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That's a mistake, say a trio of specialists: wealth management
adviser Haitham "Hutch" Ashoo, CPA Jim Kohles and estate planning
attorney John Hartog. "Whether you're selling your company,
passing it along to a successor or simply retiring, that's a
potentially irreversible life event -- you've got just one chance to
get it right," says Ashoo, CEO of Pillar Wealth Management.
A 2012 survey of CEOs by executive search firm Witt/Kieffer found
that 71 percent of those age 55-59 have no retirement plan, although
73 percent look forward to more recreational and leisure activities
when they let go of the reins.
"A lot of baby boomers have the idea that they're just going to
work till they stop working," says Kohles, chairman of RINA
accountancy corporation. "If they hope to do certain things in
retirement and maintain a certain lifestyle, they're likely to end
up disappointed."
Planning for the transition from CEO to retiree should
incorporate everything -- including what happens to your assets
after you're gone, adds John Hartog of Hartog & Baer Trust and
Estate Law.
"Many of my clients worry about what effects a large inheritance
will have on their children -- they want to continue parenting from
the grave. You can, but should think hard about doing that," he
says.
The three say smart planning requires coordinating among all of
your advisers; that's the best way to avoid an irrevocable mistake.
With that in mind, Ashoo, Kohles and Hartog offer these suggestions
and considerations from their respective areas of expertise:
Haitham "Hutch" Ashoo: Identify your specific lifestyle
goals for retirement so you can plan for funding them.
To determine how much money you'll need, you have to have a clear
picture of what you want, Ashoo says. Do you see yourself on your
own yacht? Providing seed capital for your children to buy a
business? Pursuing charitable endeavors?
Each goal will have a dollar amount attached, and you or your
adviser can then determine whether it's feasible and, if so, put
together a financial plan.
"But you can't just create a plan and forget it. You need to
monitor its progress regularly and make adjustments to make sure
you're staying on course, just like you would if you were sailing or
flying," Ashoo says. "We run our clients' plans quarterly."
It's also imperative that you don't take any undue risks -- that
is, risks beyond what's necessary to meet your goals, he says.
"You may hear about a great investment opportunity and want in on
it, but if you lose that money, you may not have a chance to make it
up."
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 Jim Kohles: Don't sell yourself short when selling your
business.
"If you're banking on money from the sale of your business, know
that it's unlikely you'll have investors just waiting with the cash
for the chance to buy it when you're ready to sell," Kohles says.
Buyers are more likely to offer to pay over time from the
company's future earnings -- which leaves the retired CEO with no
control over the business and utterly reliant on the new owners to
maintain its profitability.
Kohles says a good alternative is to establish an ESOP: an S
corporation combined with an employee stock ownership plan.
"You're selling the company to the employees while retaining
control until you phase yourself completely out," he says. "The ESOP
doesn't pay income taxes -- the employees do when they retire. And
you don't pay taxes on the money or the stock that you contribute."
John Hartog: What do you want your kids' inheritance to
say?
If you have children, this decision can change their lives for
the better -- or the worse.
"How your assets are disposed of should reflect your values,"
Hartog says. "A lot of people prefer to think in terms of taxes at
the expense of values. I advise against that."
For children, incentive trusts can encourage, or discourage,
certain behaviors.
"If you're concerned your adult child won't be productive if he
has a lot of money, set up a trust that will make distributions
equal to what the child earns himself," Hartog says.
"Or, if you want to be supportive of a child who's doing
something socially responsible, like teaching in an impoverished
area, you can set it up to pay twice his salary."
There are many creative ways to establish trusts, Hartog says.
Plan about five years out, and change the trust as life events
dictate.
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Haitham "Hutch" Ashoo is the CEO of
Pillar Wealth Management LLC
in Walnut Creek, Calif. The firm specializes in client-centered
wealth management for ultra-affluent families.
Jim Kohles is chairman of the board of
RINA accountancy corporation,
Walnut Creek, Calif. A certified public accountant for more than 35
years, he specializes in business consulting, succession and
retirement planning, and insurance.
John Hartog is a partner at
Hartog & Baer Trust and Estate Law. A certified specialist in
estate planning, trust and probate law, and taxation law, he has
been selected to the Super Lawyers Top 100 list for nine consecutive
years.
[Text from file
received from News and
Experts]
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