small business owners are finding their retirment plans delayed, if not abandoned
crunch is hitting business owners on many levels, including one they may not
have seen coming. According to the
New York Times, many small business owners who had hoped to sell their
businesses and retire on the proceeds are finding their plans must be delayed,
if not abandoned. The problem is not so much that their businesses have lost
value, but rather that banks are reluctant to lend money to prospective buyers.
There are some
options, but business could consider whether it would be best to
Sell Now –
perhaps taking less money, but enjoying a currently low capital gains
Hold Now – run the business for a few more years and
let the economy recover, but be careful you don’t “take your foot off the gas”
and let your business slide (and devalue); or
Buy Now – invest in the business, or find
investors to provide the financing for a sale.
Transfer/Gift to your children.
As you may know, Congress enacted a
law, which imposes punitive restrictions, on the ability of seniors to transfer
assets, before qualifying for Medicaid coverage of nursing home care. The law extended
Medicaid's "lookback" period for all asset transfers from three to
five years. But the most significant change is the shift of the start of the
penalty period for transferred assets from the date of transfer, to the date
when the individual would qualify for Medicaid coverage of nursing home care if
not for the transfer. In other words, the penalty period would not begin until
the nursing home resident was out of funds, meaning there would be no money to
pay the nursing home for however long the penalty period lasts.
Therefore, transfers/gifts, to children
or other family members, of the business, could, years later, result in
extended periods without any long-term care coverage of any kind.
What does this mean for you? If you
have considered protecting some assets, for your loved ones, in case you later
require long-term care, you should contact our office now.