Joe Robbie, the owner of the Miami Dolphins, built a fortune with his successful team. In the season from 1972-73, the National Football League (NFL) team was undefeated. Given that he had nine children, Robbie should have foreseen the infighting that followed his death in 1990.
That’s because he had chosen only three of his offspring to be trustees of the estate. Also, the IRS wanted their share — $45 million. So, to pay the taxes, the trustees decided to sell the team, Robbie’s chief legacy, but family members did not agree on the team’s value. After the taxes, lawyers’ fees, and poor negotiating with the team’s buyer, Blockbuster Entertainment Chairman H. Wayne Huizenga, the value of the estate that passed to Robbie’s heirs dwindled substantially. A robust estate plan could have preserved value, legacy and averted family strife.
The Estate Plan Building Block
So, what do you need to do to manage your estate?
- Create a Diversified Portfolio
We believe reinvesting all your profits back into your business is risky because it offers no protection in the event of a business downturn. For example, business owners who plowed their capital back into their companies suffered many sleepless nights when the economy tanked in the Great Recession of 2008. Some companies went belly up due to weak or negative cash flow.
So, to make sure your business is not vulnerable, your estate plan needs to include a diversified mix of assets outside of your business. You can tap into them in tough times and weather the storm.
- Provide a Plan for When You’re Gone
A robust estate plan clearly outlines who gets your assets after you pass away. It helps ensure your business continues to hum along smoothly while also minimizing taxes and fees. On the other hand, without an estate plan, you open the door to dissension in the family, ruined relationships, years of lawsuits and reduction in the wealth you pass to your heirs.
You have the latitude to choose who gets your assets. If you don’t, the courts will make the decisions for you. The final results are unlikely to align with what you would have chosen. Clearly, every business owner needs an estate plan, and that’s why it’s a cornerstone of The Ultimate Business Owner’s Plan.
- Protect Your Assets from Taxes
If you are married with less than $11 million in assets or single with less than $5.5 million, estate planning can be relatively straightforward. However, above these amounts, it becomes more complicated because the estate tax comes into play. When you’re alive, you decide how to allocate your money. You can give it to friends and family or charities. After you pass away, however, the federal government has its own plan to take 40% of your estate.
Do you want to choose how your money is used or leave it up to Uncle Sam? If you want control, plan ahead.
Don’t Delay—Craft Your Estate Plan
There’s no reason not to create your estate plan. After all, you know you need one.
We’ve worked with business owners for over a quarter century to create rock solid estate plans. We can help you to navigate the estate planning process successfully. And we can review other aspects of your business to help ensure you have all the building blocks of The Ultimate Business Owner’s Plan in place, enabling you to maximize your success.
To learn more about estate planning, schedule a complimentary consultation now.