by Lisa Collins, QC, TEP | Sept 2, 2014
‘Planning Avoidance’ occurs when business owners postpone planning for the succession of their business and wealth. It is a widespread affliction among business owners across Canada, and although there can be many reasons for it, we’ve compiled a list of the 7 most common things we hear. Perhaps you’ve said, heard or thought these same excuses before … and we’re here to debunk them and introduce you to a great solution through our Family Wealth Counsel Program.
1. “I don’t know where to start”
A good starting point is to think about what is important to you and your family, which is the foundation to this kind of planning. Simply taking the time to think about these things, and sitting down with an experienced professional is a perfect first step. One of the things we don’t start with is tax planning. Yes, saving taxes is important and it will certainly be addressed, but it is not the starting point. We work with families to first-and-foremost identify their goals and objectives, so that planning can revolve around that. To take some of the pressure off, we are also happy to provide complimentary consultations to get the conversation started.
2. “It’s too complicated”
One of the main objectives of succession planning is to simplify things. Yes, most business owners’ affairs are complicated, but this is why we take a “whole picture” approach. The Discovery phase is a perfect way for us to obtain a detailed understanding of your entire personal, family and business situation. We then map out this information in an easy-to-understand way, so that you can feel educated and well-informed to make the right planning decisions. It may seem complex or messy to you, but by integrating our expertise in a number of areas, you can soon gain a solid understanding of all of your affairs and the potential solutions and opportunities.
3. “It might create or uncover more problems than it solves.”
It’s true that you might uncover some issues that have been hiding under the surface, such as pending tax burdens or gaps in insurance coverage. However, it is better to have the opportunity to solve those issues before it is too late. Much bigger problems also often arise when planning is not done. Unfortunately things do not sort themselves out, and the legal and tax implications can be unforgiving if not planned out properly. To make things worse, when family dynamics are involved, there are often gaps in family communication which can lead to animosity, conflicts and costly disputes. Our best recommendation is to just start the first conversation, knowing that once we help identify any issues, we are ready to help you develop solutions and plans as well. Once those solutions are in place, you can look forward to moving on with your business’s (and family’s) future.
4. “I’m pretty sure things are already taken care of by my long-standing professionals”
Planning for the succession of a business and family wealth is specialized work. It should address the many aspects of your financial affairs and family circumstances. Although many business owners have long standing relationships with their professionals (such as financial advisors, accountants and lawyers), often these services have been focused on the business itself, and involve specific transactions or functions. Moreover, there is often no coordination or communication among the various professionals. Planning properly for the succession of your business and wealth requires “hands-on” integrated planning with specialized expertise. However, we welcome the involvement of your other professionals in the process, and depending upon your needs, they are often key players in the implementation of your plan.
5. “It’s going to cost too much”
In almost all cases, it will cost much more to NOT do your planning. Some examples include unnecessary taxes, increased professional fees and family disputes that can erode your wealth. We understand that business owners want to know what they are getting into and how much it is going to cost when it comes to their planning. This is why we take the time to get to know your situation and explain all that is involved, before we are engaged. We also use a fixed fee structure for the Discovery and Planning phases, to provide you with the best value and peace-of-mind.
6. “I’m going to work forever”
Although you may be enjoying your role in the business now, there will come a time when you are either ready to slow things down or you are no longer able to manage your responsibilities. So the short answer is, No, you are not going to be able to work forever, and you likely won’t want to work forever. Many of the business owners we work with are at a point in their life they’re ready for the “next phase” of their life, including leisure time, travel, or spending more time with their family. It’s also important to recognize that there is a significant risk involved in not planning your business succession. Should you suddenly die or become incapacitated without a succession plan in place, the future of your business and overall wealth are immediately at risk, not to mention the complex and stressful situation for your family, management team and employees.
7. “I’m going to live forever”
Although most people don’t say or think this, many act as if this is true. And no, you are not going to live forever. We are very sure of that. You don’t even get to choose when it happens. Unfortunately, dying without having proper plans in place can be one of a business owner’s biggest regrets, based on what their loved ones have to go through. We have seen situations where a business owner’s lack of planning has caused their family to take on immense responsibility to restructure or sell businesses, sort out legal and accounting issues, pay large tax burdens and make major succession decisions, right in the midst of their grieving.
It’s easy to get caught up in your busy day-to-day life, but putting off your business succession and family planning can have devastating consequences. If you or someone you know is experiencing some Planning Avoidance of their own, we invite you to contact us to set up your first consultation as part of our Family Wealth Counsel Program. This comprehensive program is designed to overcome these barriers and more, so that you can preserve and enjoy your wealth for generations to come.
If you have any questions or comments, please contact me at email@example.com or (250) 294-4218. Your comments are also welcome below!
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