End Game: Estate & Succession Planning for the CPA.

• Author: Paulsen, George

i was surprised to learn during my tenure as chair of the CalCPA Management of Accounting Practice Committee that many small firms and sole practitioners had no plan or a poorly thought-out plan for their retirement, disability or death. If you considered your end game years ago and talked to a friend about taking over for you if something happens, I recommend you consider the following to get your affairs in order for the inevitable.

Succession planning should result in something that works for the practitioner. I suggest you create a one-page document that describes the mission of the plan, measurable goals and strategies to attain the goals you set. Creating this document should give you focus and a direction with actions to make the plan work.

We all know the importance of planning for our families by buying life and disability insurance. If you're a partner in a firm--small or large consider life insurance on you and your partners with the firm as the beneficiary. This protects your partners, you and your family as the firm will have resources to buy your equity from your spouse and have the liquidity to replace you and retain your business.

I've had partners who've been diagnosed with cancer that's debilitating and then life ending. I wrote an article many years ago in this magazine about helping a friend and partner through his battle with cancer, and when I merged into a larger firm, we had a partner with the same issue. In the two cases, both partners wanted to stay active and help their clients and share the workload as best they could. In both cases, their and the firm's decision was to do the right thing for the partner, the clients and the firm. This created an unfortunate problem. Disability insurance often works like a light switch: on or off. My disabled partners should've received disability-payments, but the claim was denied until they stopped working near the end of life. Our firm has subsequently found policies that take this issue into account so consider this when you review your disability insurance.

To help maximize the value you collect on your hard work, look to practice brokerage businesses. They sell between 30 percent and 40 percent of businesses listed for sale. You could expect about 20 percent of annual collected billings for five years adjusted by the quality of your clients and staff successfully transferred.

A benefit of being an active member of CalCPA may be a better return for your retirement and no...