that your plan should offer immediate tax benefits as well.

How Much Should You Save?

Number Of Years Until RetirementEstimated Monthly Savings Needed Per $1,000 Desired (assumes 10% return)
15$ 239.23
16$ 210.97
17$ 186.22
18$ 165.02
19$ 146.63
20$ 130.55
21$ 116.41
22$ 104.06
23$   98.11
24$   83.33
25$   74.74
26$   67.07
27$   60.28
28$   54.17
29$   48.73
30$   43.88
31$   39.51
32$   35.61
33$   32.10
34$   28.95
35$   26.12

The sheer number of retirement plans that are available can be overwhelming. How do you select a plan that will best provide for you at the time when you need it most? Is a combination of plans more suitable?

Are you ready to save for retirement? The partners and staff at LBA Haynes Strand are eager to help you choose the retirement plan that makes sense for you. Our team can also advise you on how changing tax laws will impact your current plans. Ready to discuss your future? Call or email us today for a FREE consultation!