Explain Why You Gave One Child More

Posted on September 15, 2011 by John Hugg

A number of my clients leave different amounts to children via their Wills. In my experience, this occurs most often after parents give one of their children money to help out while they are alive, but not all children. The thought behind giving more through a Will is to give the child who did not receive money while mom and dad were alive a little more at death to equal things out. Of course there can be other reasons for unequal bequests including estrangement or other non-financial issues. A recent Wall Street Journal article notes that when this situation occurs, you should take steps to reduce the likelihood of conflict. Two good ways to reduce the likelihood of a Will contest are writing or videotaping an explanation of the unequal distribution and, under certain circumstances, taking additional steps to show a clear mind when you signed the Will.

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Is Gifting Right For You?

Posted on September 12, 2011 by John Hugg

For many people, making large gifts to children and grandchildren may not be the wisest action to take. For example, if you are a married couple aged 70 with a nicely sized combined estate, gifting may ultimately do more harm than good. Remember that if you are now on a fixed income, inflation will significantly eat into your purchasing power over time. Also, certain costs have historically increased far faster than the overall rate of inflation. Long term care is one such cost. Medical expenses are another fast rising cost. So before you give everything away, think about how much money you will really need to live on during your golden years.

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Business Succession Planning Tips

Posted on September 4, 2011 by John Hugg

If you are planning to pass your business to your children here are some tips and options you may want to consider:

  • Carefully evaluate the interest and desire of the next generation to work in the business. If a child lacks the necessary interest and desire he or she will certainly fail to maintain the company.
  • Turn over control slowly and over time. This will enable the second generation to become familiar with the business and the challenges of running it, allow children to make mistakes without jeopardizing the enterprise and allow you to make course corrections if the chosen heir is not working out.
  • Structure a transfer that requires the next generation to “earn” the company. Set up a purchase over time so you receive much needed cash for retirement, the child or children get the business while learning it has to be earned – it is not merely a gift.
  • Consider having family members who do not participate in running the business be creditors rather than owners. Non-participating family can receive a stream of income while not negatively affecting management of the business.
  • Communicate with all family members about what you are doing and why.
     
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