Entrepreneurs need to pay closer attention to potential changes in the plan.
The average person will meet with an estate-planning attorney to draft a plan, but often has neither the need or desire to look at it again for another 10-15 years. The person may meet with their advisor once in a blue moon to see how much they need to work and save along the way to retire comfortably, but that’s all. Seems pretty simple, right? For entrepreneurs, this path isn’t so clear-cut.
FGE VERSUS NON-FGE
Has the loss of a key employee changed your succession plan? How have the key people changed in your life? Do you, as the business owner, even know what to look for in a complete estate plan?
The ever-changing nature of a first generation entrepreneur’s (FGE) situation forces them to reevaluate their business and estate plan frequently. The fluidity of a business makes revisiting the plans often a necessity to ensure their wishes are appropriately aligned. Not only is the business tied to their estate planning, but it plays a huge part in their financial planning as well.
SPECIAL CIRCUMSTANCE CALLS FOR SPECIALIZED ADVISORS
The constant evolution of a FGE’s business results in a different set of people problems and succession changes. Estate planning documents can be both legally correct and a complete disaster for an entrepreneur’s business plan because the advisor wasn’t looking at the business owner’s big picture.
This becomes a common mistake for FGEs; not having a business estate planning attorney preparing these unique and specific documents to hone in on the FGE’s situation. Having a trusted set of advisors around you who understand your personal and business goals can help point out any blind spots.
A non-business owner is dependent on his employer to make a comfortable living and save enough throughout the years to invest accordingly. The entrepreneur, on the other hand, is heavily dependent on increasing income and driving the value up in their business. Entrepreneurs need the income now and the value in the future. They constantly need to be looking at their business in a snapshot of 2-3 years versus 10-15 years, not only because of people changes but also because their net worth can change wildly from one year to the next.
Estate and retirement planning for entrepreneurs isn’t impossible, but it is a delicate, ever-changing landscape that must be revisited often and with close attention to detail.
Randy Gerber is founder & principal of Gerber, LLC. Gerber, LLC is a professional services firm located in Columbus, OH that works exclusively with first generation entrepreneurs. Gerber works with clients to plan for business growth and understand what they want out of life, then puts a holistic wealth management plan in place to make it happen.
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