Whitepapers Archives - Rigby Financial Group

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Not all wealth management strategies are built alike—and why should they be? A truly effective wealth management strategy must be designed to meet both your current and future financial goals —and these are as unique as you are.

If you’re a high-earning individual looking to develop a strategic wealth management plan for your assets, you may want to consider developing a working partnership with one of the expert CPAs at Rigby Financial Group to help you devise and implement a wealth management strategy designed to meet your own unique goals.

This whitepaper will outline what it takes to build a reliable and effective wealth management strategy with the guidance of a CPA.

Introduction: Understanding Wealth Management

At first, one may wonder how “wealth management” varies from the strategies and services that make up traditional financial planning. The truth is that the two are inextricably linked: in essence, wealth management is the natural result of following a comprehensive, personalized financial plan. Wealth management strategies are geared towards the development and enhancement of one’s financial portfolio. Since any comprehensive financial plan will include this as part of both short and long-term goals, wealth management becomes the natural result of good financial planning.

Despite the fiscal and regulatory impacts of 2008’s financial recession, the current wealth and asset management industry in North America is thriving. Aite Group reports via Business Insider that in the United States alone, the industry was worth over $29 trillion (USD) by Q3 of 2020 and that the total assets under management in North America are expected to reach $73.3 trillion by 2025. These statistics highlight just how critical it is to develop an effective, long-term wealth management strategy that corresponds with one’s specific financial goals and security needs.

The highly-tailored, comprehensive wealth management services offered by banks or financial firms generally require clients to meet minimums of investable assets. However, these are not the only financial service providers available to those seeking out wealth management strategies. Today, many American CPAs hold the Personal Financial Specialist (PFS) accreditation from the American Institute of Certified Public Accountants (AICPA) and can assist you in creating and executing a solid wealth management strategy within your financial plan.

Developing Effective Strategies for Wealth Management through DERIV™

You may wonder where to even begin when it comes to creating a wealth management strategy that integrates naturally into your current financial plans and goals. To help our clients make the most of their assets, Rigby Financial Group has developed the DERIV™ Process. Through the five steps of this process—Develop, Explore, Review, Implement, and Verify—our expert CPAs help our clients discover, achieve, reexamine, and exceed their financial goals in order to expand their wealth and assets.

The DERIV™ Process is not static: rather, it is designed to be an ongoing collaborative process between our team and clients, in order to address each client’s changing needs, fears, goals, and desires. We outline each of the key steps in this process below:

Develop

Any effective strategy for wealth management must be tailored to the current and future needs and goals of the individual client. At Rigby Financial, we believe that the development of an open and honest relationship between client and advisor is absolutely key to crafting a comprehensive wealth management strategy tailored directly to the client’s unique needs, taking into account each individual’s current financial picture, their goals, their risk tolerance, their timeline, and their obligations.

The development step of the DERIV™ Process requires clients to fully understand their personal relationship with their wealth and assets. Further, clients must be willing to share the most sensitive details of their financial position with their advisor. In addition, a key factor in development is understanding precisely why and how money matters to each individual client, and what it represents for them, personally.

Explore

In order to help you attain the goals you have for your financial portfolio, your advisor will need a deep understanding of the current state of your assets. Wealth management plans are most effective when approached holistically, meaning that each category of your assets is taken into account when integrating strategies to manage other asset categories and/or individual assets.

In this step, you share with us any financial documents and records necessary to the development of your financial plan. Your financial and tax records will help us craft a portrait of your current financial state and offer a realistic perspective from which to develop the best wealth management strategy for your unique needs and goals.

Review

Effective strategies for wealth management are all about synthesizing the current state of your finances with your goals and objectives for the future. During the review process, we will evaluate the best options for the management of your wealth. Together with you, we will work to create a truly personalized, holistic strategy to increase your financial portfolio according to your personal goals and the financial future you hope for.

Truly effective long-term wealth management plans will feature a well-balanced synthesis of various financial planning services and strategies. While the balance and particulars of these services may shift depending on the needs, desires, comfort, and financial standing of each individual client, any wealth management strategy must integrate a diversity of financial services to address the full breadth of your assets and goals.

Implement

Wealth management strategies don’t only exist in the abstract. Once we have developed an understanding of your goals, your current financial circumstances, and the best paths forward, the next step is to set your financial plans in motion.

Some people may fear their relationship with their financial planning advisor might falter at the implementation of their plans. Not at Rigby Financial Group – our CPAs are here for continued guidance, support, and troubleshooting of the wealth management strategy that has been crafted for you. We assist you in the implementation of your financial planning at every step.

Verify

Wealth management requires consistent monitoring of your plan and assets in order to ensure – so far as possible – the short and long-term success of your plan. As your wealth management strategies are implemented over time, there are innumerable factors that can change the course of your financial goals and needs, or affect the efficacy of your original plans. For example, it’s important to consider global market and regulatory changes on the horizon which may impact the approach we take to developing our clients’ wealth, as became apparent during the global COVID-19 pandemic in 2020.

The truth is that highly personalized, comprehensive wealth management strategies must remain nimble enough to change course when the need arises. Our advisors know this well and are here to meet with you regularly, to map the progress of your financial strategy and ensure it continues to grow with you.

Build a Wealth Management Plan Meant to Last with Rigby Financial Group

With the expert guidance of a CPA, you can adopt various effective wealth management strategies to cultivate a well-balanced, long-term plan to manage, secure, and increase your wealth. Rigby Financial Group’s team of experienced CPAs can help you create a strategic wealth management plan that aligns with your goals for your assets, enhances your investment portfolio, protects your family, and more. To schedule a consultation with a member of our team, contact us today.

Digital estate plans are an increasingly important element of the estate planning process. In this whitepaper, we’ll outline the definitions, considerations, and steps necessary to create a digital estate plan.

Introduction: Defining Digital Assets

Before developing a digital estate plan, it’s critical to have a solid understanding of what digital assets are. Broadly speaking, a digital asset is an electronic record owned by either an individual or enterprise that comes with the right to be used by said owner. According to this definition, digital assets may include the following:

Personal accounts and logins: Your social media and email accounts, as well as your accounts for any medical portals, e-commerce sites, cloud services, online banking and billing accounts, or password management services, qualify as digital assets.
Digital records, documents, and tools: This category includes digitally uploaded or created photos and videos, audio files, PDFs, spreadsheets, blogs, website domain names, and even computer software stored within a physical location (like your home computer or flash drive) or a cloud-based storage system, such as iCloud or Google Drive. These records, documents, and tools are likely to be the broadest, most challenging category of digital assets to collect.
Physical technology: Based on their more obvious, tangible value, your physical technology may be among the first items you want to consider when taking stock of your digital assets. Desktop and laptop computers, tablets and e-readers, cellphones, flash drives, external hard drives, digital cameras, as well as any other devices connected to the Internet of Things (IoT) can be considered digital assets for the sake of digital estate planning.
Financial assets: The most legally complex category of digital assets are those that fall under this category. Digital financial assets may include both traditional fiat currencies and cryptocurrencies, digital wallets, investment accounts, annuities, retirement accounts, and more. Unclear legal definitions and shifting regulations for financial assets in digital markets have created complex issues regarding blockchain technologies and posthumous digital asset management, specifically.

The Necessity of a Digital Estate Plan

Despite the prevalence of digital technology in both the personal and professional spheres, many individuals may not fully understand their digital assets’ value and breadth. Therefore, they may not realize the importance of accounting for the management of these assets after their death. The vast scope of data and devices that can be considered digital assets only contributes to this issue: everything from a blog post to your cryptocurrency holdings is a digital asset, though their levels of importance—both personally and legally—may vary greatly.

However, the rate of global digitization over the past two decades has increased both the ubiquity and value of digital assets in all their forms: the World Economic Forum has estimated that 60% of all global GDP will exist digitally by the year 2022. Further, the growing presence and importance of digital financial assets such as Bitcoin, Litecoin, and Ethereum in the global market indicate an urgent need for legal processes which outline posthumous digital asset management practices for cryptocurrency holders.

In today’s digital world, traditional estate plans alone are not comprehensive enough to encompass the disposition of many digital assets. Unfortunately, however, the creation of a digital estate plan can be tricky. In certain states, a digital estate plan must be added as an amendment to your existing estate plan (such an amendment is known as a codicil), once your plan has already been finalized. However, even filing a codicil may not grant your executor legal access to your digital assets: terms-of-service agreements associated with many online accounts prohibit third-party access to user accounts—even in the case of the account holder’s death.

Additionally, certain federal and state data privacy laws, such as the Stored Communications Act (18 USC §§2701-2712) and the Computer Fraud and Abuse Act (18 USC §1030), both enforce and blur the obstacles pertaining to digital data and death. As of 2021, 45 states and Washington DC have either introduced or enacted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) to provide fiduciaries with legal pathways to managing the digital assets of the deceased. However, California, Oklahoma, and Louisiana have yet to either introduce or enact similar legislation, making digital estate plans an even more urgent necessity for individuals in these states.

Ultimately, a digital estate plan is necessary to clarify any potential questions, concerns, and legal ambiguities associated with the handling of your digital assets after your passing, especially for individuals with cryptocurrency holdings, online businesses, or other sensitive digital holdings

CPAs and Digital Estate Planning

CPAs are a great resource in developing both traditional and digital estate plans; some critical benefits from consulting with a CPA for the latter include:

When it comes to your digital estate, a CPA can help you understand the tax ramifications of your financial plans, helping you maximize your estate’s amount, which will be passed down to your beneficiaries.
A CPA can help you organize your digital assets into clear categories that 1) make sense in the context of your will, and 2) take into consideration any tax laws, regulations, or contingencies that could impact your digital assets upon your passing.
As an expert financial advisor, your CPA can be an invaluable resource for the executor of your digital estate. They can assist your executor in understanding various tax processes and responsibilities in the execution of your will.

Steps to Creating a Digital Estate Plan

Accounting for digital assets in an estate plan may be fully as time-consuming (and possibly more complex) as developing a traditional estate plan. However, you can take four key steps to organize the digital estate planning process for yourself, your family, and any professional advisors involved in the process.

1. Organize and outline your digital assets

First, identify your various digital assets and sort them into appropriate categories and subcategories, based on their function as well as the type of information each contains. For example, while your social media and bank accounts both have online logins, you’ll want to separate those two account types into different subcategories due to their differing functions.

For each asset, include instructions on where and how to access each account or asset, including usernames, passwords, login links, URLs, portals, security keys, answers to security questions, and any other relevant information.

2. Determine where / how each asset will be distributed or otherwise handled

With respect to your online accounts, you may first want to review the terms of service for each account’s website or company. Many companies, such as Google and Facebook, now have policies regarding handling user accounts upon their death, which may help define the handling of these accounts in your estate plan.

3. Appoint a digital executor

Just as with traditional wills, digital estate plans require an executor – with access to your digital estate – to implement your plan. While the digital executor can be the same individual who executes your primary estate, you may choose to name another trusted person for this position. In either case, a CPA can be an extremely helpful resource for your digital executor—therefore, you will want to provide this individual with contact information for the CPA who assisted you in developing your digital estate plan.

4. Legalize your Digital Estate Plan

It is best to have your digital estate plan outlined separately from your will, which will become public information upon your death. Since the digital estate plan will contain highly private data such as usernames and logins to your digital accounts, share the location of your digital estate plan with your executor and your CPA, by all means, but do not risk your confidential information being made public.

Creating a Digital Estate Plan with Rigby Financial

It’s never too early to begin building a digital estate plan to ensure the safe handling of your digital assets. Though estate planning can be emotionally taxing, Rigby Financial Group can ensure that your estate plans are handled with the utmost care and consideration for you, your property and your loved ones. Contact us today to schedule a consultation with one of our trusted CPAs.

If you’ve been successful in accumulating financial resources, you may want to leave some of your wealth to family members to help provide for their futures. Transferring your wealth to family members may afford them financial opportunities they would not have without your generosity. However, a genuinely effective intergenerational transfer of wealth requires the design and implementation of an individually-tailored, comprehensive strategy.

Each person’s financial situation is as unique as their fingerprints – what works for one family may not make sense for the next. Developing a financial plan that protects your family and your wealth is essential, but getting started can be daunting. Whatever the intricacies of your financial situation, consulting with a financial professional who listens to you and implements a plan tailored to your needs is the best way to ensure the effectiveness of your wealth-transfer strategy.

How can you create generational wealth?

Any valuable asset can be passed down to your heirs to provide generational wealth. Such assets commonly consist of cash, bonds, stocks and mutual fund investments, personal property such as cars and artwork, real estate, or equity in a business. Obviously, with such a variety of assets potentially in play, generational wealth transfers can become quite complex. Arranging for a seamless transfer of your wealth is essential – not only to preserve the worth of your assets, but to ensure your heirs are prepared to manage the wealth they will inherit, and minimize the taxes you will pay.

America is steadily approaching the largest generational wealth transfer in our nation’s history, as the “silver tsunami” approaches. Baby boomers – those born between 1946 and 1964 – are retiring at astonishing rates. The Pew Research Center estimates that 40 million baby boomers have retired as of the end of 2020, with almost 5% of all baby boomers retiring in 2020 – more than twice as many as in any year since 2011. A significant portion of their wealth may be transferred to their children and grandchildren, particularly via qualified retirement assets. With the impending effects of this significant shift bound to reverberate throughout society, it is now essential to determine the best strategies for managing and transferring your wealth.

Importance of Proper Financial Planning for Wealth Transfers

Life is unpredictable, and anyone’s circumstances can change dramatically. If your financial plan is not both well-designed and set firmly in place, you may be risking more than you realize. Without proper planning and management, your valuable assets are may start declining, which can lead to financial anxiety for you.

Having an expertly crafted plan for transferring your wealth helps to mitigate unnecessary income tax and estate tax liabilities. Moreover, being proactive and inclusive in this process can protect your family from lengthy court battles, during which the value of assets can be severely depleted.

Handling the transfer of your wealth requires time and commitment, and, while it’s never too late to get started, the sooner the better. Rivers are easiest to cross at their source.

Some questions to consider when planning include:

What is the total value of your assets?
How much annual income do you think you will need once you retire?
Are you charitably inclined? Do you want to leave some of your assets to charities you support?
If you own or partner in a business, is it securely structured to provide liquidity to you?

If you choose to transfer some of your wealth to family members, you should consider discussing your structured plan with them once it is in place. You may even want to leave them detailed instructions on how to handle your money.

Basic Starting Points for Generational Wealth Transfer

Creating a Trust

Trusts can provide grantors with safe and flexible ways to hold and pass along valuable assets. Depending on its purpose and design, a trust can shield assets from certain tax liabilities while the value of the assets held in the trust continues to grow. Some popular types of trusts used for generational wealth transfer include:

Dynasty Trusts
Grantor Trusts
Marital Bypass Trusts
Charitable Trusts

To create a trust for your family, consult with a CPA as well as an estate attorney to help you determine which type of trust is most appropriate for you, which assets to include in your trust, how to choose trustees and beneficiaries strategically, and when and how to distribute the assets.

Annual Gift Giving

Another way to transfer your wealth to family members is through yearly gifting. For the tax year 2021, individuals can give up to $15,000 to anyone they choose without incurring gift tax liabilities, and there is no limit on the number of people to whom this amount can be gifted annually.

In addition, an individual can gift more than the standard $15,000 amount without incurring gift taxes, provided the funds are used to cover certain qualifying expenses, such as tuition or medical expenses if these are paid directly to the respective institutions. Consultation with a financial professional is critical to help you understand and navigate the potential tax implications associated with gift-giving for generational wealth transfers.

Currently, the estate exclusion is $11.7 million per individual, meaning that a married couple can effectively gift a total of $23.4 million without incurring any estate or gift tax liability. This exemption is likely to be reduced under the current administration, and changes may be made retroactive to April 28, 2021, so we recommend you begin your estate planning as soon as possible

Roth IRA Conversions

If you have a traditional IRA which a) you are not currently making contributions to, or b) holds assets you don’t think you will use in your lifetime, you may want to consider converting a portion or all of its funds to a Roth IRA. While you will be liable for income tax on the entire amount of the assets you convert to a Roth IRA, once converted those assets can currently appreciate tax-free, and be distributed tax-free to the stated beneficiaries as well, without your having to take required minimum distributions during your lifetime. Timing is key here; the specifics of your individual financial situation will determine whether – and when – this option is right for you.

Simplifying Your Wealth Transfer Strategy with Rigby Financial Group

Though generational wealth transfers can be overwhelming to organize, it’s something you should prioritize to ensure that you and your family get the best use of your hard-earned assets, and it’s crucial to remember that because every person’s financial situation is unique, the best strategies will vary from person to person, and from family to family.

It is particularly important to address your wealth transfer strategy now, as there are current proposals to significantly change the calculation of income taxes, estate and gift taxes, and capital gains taxes. Though some of the proposals may not become law in their current form, it’s very likely that there will be significant changes to the capital gains tax rate, estate exclusions, gifting, and other wealth transfer strategies. Therefore, it’s a good idea to take steps now to plan for securing your assets and reducing your tax liabilities.

If you aren’t sure what strategies are most appropriate for your family and circumstances, let Rigby Financial Group help. Our experienced team of financial professionals will help you develop and implement the most effective strategies to steward your wealth for yourself and your heirs. Call or connect with us today to begin mapping the best path for your family to navigate the road toward a successful generational transfer of your wealth.

If you come from a long line of generational wealth, new laws may change your succession plan. In the past, the rules for succession planning for families have stayed relatively the same. Previously, when the original owner of a property or asset died, the asset would be passed down to an heir and they would not have to pay estate taxes or capital gains taxes until they sold the asset. President Biden’s Administration, however, plans to change how inherited wealth gets passed down from generation to generation. It’s essential to be aware of these new plans and when they might occur because it’s likely that they’ll impact the succession plan you already have in place. If you do not already have a plan in place, you should create one sooner rather than later with these new details in mind.

Potential Changes to Impact Succession Planning

The Biden Administration is working to enact the American Jobs Plan and the American Families Plan. The American Jobs Plan is supposed to create millions of jobs while rebuilding the country’s infrastructure. The American Families Plan aims to lower insurance coverage premiums, provide universal preschool to children aged 3 to 4, and more.

Though these plans seek to better the economy, people, and infrastructure of the nation, the money to put them into action has to come from somewhere. These plans will receive funding by tax increases that will primarily be impacting the very wealthy.

If the American Families Plan gets passed, it would raise the capital gains tax and change a rule that has been in place for many years. This rule is known as the “stepped-up basis.” Essentially, heirs do not have to pay capital gains tax on appreciated assets until after the asset is sold. Even then, they only have to pay the gains that occurred after the original owner’s death.

This change, if enacted, would increase the capital gains tax rate by 19.6%, taking it from 23.8% to 43.4% Additionally, heirs would have to pay the capital gains tax on assets upon the original owner’s death instead of when they sell. There is a $1 million per person exemption on this tax increase, which is likely to cover most people; however, it will affect families with a net worth of around $2.6 million.

In addition to the higher capital gains tax and the repeal of the “step-up in basis” rule, there may also be higher estate taxes as well as a higher income tax rate. The new proposed income tax rate for top earners would be 39.6%, a 3.8% increase. With all of these tax changes combined, the very wealthy could see tax increases as high as 61%. Some tax experts feel that imposing estate tax and capital gains tax upon death is unnecessary and unprecedented. If the law were to go into effect, many believe that Congress would overhaul payment on the estate tax.

Some of these tax increases may happen even if Biden’s legislative actions are passed. In 2017 the Tax Cuts and Jobs Act was passed and in its passing, there were several tax cuts for individuals. Many of the benefits went to the top 1% earners, whom the new tax increases will be affecting as well. These tax cuts created by the 2017 act are set to lapse in 2025, making tax laws for top earners revert to what they once were. After these benefits lapse, the increases may not be as substantial as they would be with Biden’s legislation passed; however, there likely won’t be any more after-tax income growth like top earners saw with the Tax Cuts and Jobs Act.

With all of these potential and coming changes to taxes, it’s important to have a CPA for you and your business.

Why You Need a CPA for Succession Planning

Because many new rules may be going into effect, it’s best to reexamine your succession plan. Whether it’s for your business or yourself, you need a succession plan that will be able to withstand these new tax changes. A CPA can help you with many different aspects of succession planning.

CPAs can help you better understand the value of your business. When you are succession planning for your business, one of the most critical steps is assessing your business’ value. Whether you choose to sell, liquidate, or pass your business down to a successor, you should know your business’s value when creating your succession plan.

A CPA can also help you create a Pro-forma statement, which are financial reports that use hypothetical events or assumptions about things that have happened in the past or things that may happen in the future. These statements can create a greater outlook on what will happen in your company which will be helpful when succession planning.

Overall, a CPA can help you figure out how to best minimize taxes when it comes to transferring estates and assets. As we wait to hear what tax increases will be implemented, a CPA can help you prepare to make the necessary changes. CPAs can be guiding light when it comes to succession planning if you allow them to be.

Deferring your deductions, converting your IRA, and using municipal bonds, are just a few strategies that may help you with the potential tax increase. If you need more guidance or insight about how to prepare or these strategies, you should contact The Rigby Financial Group.

Choose Rigby Financial Group for Your CPA Needs

The Rigby Financial Group is an experienced financial organization that can help you prepare for the potential tax increases among many other things. Many other CPA firms are rigid, unresponsive, and only contact you once a year. That is not the case at the Rigby Financial Group. When you use our services, we take a look at your business as a whole and craft you a customized financial plan that is catered to you and your best interests.

When you invest a significant amount of time, energy, and money into your business, you want to make sure that the values you created will be upheld when you’re gone. Many people don’t want to think about succession planning, but this is not the route you should take. By doing succession planning for your business, you ensure that it’s in the right hands when you retire, sell it, or pass away.

Starting the process can be daunting, but you’ll be grateful once you have a plan in place. Succession planning may seem like a process you can avoid, but it will sneak up on you before you know it. If you are a business owner, you should start succession planning.

Succession Planning For Businesses

Many business owners don’t have a succession plan. A study conducted by Wilmington Trust found that 58% of small business owners said they had no succession plan in place. There is no “right time” and it’s never too late to start succession planning. However, the earlier you start, the less you’ll have to worry about at a later date.

When creating a business succession plan, deciding what you want to do with your business when you’re no longer around to run things is the first step. You have a few options when developing your business succession plan. You could choose to:

Transfer your business to a family member, spouse, or business partner
Sell to a business partner or partners
Sell to an outside purchaser
Close and liquidate your business

What you plan to do with your business determines the next steps in your business succession plan. Unless you choose to liquidate and close your business, you will need to select a successor and set up a buy-sell agreement if you are not passing the company to a family member.

Choosing a Successor

Choosing who will run your business can be challenging to decide. Some people may feel entitled to the position, while others are more deserving. Who will run your business is an important question to ask when succession planning, especially if you do not plan to sell your business.

If you plan to pass the business down to a family member, you should have a conversation with them beforehand. When transferring a business between family members, much financial planning is needed. If you’re retiring, you’ll need to talk about the income amount you’ll need to maintain the standard of living you desire.

When passing the business to family members, you should discuss who will take over or if multiple people will take over. This discussion is integral to the buy-sell agreement.

If you have business partners and plan to pass the business on to them, succession planning may look slightly different. If you plan on selling your business, you’ll need to have a buy-sell agreement in place. A buy and sell agreement is a legally binding agreement that outlines how a partner’s shares will be reassigned in the case of death or if they leave the business.

Buy-Sell Agreement

When succession planning for your business, you should evaluate how much it’s worth, especially if you plan to sell. To get an appraisal for your business, you’ll need a CPA. This kind of financial planning service is available with the Rigby Financial Group. Knowing what your business is worth will help you along in the succession planning process. Getting a precise quote minimizes the chance that your business will be sold undervalue if something happens unexpectedly and ensures a smooth transition.

After a CPA evaluates what your business is worth, life insurance will need to be taken out on all parties with ownership of the company. A life insurance policy provides the funding necessary to buy out the deceased owner’s share of the business. Without a policy, business partners may be forced to liquidate if heirs are not interested in running the business. The primary insurance policy that funds buy-sell agreements is Whole life insurance. If premiums are paid on time, the policy will grow at the correct pace to fulfill the agreement.

If you don’t clearly outline who will be taking over in the buy-sell agreement, family members may unintentionally become the owners of your business.

How a CPA Can Help You With Succession Planning

There are several financial aspects to succession planning that can be hard to understand and navigate alone. Though it is never too late to start succession planning, a CPA can help guide you into the process earlier. A CPA can help you understand the economic implications of your succession plan.

Suppose you choose to liquidate your business after you retire, or in the case of an untimely event, there are many things to consider. When determining the need for liquidity, the business owner needs to consider other non-cash benefits that their business receives, such as health insurance and company cars. A CPA can help you with this and help you minimize taxes when the time comes to transfer.

It’s important to note that every situation is different, and no one can have a cookie-cutter business succession plan.

Business Succession Planning with Rigby Financial Group

There is great importance in succession planning. If you believe that it’s unnecessary to have a succession plan, consider the businesses you see in the news when the CEO dies. For example, the singer-songwriter Prince died without a will and many people emerged claiming to be his sibling, a long-lost child, and even his wife. Months of legal drama ensued before his siblings were declared the heirs to his estate. With a succession plan, you can avoid unnecessary confrontations between business partners or family members.

Rigby Financial Group offers you the support you need to build a successful business succession plan. We will help you create a plan so that you can pass down your business with ease. It’s never too late to start your succession planning, but the earlier you begin, the more well-off your business will be. When you choose to work with the Rigby Financial Group, you’ll get a carefully crafted plan catered to your business. In addition to a business succession plan, you should also set up a succession plan for yourself. Individual succession planning is just as crucial as business succession planning, and Rigby can help you with this as well.

Are you looking to start your succession planning today? Contact us, and we can help you get started.

For most people, succession planning can represent a significant obstacle. You might be organized in your professional life, but when it comes to financial and succession planning, you may find yourself wondering, “Am I doing enough?”

According to our CEO, Eric Rigby, the most challenging part of succession planning is getting started, and as Benjamin Franklin expertly said, “If you fail to plan, you are planning to fail.”

It is never too late to get started on your succession planning, and Rigby Financial Group is here to help.

Succession Planning For Individuals

The truth is there is no perfect time to begin the journey of succession planning. Many people find it easy to delay answering the uncomfortable question of, “What happens to my assets and my loved ones when I die?” Individual succession planning is so highly avoided that roughly half of Americans don’t have a will or an estate plan. It is never too late to evaluate your assets and begin this process. Ultimately, everyone’s succession plan will be different depending on your unique circumstances and how you want what you leave behind to be distributed.

For those individuals who may feel stressed by the idea of preparing for their death, the best tactic is to break down the task into smaller and more manageable pieces while considering your marital status, the estate size, privacy concerns, and philanthropic goals.

Marital Status in Succession Planning

An important aspect to review when building a succession plan is your marital status and what your death means for your partner. Every state has different provisions regarding what your spouse is entitled to, so it is imperative to understand the specific laws and provisions of the law that applies to your state of residence. For example, Louisiana is one of 7 states with community properties, meaning that the state, along with Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin rules that all assets acquired during a marriage are “community property.” The remaining 43 states are common law property states, which provides that property acquired by one member of a married couple is owned entirely and solely by that person.

Common Law Property States

In a common law property state, when one spouse passes away, their separate property is distributed according to the will or according to probate in the absence of a will. If they own property in “joint tenancy with the right of survivorship” or “tenancy by the entirety,” the property goes to the surviving spouse. If the property was owned as “tenancy in common,” then the property can go to someone other than the surviving spouse.

Community Property States

The community property states, also known as marital property, rule that all earnings, property bought with those earnings, and debts accrued during the marriage are shared equally by both spouses absent a separate property regime. Any assets acquired before the marriage are considered separate property and are owned only by that original owner. However, a spouse can transfer the title of any of their separate property to their spouse or the community. When it comes to community property, a spouse may not transfer, alter or eliminate any whole piece of community property without the other spouse’s permission, but they can manage their half. Upon death in a community property state, 50% of your assets will go to your surviving spouse, and the remaining 50% will go to your children under the age of 23. If you do not have children under that age, you are entitled to leave your half of the community property to whomever you wish. If you choose to leave your assets to someone other than your spouse, you will need them to sign off on this request.

In community states Arizona, Nevada, Texas, and Wisconsin, you can add the “right of survivorship” to your community property so that when one spouse dies, the other automatically owns 100%, which avoids probate. While in California and New Mexico, couples can qualify for simplified procedures for transferring property to avoid probate. In Louisiana, however, the community property must go through probate.

If you die without having an executed will in force, your assets will be subject to intestate succession. If you die intestate while single, the court will identify your closest legal relative(s), who will then inherit your assets—minus the court and executor expenses associated with administering an unbequeathed estate. Most likely, if you are unmarried, this will be your children, or your parents, or your siblings, respectively.

Why You Need a Will

Forbes lists a will as the number one document you should have in your estate planning arsenal. Despite the advice that a will is a necessary document, 6 out of 10 people do not have one. Taking the time to create a will gives you and your family a plan when dealing with death and allows you to have control over your belongings and what you want to happen to them when you are gone. The will removes the guesswork of who will inherit what aspects of your estate and allows your family to grieve rather than figure out how to handle what you’ve left behind. Additionally, a will keeps your family out of probate court. If you die without a will, which is referred to as dying intestate, the court will settle your estate for you. Like marital status, each state has its own intestacy laws; most courts will give half your belongings to your spouse and half to your children. But, if you are not married or have children from a previous marriage, things become more complicated. If you are single and childless, the court will divide everything evenly between your parents and siblings. A will also protects your children. If you die intestate and have children under 18, you will have no say as to where the children end up. A will is the only way to leave a plan for the care of your children.

Legal Aspects of Succession Planning

Succession planning requires a lot of documentation, such as a will, a medical power of attorney, and a financial power of attorney. Getting all of these documents in place is crucial, and we recommend seeking the advice of retaining professionals such as an attorney and a CPA to ensure that you are well-informed and that the process is handled efficiently and correctly.

Durable Power of Attorney

Regardless of your economic situation, succession should be at the forefront when you plan your future.

Suppose you cannot make decisions for yourself. In that case, you will need a durable power of attorney (POA), which legally authorizes someone else to handle certain matters, such as finances or healthcare, on your behalf. If the power of attorney is durable, it remains in effect if you become incapacitated due to illness or an accident. Durable powers of attorney also help plan for medical emergencies and declines of mental functions to ensure that your finances are taken care of. Some of the things that the durable power of attorney can do on your behalf are as follows:

The POA documents, similar to a will, eliminate confusion and uncertainty when family members are faced with difficult decisions. Unlike ordinary powers of attorney, a durable POA will not expire if you are no longer capable of making decisions. You can revoke your power of attorney at any time, as long as you’re mentally competent.

Medical Power of Attorney

Oftentimes, individuals prefer to have separate powers of attorney for their financial and medical affairs. The person appointed as your medical or health POA will be granted the authority to handle all the medical decisions on your behalf. This individual will operate in accordance with your wishes to execute your care and end-of-life arrangements. This appointment can be used in conjunction with a living will or may contain living will directives. If you are in a vegetative state or unable to communicate your wishes, you will need a medical power of attorney to allow your loved ones to decide on your care. Upon appointing a medical POA, it is advisable to consider nominating an alternate agent in case your first choice is unable or unwilling to make a healthcare decision.

When appointing a medical POA, you must be a mentally competent adult. If you should ever choose to cancel your designated individual’s status as POA, you must be of sound mind and notify your doctor and the appointed individual.

Benefits of Bringing in a CPA During Individual Succession Planning

Beyond your marital status, POAs, and your will, there are numerous areas to consider when implementing a succession plan. While most people know they should hire a good attorney to help ensure the legal requirements are met professionally and thoroughly, not many people understand the value of a CPA in the process. When it comes to nuances of succession planning, a CPA is beneficial in the following ways:

Helps reduce taxes: a CPA can advise you on reducing the chances of owing estate taxes, and the impact of what various choices mean for your heirs.
Aids in trust planning: while an attorney can help you set up a trust, a CPA will help ensure you follow tax rules, understand the tax filing forms, and are using the correct type of trust.
Advises early actions: not all estate and succession planning happens in a will or trust, so a CPA can help you make decisions ahead of time, such as using the gift tax exclusion or diversifying ownership in your business.
Helps your executor: a CPA can develop a relationship with the executor of your estate to aid in various aspects, including filing final tax returns, estate Forms 1041, or Schedules K-1.
The Rigby Financial Group can put together a statement of net worth, liabilities, passwords, and other financial information to keep you organized.

Succession Planning with Rigby Financial Group

When you want to begin the succession planning process, choose Rigby Financial Group. At Rigby Financial Group, we ensure that you have a plan that best fits your individual needs and the long-term goals you have for your family. Although succession planning is often an uncomfortable subject, leaving your loved ones without a plan in place will place an unyielding burden on them that is dealt with while they process their grief.

Rigby Financial Group welcomes the opportunity to take that first step with you to get your succession planning process rolling. Our knowledgeable CPAs and financial advisors are ready to offer the support you need regarding succession planning and establishing financial security and growth.