Why Now Is a Perfect Time for Estate Planning

Many business owners are struggling right now, but there’s an opportunity for savvy professionals to use this time to take advantage of some estate planning tricks. Here’s what I mean.

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Most of us are working from home these days, and you’re probably asking yourself how you can be more productive in light of all these circumstances. Today I want to give you an idea of how to proceed if you have an estate that you will want to transfer to your children someday without paying a lot of estate taxes.

You might think that right now is a bad time to talk about estate planning, but it’s actually the best time. Here’s why.

  Your $1 might be worth $10 in just a few short years.

There’s a good chance that your business is struggling right now. Your revenue and profits are down, and you’re wondering when the economy is going to restart—the last thing on your mind is estate planning. Let’s say, for the sake of simplicity, that your estate is worth $1 and your business makes up a huge portion of that dollar. It’s very essential to protect the business by planning ahead and avoiding a future 40% estate tax. Your $1 might be worth $5 or $10 in just a few years.

Right now, if we did a valuation on your business in its current condition, is it still worth that $1? Maybe right now it’s worth 75 cents or 50 cents, but once the economy recovers, it could be worth $4 or $5. If you have that kind of business, you can estate plan now for a business that’s worth 50 cents and gift it, transfer it, or sell it to a trust for the benefits of your kids and successors when it’s eventually worth over $1. That’s some huge leverage that you can get by doing the transfer today.

If you need help with a situation like this or just have any questions, don’t hesitate to give me a call or send me an email today. I look forward to hearing from you.

The Keys to Strong Leadership During Crisis

Today I’ll share a few strategies that you, as your team’s leader, can utilize to enhance your team’s bond and ensure that you outlast this crisis and prosper long beyond that.

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Especially given the current situation our country and the rest of the world is going through, I thought now was a good time to talk about leadership. Remember: As leaders, your team is looking for assurance, not a match to set their hair on fire. Maintaining calm during a crisis is critical. This is a time of opportunity—not to gain revenue but to gather your team together and make them stronger. Today I’ll share a few strategies that you, as your team’s leader, can utilize to enhance your team’s bond and ensure that you outlast this crisis and prosper long beyond that.

If you have any questions or would like to implement any of the strategies we use, don’t hesitate to reach out to the Nabity Business Advisors. We’d be happy to help!

Navigating Estate Taxes

Estate taxes can become a large problem for those looking to pass their business down to the next generation. Here are the solutions to that problem.

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If you don’t properly plan for the estate taxes that will be assessed on your business when it transfers between generations, you can run into catastrophe.

First, let’s assume your company is a manufacturing company, your children work there, and you want it to stay in the family when you retire. Let’s also say your company is worth $20 million.

One of the great things about your company is that it will grow in value; you have a great product, access to great markets, and within 10 years, your business will be worth $40 million due to growth opportunities.

If you want your business to end up in the hands of your kids, it will be subject to estate taxes—40% on the federal level and 1% on the state level—on anything above the amount the IRS allows you to pass onto the next generation and/or that you get an exemption for. If you’re single, that limit is $11.4 million, and if you’re married, it’s $22.8 million.

Now let’s assume that you’re married and you have a $22.8-million exemption on your estate. That means if you and your spouse pass away and transfer the business to your children, $17.2 million will be subject to federal estate taxes. And it will take almost $7 million to satisfy the IRS.

  Tax liabilities can become a huge issue for transferring companies between generations.

So how are you going to do that? Will you sell the business just to pay the $7-million estate tax? If you go to the bank and borrow that much while you’re trying to run a fast-growing company, it will be a huge problem for your company; you’ll be paying principal and interest over maybe 10 years to cover the debt service on that $7 million.

There are ways to keep this from getting out of control:

First, you can move stock into the hands of your children right now, when the company is worth $20 million, and let a portion of the growth end up in the hands of your children. Both you and your spouse can give $11.4 million this way.

You could also sell the stock now in exchange for a note back. Let’s say your company will be worth $60 million instead of $40 million and that your kids are going to end up having the business anyway. If you sell the stock to your kids in exchange for a note back, then the growth rate on your personal financial statement is just the interest rate on the note. All the growth in the value of the stock will be in your kids’ estates instead of your (the parents’) estate. That way, you keep this tax liability from becoming a huge issue for your own estate.

Thirdly, you can get life insurance on either you or your spouse for an amount that ensures the family has the liquidity to pay off the IRS. With this strategy, no stock has to be sold and the business can be kept in the hands of the family.

So what do you do if your taxes are still too high? Now let’s discuss why it makes sense to get life insurance to pay estate taxes.

Nine months after the date of your death, an IRS auditor will show up to your family demanding that they pay a tax bill to the tune of 40% of your estate that isn’t exempt. If you don’t properly plan for this, you’ll end up throwing away 40% of your estate just to satisfy the IRS.

But there is an alternative: you could send a little bit of your estate to an insurance trust each year. That insurance trust then sends money to a life insurance company, which then either insures you as the business owner or both you and your spouse. Joint policies are less expensive.

If you use this strategy before you pass away, the insurance company then pays the IRS the amount they demand, and your family gets to keep the estate for future generations.

We don’t represent any particular insurance company, so when it comes time to look at policies, we gather their medical files and give them to our underwriting team to consider each individual. They’ll then bid the insurance out to multiple companies so that we can get offers before we submit a formal application. This lets us know the upfront costs and ensure accuracy for clients. If you don’t follow this strategy and are declined, your information can be posted in the Medical Information Bureau, where it becomes available to all insurance companies, even those you haven’t submitted applications to.

If you have any questions or would like to implement any of the strategies we use to help families avoid estate taxes and protect their companies, don’t hesitate to reach out to the Nabity Business Advisors. Let’s see if we can’t solve some of these problems for you!

How to Have a Good Team and Good Profits

I’m discussing how to not only have good people working in your business, but also how to profit from it. These two aspects must work together.

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I have two questions for you: How profitable is your company, and how good is your team? If you’re not as profitable as you should be and your team is not as good as it needs to be, what should you do?

We frequently run into entrepreneurs who are running fast. They have sales and activity and are as busy as you can imagine. However, they have a host of issues: They’re not making the money they should be, they’re growing their debt, their accounts receivable are growing, they have human resource problems, people aren’t getting along, things are falling through the cracks. Things are just out of control. What do you do in that situation?

Well, you could get some auditors to come in and take a look at things. You could bring in some business coaches. You could sign up for programs that put your employees through an eight-week course for something. But how do you put it all together?

Often there’s a large disconnect between the coaching, the management, and the financial analytics inside the company. The management and finances need to coincide. When this disconnect happens, the owner is going in the hole, they aren’t making much money, and there’s a lot of conflict and stress within the business.

Often there’s a large disconnect between the coaching, the people managing side, and the financial analytics.

One of the things we offer is the ability to come in and do an assessment of your company. We not only look at the people, positions, and whether you have the right people in them, but also what your systems are for accountability. We go deep into the weeds of your finances. To have a successful business, you need to have a great team and a strong operation.

It’s one thing to coach your people and help them get better, but if you don’t have the right analytics, financial processes, accountability, and ways of measuring what’s happening in each division, you’re not going to make money, even if you have the best people on earth.

If you find your company in this situation, give us a call. We have the people who can not only go in and analyze the team and help them get better, but we also bring in a financial group that will look deep inside the company and analyze everything and ensure you have the right systems in place to know what’s going on at all times, so you can make excellent business decisions and hold people accountable. We’d love to come out and meet you, get a good idea of what’s going on inside your business, and see if we can offer some solutions that can help you become more profitable and enjoy your workplace in the long term.

The Next Generation

If you want the next generation to keep your company growing, you need to apply the right financial analytics to it.

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If you own a family business and you want to transition that business to the next generation, how do you ensure that generation succeeds?

Although family members are the people you might want to take over the business, they often aren’t ready to run the company in a way that not only succeeds in the short-term but also grows the company in the long-term.

A common cause behind this problem is how they manage finances. In many cases, the metrics aren’t even there for them to be able to do the right processing to improve the finances of the company and make it profitable. Another common cause is they don’t have the right people in the right positions.

Sometimes, the next generation simply can’t run the company without the management team that isn’t family. That management team has perhaps been in the business a long time and, although they’ll never own stock, you have to hang on to these people because they’re talented and the next generation isn’t ready to take over certain positions.


Give us a call and we’ll go deep into your organization and it’s finances so that you become as profitable as possible moving forward.

In today’s marketplace, there are all sorts of different programs designed to help you understand how to train and develop your team, but what’s missing from these programs is the right financial analytics that need to be applied deep within the company to know where the pain points are and where money is being lost.

That’s where we come in. At Nabity Business Advisors, we not only help you analyze your organization and put together the vision that holds everyone accountable, but we have the people who can go deep inside the company’s finances to find out where money is falling through the cracks and what needs to be improved. This way, you can make good decisions on how to manage the company and make sure you have the right people in the right positions.

This is critical because, if a new generation is buying out the company from the founders or the first generation, then that previous generation will be getting installment payments from the new one. If the company isn’t successful, it could be a big problem down the road.

So if you find yourself in this situation, give us a call and we’ll go deep into your organization and it’s finances so that you become as profitable as possible moving forward.

If you have any other questions about this topic, feel free to reach out to me as well. I’d love to speak with you.

Selling Your Business to Outsiders

If you’re a business owner near the age of retirement, here are a few things to keep in mind about selling your business.

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There are lots of different ways of selling your business to outsiders. You can go to business brokers, finance people, investment banks, and so on.

At Nabity Business Advisors, we’ll work with you to make sure that everything is packaged properly so that when the time comes to take the business to the market, you and your management team are ready. Having a third party involved will help you find the best candidate to take over your business.


We’ll work to make sure that you can retire with peace of mind and that the buyer is in a position to succeed after taking over your company.


Your buyer might be someone friendly to you from inside the industry, or they could be a complete stranger you know nothing about. Regardless, we will work with that other party, go through the numbers, and try to find common ground for the greater good of both parties. We want to make sure their offer is reasonable, that you’re treated fairly, and that they’re not going to come in and gut the business that you’ve worked so hard to build. With us as a third-party intermediary, we’ll work to make sure that you can retire with peace of mind and that the buyer is in a position to succeed after taking over your company.

If you’re thinking of selling your business so you can retire, or would like to consider it for the future, reach out to us. We can give you ideas about positioning your company to be ready for sale when the time comes.

How to Manage the Transaction of Stocks Between Family Members

In this installment of our series on transitioning stock, we’ll be discussing how business owners should handle the logistics of this deal.

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Welcome back to our series on how to transition stock from your business. As we mentioned in part one, which you can view here, transitioning stock to family members can be a tricky process. This is especially true when only some of your family members are active in the business, or even when all family members are active, but only a couple are really putting in the time and effort to make it successful.

When the time comes to start thinking about transitioning your stock to family members, the first point to consider is your business’ value. Because you and your family are likely somewhat biased, having a neutral third party analyze the value of your business is generally the best approach. Such an analysis will not only be more accurate than one conducted by you or your family members, but it will also help to reduce internal conflict.

    The value of having third-party guidance when transitioning stock is impossible to overstate.

After you’ve assessed your business’ value, it’s time to think critically about who will be the most capable successor. There may be cases where one of your children is CEO material, but there may be other instances in which looking outside of the company will reap the best results. The most important thing is that you find someone who is truly equipped to lead in your stead. Again, having a third-party (like Nabity Business Advisors) to help you with this decision can ease this process.

Once these details have been settled, the next step is to make a plan for executing the deal. Do you write a lump-sum check? Do you sell all your stock in exchange for a note? Should you seek a loan from the bank?

There are many different ways to go about handling this transaction, and, again, the best way to determine which strategy is right for you will be to have an outside firm come in and look at your business’ specific circumstances. The value of this third-party guidance is impossible to overstate.

As a final note, please realize that this decision is about more than just the integrity of your business. Handling this transition incorrectly has the potential to destroy your family. This is the core reason why having an intermediary involved is so crucial.

We at Nabity Business Advisors specialize in facilitating transitions like this, so don’t hesitate to reach out if you have any other questions or would like more information. We look forward to connecting with you soon. As a final note: Be on the lookout for part three of this series. You won’t want to miss it.

How to Prepare to Transition Your Stock Before Retirement

If you want to learn about transitioning your stock upon retirement, this new three-part video series is for you.

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If you own and run a company, a time will come when you will need to transition your stock to a new shareholder. Even if you aren’t ready to retire yet, there are several steps you should start taking to prepare right now. We’ll go over a few of the most important steps in our latest series: Strategies for Transitioning Your Stock.

Whether you decide to sell or gift your stock to a friend, colleague, or family member, the first step you must take is to consider your estate plan. For instance, should you own your stock outright, or should “ownership” of your stock fall to your trust?

    Giving stock to children who aren’t active in the business can create a lot of conflict later on.

Owning your stock outright, as opposed to running ownership of your company through a trust, could result in a hefty estate tax when the time comes to sell your stock. Getting your estate plan in order early on is critical.

On that note, don’t split wealth evenly between your children if some of them aren’t working within the business. It may seem like the obvious choice, but giving stock to children who aren’t active in the business can create a lot of conflict later on. Jealousy, animosity, and general negativity can begin to fester, otherwise.

A good alternative is to simply supplement your other children’s inheritance with wealth from other sources. This way, you are still leaving equal assets behind. Getting a life insurance policy that will help create equity among your estate’s recipients is another great option.

If you’d like to learn how the process of transitioning stock to family members actually works, be on the lookout for part two of this series, which will be coming up soon. As always, if you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

How We Help Family Business Sales and Purchases

An independent third party can be extremely valuable to both business owners who are looking to sell and those who want to buy their businesses.

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Have you wondered about whether it would be a good idea to get somebody from the outside to come inside your business and help you get ready to sell it? Or have you wondered about whether it’s a good idea to get a third party involved to help you negotiate the terms of a purchase of a business? I’m here today to share my thoughts on this matter.

When people own companies and they’re getting to the point of retiring, they aren’t usually prepared. Maybe they don’t know the right way to sell or what the actual value of the company is. 

At Nabity Business Advisors, we help owners figure out the true value of their company and the best way to sell it. There are a lot of options out there. Sometimes it’s better to get a firm on board like ours to help negotiate the transition. Using a 3rd party helps separate yourself from the negotiation and we can help get a deal done where everyone is happy with the outcome.

    Having someone study your prospective organization is key.

For buyers, having someone to study prospective organizations is key.
That way, you’ll know that you’re getting into a good business transaction with good people. If it’s a merger, this is especially important. We can separate you from the transaction, look at what a fair price is, look at the people you’re going to be merging with, and make sure everything is a good fit. With a firm like ours in the middle, we can work hard to find out the greater good of the whole.

One last thing I wanted to mention was regarding family transactions. When you’re dealing with parents, kids, and siblings, conflicts can arise. We try to build trust with all the family members involved in a situation like this so we can do the right thing by the business and by each member of the family. We will make sure everyone still loves each other at the end so that Christmas isn’t ruined.

If you have any questions for me, don’t hesitate to reach out and give me a call or send me an email today. I look forward to hearing from you soon.

Do You Have a Plan in Place to Protect Your Company if a Key Shareholder Dies?

If your company has multiple key shareholders and one of them dies, what happens? We’ll discuss the potential outcomes, as well as how to plan for this unfortunate scenario, today.

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If you own a company with multiple stockholders, what happens when one of the key stockholders dies?

Ideally, you should be prepared for this scenario before it occurs, and today we’ll share a few of the most important preliminary steps.

The first step is to assess the value of your company and the stock you own in it. This will help you understand the kind of liability you’ll face if you have to buy out the family of a shareholder who has died.

The next step is to consider what the terms of this buyout might look like. Will you buy the family out over time or give them a lump sum? Can you even afford these options? Taking a deep dive into your finances now can save you a major headache later on.

Once you’ve assessed the value of your company and thought about what the terms of a buyout would look like, you can then draft a buy/sell agreement. This agreement is one that all shareholders will review and, hopefully, consent to. It will outline exactly what will happen in the event that a key shareholder dies or becomes otherwise incapacitated.

“This process might sound relatively straightforward, but you would be surprised to learn just how many corporations haven’t planned for such an event. “


Finally, you’ll need to sort out your plan for funding the buyout. One of the least expensive ways to ensure you have the capital to buy out a stockholder in the event of a catastrophe is to insure that stockholder. There are many ways this insurance can be arranged. Sometimes, it’s a matter of one shareholder insuring another. Other times, it’s the corporation itself that insures the shareholder.

The money sent by the corporation to the insurance company would, upon the death of a key shareholder, be sent back to the corporation. The corporation would then send this money (either in installments or as a lump sum) to the family of the shareholder. The deceased shareholder’s stock would then be re-transferred to the company to be disbursed among the surviving stockholder(s).

This process might sound relatively straightforward, but you would be surprised to learn just how many corporations haven’t planned for such an event. And without a plan like the one we’ve described,  the decedent’s family could inadvertently become key shareholders in your corporation. Obviously, this is the last thing you want. This is exactly why preemptive planning is so important.

If you have any other questions or would like our help putting together this kind of plan for your business, feel free to give us a call or send us an email. We look forward to hearing from you soon.