If you own a family business, did you know that you are in an elite group? You help comprise a group responsible for 70 percent of global production. Family businesses are some of the major creators of private wealth in this country.
While most family business owners do have an estate plan, many of these plans are outdated. In a survey of middle-market family businesses, results show that nine out of 10 senior executives in the business have had an estate plan done. The problem is that many create the estate plans and then fail to update them as the business and their lives change.
The survey showed that only 22 percent of the estate plans for family businesses had been updated in the past two years. About one-fourth of the owners or executives said they updated their plans between the past two and five years, and all others stated that they had not updated their plans in over five years.
If your heirs and beneficiaries have not changed, why should you update your plans? There are many reasons. The net worth of your business may have changed, and your plan may need some "refining." New tax laws are added every year -- some with tax savings that may have a significant effect on the benefits that your heirs will receive.
There are also advanced planning strategies being developed as the economic structure of the country changes. Visiting your estate planner at least every two years to review your estate plan only makes sense. You have worked hard to build your business; you shouldn't leave your estate plan to chance.
Source: Forbes, "Most Family Business Owners Should Update Their Estate Plans," Russ Alan Prince, accessed Oct. 16, 2015