Cooper Wealth Management

  • Cooper Wealth Management with RBC Dominion Securities Inc.   |   1-800-263-7200 |
    Location: 63 Church Street, Suite 306, St. Catharines

By Cooper Wealth Management

EVERY SUCCESSFUL FAMILY has a great story to tell; the highs, the lows, and all the compelling reality that made you the success you are today. However, as you look ahead, you see the crossroads. What does my retirement look like? Will my family take over for me? What’s next? The time to start thinking about the next chapter is now.

As a business owner, you speak to clients and staff constantly but may be making assumptions about the wishes of the members of your family. A successful business transition starts by having a frank and open discussion with all your family members, even if there is a seemingly obvious candidate to take over. Does the family need the business to continue? Will more capital be required to keep the business running? Do they or you need the proceeds from the sale of the business to maintain your lifestyle? Do your children want to be involved? While these discussions may be difficult and some answers may surprise you, the information will help solidify your plans and allow you to forge ahead.

Now that you have a fuller understanding of your family’s wants and needs, you need to gather all of your personal and business financial details. If you have a Board of Directors, be sure to consult them immediately as they are the most familiar with your business and its potential sale value. It may even be that the best possible buyer for your business is already sitting at your board room table.

This is also the ideal time for a family based financial plan. This process will help you gain insight into your retirement finances, especially your expenses and income needs, once your business has been sold / transitioned. Depending on the timing of a sale, your family plans and your retirement goals, you should consider different tax structures that may better align with your needs. For example, a personal Holding Company would let you transfer surplus cash or assets out of your operating business in a tax efficient manner. Other potential ownership structures might include an Alter Ego Trust, which allows you to bypass probate costs, or a Family Trust, where you can distribute income to other family members to take advantage of lower tax brackets. If you are retaining ownership of the business, but passing control to the next generation, you might also want to consider an Estate Freeze, in order to let the future growth of your business accrue in your family’s hands and reduce your future tax bill. A solid financial plan, closely followed and regularly reviewed, will answer all these questions and put you on the right road towards retirement.

Part of your financial plan will include an insurance review. Many business owners think they no longer need insurance once they have sold their business but there are many instances where insurance is very useful. Did you know a whole life or universal life policy could be used to remove money from your holding company tax-free upon your death? Also, if you are selling your business and the buyer is paying you out over time, it might be wise to consider insuring the purchaser up to the amount required to pay off the balance owed to you. It is important to at least consider these options to ensure the best financial outcome for you and your family.

Once the financial plan is completed, it is time to review your personal investments. It is important to develop and implement an Investment Policy Statement that clearly spells out your unique financial situation, risk tolerances and income needs. This should be reviewed annually to keep your portfolio on track. It is also important to monitor results. Ensure you receive written performance reports quarterly and annually to review them against your financial plan and monitor your progress.

Finally, review a sample of your investment tax reporting package with your accountant to confirm they have all the information they need to prepare your tax returns.

The last key consideration that is imperative to a solid financial plan are your Will and Powers of Attorney. A completed business sale will simplify your estate planning and should be reflected in your Will. One quick note on your Power of Attorney for Property: your Power of Attorney cannot act for you to sign corporate documents or remove money from a corporate account. Therefore, for any Holding Company or operating business, you should have at least two signing officers in case of a problem. Your path to a secure retirement may have started at a crossroads, but with a solid financial plan as a roadmap, the way forward should be clearer.

At Cooper Wealth Management, family business is not just in our name, but in everything we do. We know the road you are on because we have been there ourselves. We formed our partnership in 2001 as part of a family business transition and over the past 16 year, we have helped hundreds of families and businesses meet and exceed their financial goals. From planning to strategy to execution, we are with you every step of the way. With 13 financial professionals on staff and over 150 years of combined financial experience, as well as access to the resources of the Royal Bank and RBC Dominion Securities, we have everything you need to make your family business transition a successful one.

Our family business transition was a success and we can help you with yours. If you are considering the future of your business or would like an independent review of your family finances, please give us a call. AITF