Why the Sale Isn’t the Last Step
You’ve recently sold your business – congratulations! You’re ready to start the next chapter of life after what was likely a long and stressful sales process. However, before you take off on a year-long cruise around the world, be sure to tie up these important financial loose ends.
#1 – Make a plan for the sales proceeds.
The first step following the sale of your business should be to incorporate your assets into your overall financial plan. Your wealth manager will help you make decisions regarding the long-term management of your sale proceeds and retirement assets.
You’ll want to invest in a diversified mix of low-cost, tax-efficient assets that complement your overall portfolio and put you on track toward achieving your long-term goals.
#2 – Establish an income stream.
Following the sale of your company, you’ll need to transition from having a salary and profits to living off your investments and other assets. Your wealth manager will work with you to establish a tax-efficient monthly income stream to cover your living expenses.
#3 – Understand potential tax consequences.
There are unique tax considerations to take into account when you sell a company. Because the IRS typically requires an accounting of every individual asset that was sold with the business, you must be able to categorize each asset as one of the following:
- Capital asset
- Inventory
- Real property
- Depreciable property
A qualified tax professional can help you make sense of your taxes and minimize your liabilities.
#4 – Plan for healthcare.
If you sell your business before reaching age 65, you likely will not be eligible for Medicare benefits. This means you need to make a plan for healthcare coverage. Your wealth manager can help you evaluate insurance options and choose a plan that makes sense for your particular situation. He or she can also provide various projections to illustrate how your healthcare costs may impact your retirement cash flow.
#5 – Revisit your estate plan.
It’s wise to review your estate plan any time you experience a major life event, and selling your business is no exception. Your wealth manager and estate planning attorney can help you review the following designations to determine if any updates are required.
- Guardian designations for minor children
- Trusts
- Designated trustees
- Healthcare proxies
- Powers of attorney
- Will
#6 – Develop a charitable giving strategy.
After selling their companies, many business owners seek opportunities to give back to the causes that matter most to them. If charitable giving is part of your financial plan, it’s important to have an effective strategy in place. Below are several options that can help maximize your impact while minimizing your taxes.
- A direct gift of cash or appreciated securities
- A donor-advised fund (DAF)
- A family foundation
- A charitable trust
#7 – Enjoy!
You’re officially off the clock! Your finances are secured, and it’s finally time to enjoy life and live the retirement you’ve always dreamed of. You can walk away from your business confident you did all you could to provide for your employees, your customers and your family. Now it’s time to live life to the fullest!
Need assistance navigating your finances following the sale of your company? Creative Planning is here for you. Our team of credentialed, educated, experienced and action-oriented advisors includes Certified Financial Planner™ professionals, certified public accountants, insurance specialists, attorneys and other professionals all dedicated to helping you achieve your goals. To get financial planning help after the sale your business, schedule a call with a member of our team.
