Are you Understanding your Legacy?

A privately-owned business is not a Legacy.  It is a wealth generation tool.  Your Family and your Life are your Legacy.  If you remember this adage you can plan more effectively for your future retirement.

In Steven Covey’s book “The Seven Habits of Highly Successful People”, he emphasizes to always begin with the end in mind.  He says “find the end before the end finds you”.

In Peter Christman’s book “The Master Plan: Exit Strategy for Successful Business Owners”, he emphasizes the need to master all three legs of the planning stool.  The first and most important leg is your personal plan.  You must understand what you want to do with your life after your business is no longer a part of it.  Understanding this allows you to effectively move on to your financial plan.  Here in the second leg, you gain an understanding of the costs associated with living the lifestyle you’ve determined you want to live.  It also evaluates all of your assets to determine how best to generate the income needed to fulfill your lifestyle needs and wants.  Lastly, it is coordinated with your estate plan to ensure your family legacy.  The third and final leg of the stool is reserved for the business exit/transition plan.  Since the business is usually the largest asset, it is critical to get this planning right.  The business proceeds will provide most of the funding for the financial plan.

Family businesses are usually the most challenging when it comes to planning.  Here are some tips to improve your chances for success.

Silence is the biggest killer of family businesses and family wealth.  Build a culture of communication and transparency within your family.  This transparency should extend into your financial and estate plans.  Believe it or not, over a third of the people in the U.S. do not have a will.  Many of those that do have a will have outdated information.  When Bobby Kennedy died in 1968 his will listed JFK as his executor.

Most business owners view financial planning as a chore.  Consider working with an advisor with a CFP and CEPA designation.  In today’s world it’s more important than ever to have a plan.


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