What you can do as a business owner to proactively plan for retirement

Part 3: Estate Planning & Review 

In this third and final installment of our series on retirement planning, Tax Manager Mary Ann Donahoe explains why insurance and a current will are such important parts of your future plans.

The first and second posts in this series looked at transitioning your business and ensuring optimal tax flow upon reitrement. Obviously, knowing who will take over your business and having enough money to maintain your current lifestyle are hugely important when planning for your golden years. Two other crucial considerations are your will and proper insurance coverage, both business and personal. Each of these help to ensure that your wishes are adhered to and that you're fully prepared for whatever the future holds.

Insurance planning

Part of MRSB's Comprehensive Review & Tax Planning (CRTP) process is to review your current insurance policies and to liaise with your insurance provider to ensure that proper coverage is in place; this helps to achieve financial security for your estate and your family. In the event of the untimely death of yourself or a partner, or an unforseen emergency, you want to be sure that your business can withstand any ensuing financial blows. There are a number of insurance products available depending on your needs. Although we are not in the insurance business, we are able to analyze any potential tax or financial impacts of losing key players in your business, and can recommend what type of insurance would best suit your situation.

Even if you've had a policy in place for several years, it can be beneficial to take another look and make sure it's still the right fit.

Whether it is Term Insurance (where you reeive protection for a pre-determined period of time), Whole Life (where you receive protection for your lifetime and the policy accumulates value that you can borrow against) or Disability Insurance, there are lots of options and the coverage required is different for everyone. A cost/benefit analysis is always a good idea, as well as considering who owns the policy and who the beneficiaries are. Our role is to outline your needs and, in conjunction with your insurance provider, recommend the correct mix of coverage. Even if you've had a policy in place for several years, it can be beneficial to take another look and make sure it's still the right fit. A well thought-out insurance plan can allow for shareholder buyouts, estate taxes and potentially estate and family security. It's a lot to sift through, but well worth the effort.

Will review

If you don't yet have a will, you can read about the importance of this document here. If you've already taken this step, think about the last time you had your will reviewed or updated. Plans, ownership structures and laws change, and it's crucial to keep your will up to speed. Part of the CRTP process is to ensure that your will is properly structured based on your current financial situation, your assets and of course, your wishes. As tax advisors we can assist with the will review and then work with your lawyer to make any necessar adjustments. One of our main objectives through the CRTP process is to maximize wealth and minimize any potential tax burdens that you or your family may face.

Perhaps the most important take-away from this blog series is that retirement planning is an ongoing process; simply having the initial, verbatim conversations about a will, insurance and transitioning your business are not enough to ensure that your retirement will be as you've envisioned. Revisiting your plans on a regular basis can save you headaches down the road and set you up for a happy, worry-free retirement. We think you deserve it, don't you?