• First, have the basics in place. That would include a will, a power of attorney and a health care directive (“living will”).
• Consider your family circumstances and address the needs that are unique to you and your stage in life.
  • Are your children young? Then plan for guardians to raise them if you aren’t there and set up a trust to protect them financially until their adult years.
  • If you are in your middle years make sure your retirement plan assets, life insurance policies and estate plan are all integrated and work together.
  • If you are close to or in retirement, consider using a revocable living trust and other tools (payable on death accounts, transfer on death deeds, etc.) to avoid probate and smooth the transition process after you die.
  • If you have charitable intentions incorporate them into your planning.
  • Get an estate tax evaluation, particularly if you live in Minnesota where the estate tax effects smaller estates.

In addition to covering the basics, make sure your plan addresses the future stability, management, and income of the business. Do you have a buy-sell agreement that describes what happens to ownership in the business after you pass away? Who will succeed you as the manager, CEO or President? If something happens to you, will your business have liquidity to continue operating? Plan for how the interests and shares of family members who work in the business and those who don’t will be balanced and distributed.

• Plan for it. It is far better to have a succession plan in place, even if it may need changing from time to time, than to just give all your children an equal share and “hope for the best”. Family disputes are expensive, both financially and emotionally. Planning, and communicating about the plan, are themselves gifts to your children.
• When you plan, be objective about the true skills and interests of your children in running the business. Can they fulfill the primary executive leadership roles or not? If they can’t successfully operate the business, identify who can and be prepared to give that person the compensation and incentives to do so (which can be done without giving them the ownership of the business).
• Stay focused on what is best for the long-term health and success of the business.
• Do equity among your children, which is not always the same as equality. Recognize and give value to those who commit their skills, sweat and energy to the business’s success.

• A succession plan is a documented structure for the orderly transfer of the management and ownership of a business operation to intentionally chosen new managers and new owners in order to:
  • avoid liquidation or sale of the business,
  • minimize taxes and other transfer expenses, and
  • carry out the owner’s non-tax family related objectives.
• A succession plan is important because these goals don’t just happen. A will transfers legal title to your ownership in the business – that’s it. It doesn’t address other goals or deal in any real way with the continued health and viability of the business. Businesses don’t survive transfer to later generations unless the business’ needs are considered and planned for in an intentional way.
• A succession plan starts with understanding the business, structuring its ownership and management properly, attending to its cash flow and profitability and then flexibly aligning these elements to provide for the next generation to successfully take over at the proper time and keep everything going.

• The primary issue is identifying an effective and efficient exit strategy for the practice. Dentists and other medical professionals who own their own practices should be aware of the limitations of the Minnesota Professional Firms Act, as well as the limits arising out of any ethical rules which relate to their profession, and rules against the ownership of dental and medical practices by non-dentists and non-medical professionals. Due to these limits, it may be impossible for a dentist or medical professional to leave their practice to their spouse or children. Will it make the most sense to sell or will a simple wind-down work for your situation?
• Can a willing and financially able and qualified buyer be identified?
• Are the sale terms properly structured so you realize the full financial benefit?
• Is the successor qualified and dedicated so that you have confidence your patients will be well cared for?
• Does your plan cover your needs for retirement income?
• Once your practice transition plan is in place does the rest of your estate plan integrate well with it? Is your spouse’s well being and income addressed? Are the estate assets set up to pass with minimum transaction cost and in a simple manner?

• First take a look at your assets, farming and non-farming.
  • How many acres of land and what is the status of title? What is the approximate value if sold today? How much is tillable, how much is pasture or other use?
  • What is the inventory of equipment, vehicles, grain handling and storage facilities, livestock barns and machine sheds/buildings? Who owns what? What is the current value?
  • Do you have a farming partnership or a corporation? Are you in compliance with the Minnesota Corporate Farming Law?
  • Is there life insurance, disability or long-term care insurance? What IRA’s or retirement accounts are in place?
  • Homestead status of the land and other real estate
  • Any recreational real estate, cabin, hunting acreage, time share or vacation home?
  • Receivables and loans
• Next consider where and to whom these separate assets will go. Is there a family member involved in the farm? Do they want to take over and are they capable of doing so successfully? How much help do you want to give them to make their life in farming successful?
• What is the interest level of other family members – do they want to simply get “cashed out” or would they want to hold an interest in the land?
• Do you want the land all held together or are would you be ok with it being split among different family members?
• Would it help the transfer to have an entity like a family land partnership or LLC? Maybe the farming operation (crop or livestock) should be in a separate entity and rent land or facilities from a land-holding entity.
• How does your operation participate in government programs and payments? Only use structures that don’t disqualify you from participating in necessary programs.
• When all the information is considered and your goals are clear in your mind, put plan documents (will, trusts, partnership or LLC agreements, lease agreements and others) in place to define and manage the transition to following generations.

• Avoiding probate involves the use of one or more specialized planning tools.  Sometimes its as simple as drafting a proper deed to convey title at death.  Sometimes its setting up beneficiary designations properly.  Other times you may want to use a revocable or so-called “living” trust. 
• Virtually any person’s estate can be structured to avoid the need for probate. But it usually requires come care and attention to detail to make it effective and simple.

• The more wealth you acquire, the more you will need to consider the need to plan for increased tax obligations, including the estate tax.
• What counts as “wealth” includes the death benefit payments from life insurance (not just the cash value), the value of retirement accounts, annuities, business interests, real estate and all other property. 
• Higher asset individuals may want to employ the use of trusts in order to handle these obligations or to reduce the value of their overall estate.

• A trust is an arrangement where assets will be held for the benefit of a beneficiary or group of beneficiaries. A trust creates a separate legal person who will hold legal title to whatever assets are contributed into the trust. Depending on how the trust is structured, it may also be a separate person for income tax or estate tax purposes, or both.
• By putting title to assets in trust, the assets are taken out of probate and will be distributed based on the specific instructions in the trust agreement.
• A trust provides more extended control and protection over the assets than probate, because a trust can exist for a term of many years after you die. If you don’t wish assets to be distributed outright to your heirs right away upon your death, a trust is a good option.

• Procrastination! Many people put off completing their estate plan because they find the process unpleasant or assume they have plenty of time. More than half of U.S. adults do not have a will in place. Failure to plan means that state law will determine who gets your estate when you die, and it can have significant consequences if your assets are more substantial.
• Many people fail to revisit their estate plans as their lives change. They may get a will when they have young children and then fail to make new plans as their children reach adulthood, or when they acquire wealth, or upon retirement. A good practice is to review all of your estate planning documents every few years, or at a minimum when you experience a significant life event, such as the birth of a new child or  grandchild, receiving an inheritance, the death of a person named in your will as a guardian, trustee, or personal representative, marriage or divorce, major illness, disability, or a big change in your financial circumstances.
• Failing to keep beneficiary designations up to date. Assets which are subject to a beneficiary designation (“non-probate assets”) do not pass through your will or other estate planning documents, but instead will be transferred according to the instructions you have given in the beneficiary designation. If your beneficiary designation is out of date, your assets may end up bypassing your intended heirs, or if the person you have named has passed away and you have not updated your contingent beneficiaries, there may be adverse and unanticipated tax consequences.