DEFINE YOUR LEGACY
About
Have you ever considered what happens to your business once you retire, or in the event of death? What if multiple dependents are involved, and only one chooses to succeed to the business? Maybe you’d like to transition your business to key employees, while still maintaining your lifestyle.
Statistics show that 72% of business owners never create a plan to protect their business assets. Why? Traditional solutions are too complex, and too costly. People feel like they have to sacrifice too much growth today to protect the future.
To address these concerns, Definition Financial has created the Wealth Enhancement Plan. WEP provides a solution that secures your legacy, is easy to understand, and is less costly than traditional methods. Our approach is unique, ensuring your Succession Planning is successful.
THE SMITHS – CASE STUDY
BARB & DOUG SMITH
Business Owners
Barb and Doug Smith have worked their entire lives to build a successful business. They are ready to retire, want to leave a legacy, have their business survive them, and maintain their lifestyle. They have three children: Robert, Karen, and Michael.
FACTS
• The Smiths are 61 years old with 3 children
• Their business has assets of $8M
• Their business has debt of $2M
• Their son Robert wants to takeover business
• They have $1M in savings & investments
GOALS
• Distribute assets fairly among their children
• Have their business survive when they retire
• Minimize debt and taxes efficiently
• Have Robert take over the business
• Maintain their lifestyle
ROBERT SMITH
WORKS FOR PARENTS
KAREN SMITH
LEGAL PROFESSIONAL
MICHAEL SMITH
WILDLIFE PHOTOGRAPHER
PROBLEMS
WEALTH
DISTRIBUTION
How do the Smiths leave their business to Robert while distributing wealth to Karen and Michael?
BUSINESS
LEGACY
How will the Smiths maintain their business legacy, if forced to sell? What happens to Robert?
DEBT +
TAXES
By selling, are the Smiths forced to payout their debt and how do they minimize Capital Gains Tax?
MAINTAIN
LIFESTYLE
If Robert takes over, how will the Smiths maintain their lifestyle without access to business income?
The Smiths are conflicted: all their goals are equally important. However, every time they focus on achieving one goal – others become unattainable. Is it possible for the Smiths to achieve all their goals?
SOLUTION
Through WEP, we use the very assets you are trying to protect, to shield themselves. This is achieved without requiring a huge injection from much needed cash flow. Working on behalf of our clients, we build a financial plan that achieves all your succession, retirement, and estate planning needs.
Our strategy allows you to transition your assets, in whole, and tax effectively to the individuals who will succeed your legacy.
WITHOUT WEP
The Smiths retire.
They must live off savings for the rest of their lives.
Business liquidates to pay children equally.
Robert and employees let go.
Debt & Taxes paid
with liquidated cash.
Each child receives $1.5M after taxes.
Robert must find another job.
FAMILY NET WORTH: $4.5M
WITH WEP
The Smiths retire.
Tax Free income from WEP maintains lifestyle.
Business remains open.
Robert and employees keep jobs.
No need to liquidate.
Debt & Taxes paid fully.
Karen & Michael receive $3M/ea. tax free.
Robert now owns business.
