The IRS Takes a Bite Out of DOMA, Pt 2
As mentioned in the first article of this series, the U.S. Supreme Court’s (aka SCOTUS) Windsor decision resulted in a flurry of guidance from several government agencies. The agency leading the charge, because its treatment of estate taxes was called to the carpet in Windsor, was the IRS. Sidebar: When SCOTUS or an agency, such as the IRS, decides on an overall course of action, the action typically can’t or, better yet – shouldn’t, occur until the agency provides a legal how-to analysis and procedural guidelines (aka “guidance”) for those who depend on the agency when performing their respective jobs. In this case, it would be estate planners, CPAs, and others. The IRS responded to Windsor faster than most of us have ever seen with respect to an issue of discriminatory treatment of individuals; it’s response was Revenue Ruling (Rev. Rule) 2013-17. WARNING: Despite my best efforts the following language will likely be a little dry. Rev. Rule 2013-17 painstakingly crafted an IRS rule based on (1) gender neutrality, (2) the IRS’s historical treatment of common law marriage, and (3) the burdens placed on both the taxpayer and the IRS by the so-called Defense of Marriage Act (DOMA). Though somewhat spliced between most sections of the analysis, the rule provides that in the eyes of the IRS, “husband,” “wife,” and “spouse” each mean a “married person” and that “marriage” is a lawful union between “married people.” Thus, the Rev. Rule completely removed gender from the analysis of tax treatment for married couples. The IRS reached this conclusion by examining the references to gender within the Internal Revenue Code (Code) itself and found few instances of express, gender-specific terms. Further examination of legislative history and recognition of statutory construction (how laws should be interpreted) supported the gender neutrality basis for the federal tax treatment of married same-sex couples. Next, to answer whether credence should be given to state law if the state didn’t recognize the marriage as valid (recall, SCOTUS didn’t invalidate DOMA Section 2 which allows a state to not recognize valid same-sex marriages), the IRS considered its historical treatment of common law marriages. More than 50 years ago, the IRS decided that it would recognize common law marriages even if a state didn’t; therefore, it saw no reason to undo more than 50 years of precedent. (I will resist the strong temptation to comment on Citizens United here.) Equally important, the IRS determined that despite the lack of uniformity among the states regarding marriage and state taxes, “uniform nationwide rules are essential for efficient and fair tax administration.” Considering how inefficient DOMA Section 3 made tax administration, the IRS stated that “more than 200 Code provisions and Treasury regulations” contain terms pertaining to marriage. Additionally, more than 1,000 statutes and regulations are affected by DOMA, placing a huge burden on same-sex couples by forcing them to use a complicated tax return filing process. Finally, the IRS also recognized the increased healthcare costs to these families created by a loss of the tax benefits opposite-sex spouses enjoy though employer benefits. Also, looking at DOMA and its Section 3’s affect on tax administration, the IRS pointed to Windsor, where the reason for Section 3 was noted as anything but fair but, on the contrary, designed to “injure and disparage” same-sex couples seeking to marry. The Rev. Rule also acknowledged and agreed with SCOTUS\’s Fifth Amendment analysis inWindsor, stating that the IRS would prefer to pass rules and regulations that are more constitutionally valid than not. Accordingly, the IRS per Rev Rule 2013-17 affords legally married same-sex couples the same tax treatment with respect to the federal tax regime as married opposite-sex couples, even if the couple resides in a state that doesn’t recognize their marriage (an “unfriendly” state). The rule, however, also expressly provides that this treatment does not extend to those couples in a Civil Union, Registered Domestic Partnership, or other relationship that bears a substantial similarity in state law benefits to marriage but are not, in fact, marriages. IRS v. DOMA: IRS score BIG ONE; DOMA down 1 ½ . Tune in next week for what this means practically speaking for married LGBT couples. The IRS Bites DOMA, Pt 1 | 2 | 3 | 4
The Silver Tsunami Silver Lining, Pt 2: It\’s Never Too Late
Last week’s article described The Silver Tsunami and found Grandma Jen in a funky situation: she had become the guardian of 2 girls, Taylor, and Michelle, with insufficient resources left by their parents. This week’s article discusses Jen\’s alternatives. ONE. Jen needs to make sure that she has solid plans in place to provide for herself because if she’s not doing well Taylor and Michelle probably won’t either. These circumstances and Jen’s age, 52, require an estate plan that includes the requisite powers of attorney and a revocable living trust, naming a successor trustee who could step into her shoes were she to become incapacitated. That successor trustee, who should also be Jen\’s property power of attorney agent, should be working with a highly qualified financial planner and CPA, to ensure Jen’s financial needs are met. Under her trust, she should have at least 2 subtrusts, perhaps more, for the children, leaving Jen as Trustee and designating the financial advisor as a successor co-trustee and a trusted friend who would act as a successor co-trustee and successor guardian of the estates of the 2 children. The trust and powers of attorney would help considerably. Yet, additional questions she must consider are complex with serious implications: Who should determine how much of her income should be spent on her care – the trustee, the agent under her property power of attorney, or the agent under her healthcare power of attorney? What if there is not enough to fund Jen’s long-term care and college education for both girls? TWO. Let’s just say that Jen is a healthy, strong, and vibrant 52. She’s also at the younger end of the Boomer generation with at least 13 – 15 years of earning potential left. Thus she must make the best of it. Since estate and financial planning overlap and yours truly works with a number of financial and tax professionals, a financial professional would likely tell Jen to max out her retirement plan contributions, defer taking Social Security until the payout is 100%, and be mindful of the resources needed for Taylor and Michelle for at least 7-9 years after Jen’s retirement. This is also where retirement withdrawal strategies come into play. Let’s also say Jen stays healthy, retires comfortably, the girls graduate college but one flies back to the nest for an indeterminate period, an “Echo Birdie.” Now, in retirement, Jen has an extra adult to feed and shelter, which means she is again incurring additional daily expenses. What would happen if Taylor became seriously ill or injured? Has she done even nominal planning to safeguard her grandmother’s resources? Does Jen have insurance on Taylor? Thus while Jen and her late husband had an estate plan, Chris and Chaz didn’t, which isn’t surprising because 70% of all Americans, including Baby Boomers, haven’t planned or planned adequately for regular situations, not to mention the Silver Tsunami. This is just yet one more example of why estate planning is critical for the 99%rs. For recent information relevant to Baby Boomers, visit our Facebook page. The Silver Tsunami Silver Lining, Pt 1 | The Silver Tsunami Silver Lining, Pt 2
The Silver Tsunami Silver Lining, Pt 1: Minimizing the Wave
Recently, I shared a lovely dinner with a few friends and clients over a discussion about the “Silver Tsunami,” a phrase I’m sure you’ve heard bandied about over the last year of so. Still, just what is this “Silver Tsunami”? The “Silver” is related to the number of Baby Boomers, those of us born in 1946 through 1964, reaching retirement age daily. There’s a whopping 10,000 of us looking at 65 every day and that number isn’t decreasing for at least 10 years. The Silver Tsunami is the combined effect of factors caused by retiring Baby Boomers, the largest concentration of individuals reaching retirement age in U.S. history. The effects involve what happens when millions of people suddenly stop earning what they used to, are staring at potentially a longer lifespan than anyone anticipated, and because of the Great Recession or other factors may have or become non-spousal or partner dependents. But there is a silver lining to the Silver Tsunami and, given the current state of affairs of our government, this information is even more critical for Boomers and their children and parents. Most of us have dependents – minor children, grandchildren, very close nieces, nephews, or even very close minor children of dear friends. If we don’t, we probably have adult dependents. If we don’t have either, we just need to give it about 10 years or so. The point is the dependent wave is the precursor to the tsunami but this wave requires relatively simple preparation to ensure that it doesn’t morph into a tsunami. Chris and Charles’ story helps make the point: Chris and Charles decide to take a vacation without the children, Taylor and Michelle. Chris’s sister, Sarah, usually watches the kids but is working on a major project for her boss during their vacation, so Charles’s brother, James is watching them. The kids love James and he loves them, too, often lavishing them with Cheetohs, fruit punch, and snickers…for breakfast. Chris and Charles are driving along and POW! Pileup! Both sustain injuries that will require 6 months or more of surgeries and then therapy. So who’s going to care for the kids? Who will pay the mortgage? No one knows because Chris and Charles are both incapacitated and they failed to plan adequately. What could they have done to ensure the kids were cared for and the mortgage was paid while they were both unable to work? They could have had solid property powers of attorney, which would allow the right person – probably Sarah – to step into their shoes and help ensure their financial stability. In this case as in many, a property power of attorney isn\’t about helping someone out until death; it\’s about protecting what they\’ve got until they can get back on their very much alive feet. What about the money, though? Neither one will be working for at least 3 months. Any financial advisor worth his or her salt will tell you that’s why you must save at least 6 months of emergency living expenses while you’re also socking away your retirement. But let’s just say the money is there. What we don’t want is someone running away with the money, which is why choosing a trustworthy power of attorney agent is critical. What if there were no siblings but only Chris’ parents left to care for the kids? Then the waves may come crashing down on the children and definitely on the parents’ retirement goals. A recent study indicates that approximately 2/3 of Baby Boomers are unsure about their retirement resources. If Chris and Charles were only survived by the girls and Chris’ parents – Rob and Jen, then Rob and Jen were, of course, going to care for Taylor and Michelle. However, that loving obligation could surely cause waves to crash against the retirement shores. Since estate planners love killing folks off to get our points across, for purposes of our story, let’s just say that Rob didn’t last long after Chris and Charles, so only Jen – age 52, Taylor age 6, and Michelle age 8 survive. Rob left Jen comfortable, but Chris and Charles, as mentioned earlier, had not planned adequately. They did what most young couples do, bought reciprocal life insurance policies with a death benefit of $50,000.00 each, naming Taylor and Michelle as contingent beneficiaries. At the time of their deaths, the projected cost of a college education for one child at Taylor’s age was $180,000.00 and the cost to raise one child to 18 years of age, $215,000.00. Accordingly Grandma Jen would need an additional $500,000.00 to see the girls through college. That\’s a tsunami headache. What can she do? The Silver Tsunami Silver Lining, Pt 1 | The Silver Tsunami Silver Lining, Pt 2
4 Key Concerns on Estate Planning for Disabled Children
A number of articles in The Shark Free Zone address the bad idea of designating a minor as a primary beneficiary. Single parents especially struggle with this issue, which is why “it takes a village,” is more than political rhetoric. Another issue parents and family members struggle with is the unfortunate circumstance of managing the car of a disabled child or loved one. Yet, it is even more critical to plan for unfortunate events when you are the caregiver of a disabled person. As usual, examples often help distinguish bad planning from poor planning but this time we’ll just look at a scenario and the resulting considerations. Twenty years ago, Kelly and Sean’s daughter, Carrie was born mentally and physically disabled. As a result, Kelly and Sean decided that Kelly would remain at home to care for Carrie and the family would depend on Sean’s paycheck and Carrie’s Social Security Disability Income (“SSDI”). About a month ago, Kelly and Carrie were involved in a car accident and ended up with a settlement award of $50,000 after medical expenses were paid. Fortunately, neither Kelly nor Carrie was severely injured but the incident shook Kelly considerably. So she and Sean finally had the “what if” discussion about the possibility of something tragic happening to one or both of them. If one or both of them died, who would care for Carrie and what would that look like? Well, Kelly and Sean have several issues to consider, including: Guardianship v. Powers of Attorney. Carrie is an adult and, in Illinois, obtaining guardianship for a disabled adult is a lengthy and costly process. To avoid that process, powers of attorney for Carrie might be useful. The question of usefulness hinges on the severity of Carrie’s mental disability with respect to legal capacity needed to grant authority provided in powers of attorney. Adverse Implications of Government Assistance. Irrespective of who dies, if sufficient means are not available to ensure Carrie’s basic needs – food, shelter, clothing, and medical care – are met during the remainder of her life, she may need additional government assistance, such as Medicaid. However, when someone on Medicaid receives an inheritance, they may become temporarily ineligible for Medicaid. So particular testamentary planning, such as “special needs trusts,” may be needed. Sufficient Life Insurance. If Sean passes away, the question is then, how much of a death benefit is needed. Also, if Kelly predeceased Sean, who would be the contingent beneficiary able to act on Carrie’s behalf. Appropriate Fiduciaries. If both Kelly and Sean die, the question again is who will be able to financially and compassionately manage Carrie’s estate and how would that estate be structured? Caring for a child with mental or physical challenges has at least one commonality with caring for a child with no challenges: the need for a careful, caring, and protective plan in the event the parent is no longer able to provide needed care because the ability or inability of our loved ones doesn\’t change the fact that they are our loved ones.
Infants, Stairwells & Burning a Million Dollars
Wealth preservation aka “asset protection” is slowly rising to the top of the mainstream American lexicon, much like estate planning did a couple of decades ago. However, though related, the 2 activities are quite different. A solid estate plan’s end goal is to ensure that your intended beneficiaries obtain what you intend for them in the most efficient and least adverse manner possible. Retirement and tax planning are a substantial part of the estate planning process but the primary beneficiary at the end of the game is someone else, not you. Conversely, a solid wealth preservation plan will ensure that you don’t go broke before, during, or after retirement and fulfill your intentions toward your beneficiaries, tying it into estate planning. But the primary beneficiary of wealth preservation is not someone else; the primary beneficiary is you. Estate planning and wealth preservation are technically linked because the core documents and the fiduciary roles are primarily the same. Both include trusts and, consequently, trustees. Both might even include a LLC. The fundamental distinction is jurisdictional, i.e., what law governs the trust. Typically the laws in states that have asset protection statutes and are referred to as Domestic Asset Protection Trusts (DAPTs) govern wealth preservation instruments whose jurisdiction is in the U.S. Instruments whose jurisdiction is outside the U.S. are governed by the laws, or lack thereof, in those particular countries and are known as “offshore” trusts. Now before you start getting all antsy with thoughts of tax evasion, let me squash that thought like a bug. The only way to ensure that one doesn’t incur Uncle Sam’s penalties is by being completely compliant with the U.S. tax code. Now before going too far into the different schools of thought surrounding DAPTs and offshore trusts, you may be thinking, “I don’t have a gazillion dollars, so this doesn’t apply to me.” But before I lose you to Facebook or an incoming text message – wait. If you live in America, you live in one of the most lawsuit crazed countries in the world. So while you may not have a gazillion dollars, consider the following stats: 99% of doctors in high risk specialties will be sued; 75% of doctors in low-risk practice areas will be sued; Every 6 minutes a child under the age of 5 is treated for an injury sustained on a residential stairwell; In 2012, a woman was awarded about $833,000 for an injury sustained on her landlord\’s property ; Over a 10-year period, 15-21 lawsuits were filed per 100 architect firms; I won’t mention lawyers, it’s a given, people hate us, think we have deep pockets, so they sue us. So if you know your liability insurance won’t cover a potential lawsuit or the cost of litigation in successfully defending an unscrupulous claimant, how comfortable are you holding a “fire sale”? If you’re not thrilled about selling your home and liquidating all of your assets, including your retirement portfolio, to settle a claim, then wealth preservation may be needed sooner rather than later. Then again, maybe you have a million dollars to burn…
3 Lessons about Grapes and Taxes
As Baby Boomers start retiring, thoughts of mortality and legacy planning begin to dance in their heads. While most boomers don’t have taxable estates…for now…the future is still a question mark for many. While enjoying retirement – golf course, cruises, mountain climbing, museum walks, wine tasting, and theatre galas – plans should be made for a time when the retirement funds must be transferred to someone else. It is critical to know how to transfer retirement proceeds properly so the distributions won\’t be literally and figuratively taxing: Claire and Cliff are in their mid 60’s. They’ve a modest estate – home valued at about $250K with most of its equity remaining, life insurance, and retirement benefits at about $2 million. Half of the retirement proceeds is in a 401(k), 25% is in an IRA, and 25% is in an annuity. They also have 2 kids: Lenny and Lisa. Lisa’s a starving artist, who is barely in the 15% tax bracket but who also has a vivacious and smart teenager. Lenny is 10 years older than Lisa and a savvy professional about to move into the highest tax bracket and has no intention of marrying or ever having children. Claire and Cliff want to distribute their estate to Lisa and Lenny equally and have been told to give the retirement proceeds to Lenny and Lisa outright. Before doing that, however, I would ask them to consider the following in a simultaneous death situation, where Claire and Cliff went down with the Titanic III: An outright gift from a 401(k) or a traditional IRA will be taxed and if the beneficiary is over 59 ½, the 10% penalty may also apply. For Lenny, who’s Mr. Money Bags, that doesn’t present too much of a problem, though no one wants to pay taxes. For Lisa, that would be a boon indeed. But an outright distribution to Lisa would yield less than what she would receive were the proceeds titled to a trust because of income tax consequences. Pick the fruit too young and the wine will be bitter; too old and you may taste too much oak. Claire and Cliff could have the proceeds placed in a trust for Lenny and Lisa. Here, part of Lisa’s benefit would be driven by Lenny’s life expectancy because he is the oldest, which would provide her with fewer years of income. Additionally, Lenny and Lisa must be sure to withdraw at least as much as the minimum required distribution annually or face a hefty penalty. Different varietals require different soils. In a qualified (retirement) annuity, the entire amount of the contract must be withdrawn over the 5-year period following Claire and Cliff’s death. Again, okay for Lenny, but not so okay for Lisa. Tax consequences also apply to this issue. Cabernets are as good as zinfandels; it\’s the consumer\’s tolerance that is key. Just like no 2 families are alike, no 2 children are alike. So make sure that your children know how to make decisions about the different types of distributions they can choose, after you enjoy your fruits. That way, the remaining fruit will, in fact, go to your children and not the community jelly jar.
3 E-commerce Tips for Smallbiz Owners
Today\’s article was generously contributed by Deanna Wharwood, a lifetime member of the U.S. military. Thanks, Deanna, for serving our country in more ways than one! As a consumer, when you check out of your local convenience store, you may swipe your credit card through a point-of-sale device and your gas, coffee, and donuts are paid for. What if you are the retailer and your business is online? How do you as the retailer process their credit card information? Essentially, that is the job that the payment gateway. What\’s a Payment Gateway? Payment gateways allow online merchants such as electronic store owners or auction sellers to accept credit card payments over the Internet. They authorize the cardholder’s credit, i.e, they check to ensure that the customer has enough money on their credit card to cover the charges. Then they place a hold on that amount so the buyer can’t turn around and spend that same money elsewhere before it gets transferred to the retailer’s merchant account. A Payment Gateway is NOT a Merchant AccountMany people confuse merchant accounts with payment gateways but they are not the same. Merchant account services act, for the most part, as a liaison between your business bank account and the payment gateway. When a customer orders a product from your online business their card is processed via the payment gateway. The money is then moved over to the merchant account service. The merchant account service then moves those newly captured funds to your business bank account. 3 Tips for Choosing a Payment Gateway Is it PCI-compliant? If it is compliant, then the company’s security has been audited by a third party and met the industry standards. Since payment gateways store all your customers’ credit card information, your customers’ valuable information is secure. Does it provide good customer support? Clearly good customer support is essential, especially when your account receivables are involved. You will want to be able to reach a person on the telephone when there are challenges. And, you also want to make sure that you have back-ups to your invoices. Is it compatible? Finally, it is important that the payment gateway you choose be integrated to the third-party solutions you are planning to use. That means things like store front platforms and shopping carts work with your gateway. Many payment gateways offer an array of security features, some of which will help you avoid becoming a victim of fraudulent orders! In the end, they will make your e-commerce business a less-stressful, more pleasant experience for you and your customers.
5 Mentoring Tips from the Grave
As a wills and trusts attorney, frequently, clients or friends ask me how they or their parents can prevent young, adult beneficiaries from wasting their “hard-earned” inheritance. I explain that this can be managed in at least 5 ways: Use hard cold facts and an iron club. Tell them that the money was hard-earned by you and don’t leave them anything but a videotape of the family history. Leave all the money and possessions to charity. Bribe the youngsters and hope for the best. Of course, these are 2 actions that make most lawyers’ skin crawl. Educate the little people from the time they get their first piggy bank from Grandpa. Use conditional provisions that don’t “offend public policy.” This means that, while you can’t disinherit your child from marrying outside his ethnicity and can’t tell him he won’t get a dime unless he divorces his current spouse, you can cut the cord if he becomes a lifetime criminal. You can shorten the cord if she becomes a lifetime substance abuser. And you can make the cord’s length dependent on grades and gainful employment. “Staggered mentoring,” which I’ve mentioned before, is another tool. With a “staggered mentoring” provision, Grandpa leaves Hermoine 30% of her pot of gold when she turns 25, another 30% when she turns 30, and the balance at the age of 35. My favorite is a combination of 3 through 5, but as my favorite contracts professor said, “If it walks like a duck and squawks like a duck, it ain’t a beagle.” So, if Hermoine’s been in and out of jail since the age of 16 and she’s 25 now, education, at least of the financial planning kind, isn’t probably going to work.
The Money Talk – to Prevent Relationship Cardiac Arrest
April is National Financial Literacy Month and, thus, this week\’s column discusses something that needs to happen between committed couples before the number crunching begins: “The Money Talk.” Ideally, this talk should occur before you consider cohabiting, marriage, entering into a Civil Union, or having children. Why? Because money is one of the leading causes of relationship stress and is the bane of most family feuds in estate planning. So, if you and your honey can get this straight before you tie the knot or start playing with grandkids, then your relationship monitor will probably hum right along, at least with respect to finances. Ergo, make a “date,” collect your documents – which are alluded to below – and after a good meal and a nice walk, have a seat and start talking. The following issues and questions provide a good start: Credit score. Here’s what the agencies have to report. OK, so I’ve had a few bumps in the road. What’s your score? Net worth. This is what I earn; this is what I’ve saved; this is what I owe. What’s your net worth? Financial planning. These are my current financial obligations. What are yours? Family obligations. Once a month, quarter, or year, I give Aunt Sue a couple of hundred dollars to help her out. Do you assist any family members financially? Charitable giving and gifting in general. Annually, I give approximately $______ to these charities? What about you? For holiday and birthday gifts, I generally spend $______. What about you? But you don’t have to tell me how much you spend on me. Baby Planning. Build. Feed. Clothe. Shelter. Educate: $200,000 for 4-year college tuition is the current projection for the year 2030. \’Nuf said. Retirement planning. Presuming you’ve met with a financial advisor: This is what I’d like my retirement to look like and so this is what I’d like to have saved for retirement in 5 years, 10 years, 15… What do you want your retirement to look like and what are your plans? Of course, this is just a suggested list that should be toggled so it’s not always starting with you and could actually start off with something akin to, “I’ve been thinking about going on vacation, but I also am thinking about retiring or starting my own business…” How start The Money Talk is important because admitting one\’s financial boo-boos or bankruptcies is difficult; sometimes admitting that one is a trust fund baby who can probably feed the world three times over, build an international space station that would house China\’s population, and that you have more cars than GM built last year can also be scary. But what is most important is that you start. I know a couple who had it before marrying and still has it at least quarterly…
2 Very Important Ps in a Smallbiz Estate Plan
Knowing why and when to start succession planning (read here) allows us to move on and address the personal and professional practical considerations of succession planning. The first personal consideration can be assessed by thinking about the following questions: What do YOU want from your succession plan? Do you want your business to continue after you retire, to stop when you have sufficient income to retire, both – which would be similar to semi-retirement, or something else? The 4 basic personal goals surrounding succession planning are: (1) creating a legacy; (2) obtaining sufficient income to retire completely; (3) both – creating a legacy and semi-retirement; or (4) something else, perhaps creating a new career entirely. Once you’ve answered these questions, next you should consider another personal matter and how it aligns with the answer above. This helps define realistic objectives. This personal consideration involves your dependents: Who depends on you now? Who is likely to depend on you in the future? And what might that dependency look like? Being an emotional and psychological support weighs heavier than we often know. So, if this type of support isn’t managed well, it will drain our energy, time, and motivation. How we sustain this loving nature without harming ourselves will be discussed in another week or so, but let’s move on to look at other dependencies. Sometimes supporting someone financially is easier than providing emotional support; sometimes it is not. Perhaps you have or someone you know has family members who phone when the electric bill is too high, when the basement has flooded, or when the church needs a new roof? Perhaps you have a relative whose spouse or partner passed away leaving a minor child to be taken care of by a single parent? Often connected to emotional and financial dependency is physical dependency, typically accompanying caring for a disabled loved one. Your succession plan must account for of these factors and possibilities or your objectives may fall short and you or loved ones may suffer. Once completing this difficult work, we can address the less difficult matters – professional considerations. Last week’s digression, covers the first professional consideration, which is deciding your business’s legal entity, i.e., a LLC or S-Corp. In very limited situations, would one actually consider a sole proprietorship, partnership, or C-Corporation, so those entity choices weren’t discussed. Having decided on a legal entity, the next professional consideration is your market. Who is your market and how can you differentiate your business from your competitors? First just think about the people who may want or need your services or product, e.g., women with bird cages that need regular cleaning. But what if you’re already in business? One idea, for those who provide personal services, is to take the average age of your oldest and youngest client; next consider the source of your highest quality referrals who fit within that average; and then of those clients, what work did you find most enjoyable: talking to the birds, letting them fly around the house, or making their cages shiny? After creating this “niche,” the issue of differentiation remains, which requires performing a lot of research – the competition, customer demand, external variables, and more. After compiling your research, you should be able to determine how you can differentiate your business from your competitors. And yes, we’re still talking about succession planning because to create a winning succession plan, you have to create a winning business. And why is succession planning important to estate planning? If you\’re a smallbiz owner, what are you going to do with the business you once owned? A good estate plan will help answer that question. The Smallbiz Success Series: Decision 3 | Succeed Today | Personal & Practical Points | Relax & Retire