Bill Hrapmann - Taxes, Assets & Heirs: Personal Wealth Management for Business Owners

Disclaimer

Securities and advisory services offered through LPL Financial, a registered investment advisor (Member FINRA/SIPC). LPL Financial and Bill Hrapmann Wealth Advisor, Inc. are separate entities.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

The information provided is not intended to be a substitute for individualized legal or tax advice. Please consult your legal or tax advisor regarding your specific situation.

All investing involves risk including loss of principal. No strategy ensures success or protects against loss.

Copyright 2022 Bill Hrapmann, CFP CRPC, Chad Hrapmann, MBA

All rights reserved.

Taxes, Assets & Heirs

Personal Wealth Management for Business Owners

isbnhardcover: 978-1-5445-3072-7

paperback: 978-1-5445-3071-0

ebook: 978-1-5445-3073-4

Contents

Introduction

Your achievement mindset earned you the success you have today, and it can guide you toward even more future successes when utilizing the concepts and strategies in this book. Taxes, Assets, and Heirs will showcase multiple strategies in tax planning, asset protection, and educating heirs. This book will inform you of available options and remind you that, as a business owner, you have the resources to work with professionals to implement these strategies.

Only 30% of people maintain wealth through the third generation. While you may not have known this exact statistic, you are aware that not every business garners the same level of success once it is bequeathed to an heir. You have spent a lifetime sacrificing and building wealth. You deserve an optimum plan to help you pursue your objectives for both you and your family. As you and your adult children grow older, you may begin to wonder, Will I be part of the 70 % who fail or among those who make it?

Set your fears aside for a moment and imagine it is two or three years from today: You have read this book and reviewed the options available and are feeling confident about the financial decisions you have made. You are working toward reducing your taxes; you are accumulating the financial assets to live the life you have dreamed of; you are setting up your estate to be passed on to your heirs efficiently and on your terms. In summary, your finances align with both your business and personal objectives like never before. You deserve this.

Before diving into specific strategies, it is important to understand the structure of this book, so you can better use it to your advantage. Chapter 1 focuses on wealth management for business owners, the benefits of utilizing an Optimal Financial Team, and financial concepts, such as separating business and personal assets. This chapter helps you create clear objectives and maximize your financial success. In Chapters 25 , you will read about the namesakes of this book (Chapter 2 on income taxes , Chapter 3 on estate taxes , Chapter 4 on asset protection and preservation, and Chapter 5 on educating your heirs ). In Chapter 6 , you will learn about all of the relevant professionals who can help you achieve your financial objectives.

Taxes

Your tax professional may not know all of your objectives, which may lead to missed opportunities in tax savings. You must communicate openly and consistently with your tax professional, CPA, and wealth advisor to ensure they all understand your objectives, so they can utilize additional savings strategies that are right for you. Getting aligned with your objectives may help your professionals lower your taxes.

In Chapters 2 and 3 , you will read about both the more common and advanced income tax and estate tax strategies, ranging from captive insurance policies and donor-advised funds to qualified retirement plans and gifting company shares. Discuss these ideas with your tax professional to see which methods will work for your purposes.

Assets

Your home, cars, warehouse, company truckit does not matter what, why, or how you have accumulated your assets. What matters most is that your assets are protected and that you are protected from your assets (if one of your company vehicles injures a pedestrian, for example).

Whether the shortfalls are in mixing personal and business assets or in insurance coverage, you will see how important it is to have an open table with your professionals when reviewing asset protection. There are certain questions you may not know to ask, and you should not; you are not an insurance or financial expert. The guidance in these chapters will inform you on what to ask and who to collaborate with to ensure your assets do not become someone elses.

In Chapter 4 , we will discuss options which strive to protect both your business and personal assets. Using the asset protection strategies in this chapter, such as establishing different trusts and procuring specialty insurances, you can manage the longevity of your assets now and in the generations to come.

Heirs

Earning and maintaining wealth is no easy feat. Planning how your heirs will access and sustain that wealth is even more challenging.

Even if your heirs do not plan to run your business after you step down or pass away, make no mistake: it is still important to educate them on your financial strategies. If your heir is not privy to elements such as phantom income, they could unknowingly receive large tax bills well over six figures. They may have to borrow to pay the taxes or close the business altogether. Ensure that your legacy survives long after you do.

In Chapter 5 , you will learn sound strategies to prepare and protect your heirs. Many of these strategies will be familiar to you after reading Chapters 2 through 4, but Chapter 5 will examine them in a new light.

As a business owner, you have put a lot of work and sacrifice into making your business successful. Your CPA, wealth advisor, tax attorney, and other professionals can plan your finances, detail your objectives, and ensure that you plan well for your future. You and your family deserve this. Tax laws are changing, and you may ask yourself, with interest rates so low and inflation rising, if your assets will remain lucrative enough to carry through to the next generations with the same quality of life. In Chapter 6 , you will become familiar with the financial professionals who can help you achieve your financial objectives and establish your Optimal Financial Team.

The information in this book comes from over forty years of advising business owners and working with their CPAs, tax attorneys, investment bankers, business valuation specialists, and other experts, as needed.

Bill Hrapmann: Wealth Advisorand Writer

For most of this book, you will read simple definitions for strategies your financial professionals can employ to better maintain and manage your wealth. We believe it is important to separate our personal experiences from this content because it is relevant whether we are the ones explaining them or not. We do believe it is also important for you to know, however, that the people educating you about financial strategies have the credentials to teach in this subject matter. In most chapters, we will share an anecdote about a client experience or myself, starting now:

My interest in finances developed when I was in high school. I was cutting a neighbors grass once, and he had a Standard and Poors Stock Guidebook. He brought it out to show me, and he said, Do you know what dividends are? Every quarter, this company pays me a certain amount in dividends. That was the first time I heard that word. Once my interest was piqued, I made my first investment into a high-yielding money market while still in high school (money markets were new at the time). In college, I moved on to my first growth mutual fund investment.