As a business owner, you’re always busy, so it’s understandable if you’ve put off thinking about events that won’t occur until far in the future – such as your retirement, the sale or transfer of your business and the settling of your estate. Nonetheless, it’s a good idea to start planning now, while also recognizing the special challenges that women business owners face in these areas.
Essentially, you’ll have four key issues to consider:
Building assets – While you’re working, you’ll want to build as many financial assets as possible. This is especially important in case your career is interrupted by the need to provide care for children or parents. And there’s also the matter of longevity: On average, a 65-year-old woman can anticipate living about 20 more years – almost three years longer than a 65-year-old man, according to the Centers for Disease Control and Prevention. Furthermore, the average age of widowhood is just 59, according to the U.S. Census Bureau. Given these concerns, you’ll want to contribute as much as you can afford to a retirement account, such as an “owner-only” 401(k), a SEP-IRA or a SIMPLE IRA. A financial professional can help you choose an appropriate plan.
Planning an exit strategy – How you transition from your business can affect your estate plans, in terms of the assets you leave behind and which family members are connected to your exit strategy. To illustrate: You could choose to pass your business to an adult child or other close relative, but if you have no family members willing to take on this responsibility, you could transfer ownership through an employee buyout, if you have employees, or you could sell the business outright to a third party. Whichever route you choose will need to be integrated into your overall retirement and estate plans.
Caregiving – As mentioned above, you might take some time off work to care for your children or aging parents. In fact, two of every three caregivers in the United States are women, according to the CDC. Being a caregiver can incur emotional and financial costs. To help avoid entangling your finances with those of the family members to whom you’re providing care, you may want to consider creating a durable financial power of attorney, a legal document that gives you the authority to make financial decisions on behalf of someone who may be incapable of making them on their own. You’ll want to address the possible need for this document well before it needs to be activated.
Creating estate-planning documents – You will need to work with a legal professional to create estate-planning arrangements such as a will and a living trust, relevant business-planning documents, powers of attorney and health care directives. If your situation is complex enough, you also may need to bring in a trust company to manage the assets placed in a trust and oversee the eventual transfer of these assets to beneficiaries.
A lot goes into preparing for retirement, developing estate plans and keeping them current. So, start early and get the help you need from experienced professionals. The more thorough your planning, the more control you’ll have over your future.