In my experience assisting families with succession planning for legacy assets such as their family business, cottage or farm, the biggest challenge I’ve found is making sure there is enough money to pay for the immediate obligations after the current owner’s death. These obligations can be in the form of taxes, possible interruptions to business operations, and revenue and debt service. The obligations also may extend to longer-term capital needs such as paying the bills for these assets.
One solution that provides the necessary operating capital for covering family-owned property and other assets is purchasing life insurance. In the event of the current owner’s death, life insurance allows survivors to maintain ownership of major family assets (like properties and businesses). Many individuals, however, mistakenly assume that life insurance is not affordable or is a bad investment if they are above the age of 40. Actually, in many cases, the opposite is true. There are a great variety of affordable insurance products that are available to individuals in many different life situations. The proceeds from these death benefits mean significant proceeds that may be used by future generations to preserve the family’s assets, property or company.
Plan with Professionals
There are many legal strategies and insurance products available to families that wish to preserve their legacy assets. But the first step is to consult with trusted legal, financial and accounting professionals to determine the strategy that is right for you and your family.
Remember ... thinking about a plan is not the same as making a plan.