Succession Planning Strategies and Resources Dr. Norm Dalsted & Mr. Eric Peterson

Estate Planning – Why Worry About It?  Getting older.  Increasing asset values.  Do future generations want to farm (here)?  Family members living around the world.  Complexity of family units.  Complexity of business ownership.  Estate laws and taxes. You want to “leave a lasting legacy”!

Estate Planning Factors to Consider  Current legal structure  Objectives for developing a plan  Portion of estate needed by surviving spouse  Plan that work regardless of which spouse dies first  Provisions if spouse re-marries  Availability of professional expertise

Estate Planning - What is it? Disposition of property at death A plan for o Financial security during retirement o Fair consideration of heirs o Provisions for business continuation Impacts o Personal o Legal o Tax

Estate Planning – Complicating Issues  Health problems  Management  Intra-family distrust or hostility  Alcohol and drug abuse by beneficiaries  Risk of divorce  Death  Citizenship in nations other than US  Blended families  Business failure risk  Loss of insurability in the future  Risk of nursing home expenses depleting family assets  Ownership of assets in states with high probate costs

Estate Planning - Current Status Where are you ?  Financial status of the business  Financial status of personal wealth  Legal structure of business  Ownership of property  Family situation  Location of documents

Estate Planning - Fact Gathering Powers of attorney Net worth o List all assets and liabilities o Valuation (fair market value, net of depreciation) Types of accounts and ownership o Joint, joint with right of survivorship, etc. o Sole proprietorship, partnerships, corporate, trust, other Location of documents

Estate Planning – Appraisals Reliable asset valuation is critical to success of estate planning. o Gift tax exclusion o Real estate o Forming partnerships o Installment sales to children o Estate tax return Whenever a change of ownership of an asset takes place, an accurate valuation must take place.

Estate Planning – Traits of a “Good” Advisor Honest and trustworthy Good listener Easily understood Understands family situation Knowledgeable o Finances o Tax laws o Inheritance and estate laws Will help you maximize the long-term value of your estate while meeting other goals

Estate Planning – Advisors Team approach to estate planning helps move the process along faster No advisors have all the education or experience needed for the many areas of a successful plan o Investment objectives o Income tax strategies o Techniques of entity formation o Psychology of eliciting family support

Estate Planning – Advisors Members of team vary, but usually include: o Family accountant o Lawyer if emphasis on estate planning o Trust company representative o Financial planners o Appraisers There are also: o Family business consultants o Extension professionals o Life insurance agents o Mediation Firms

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