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Old 01-11-2017, 10:03 AM
 
754 posts, read 873,256 times
Reputation: 974

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I don't even know where to start. Our family has a 50+ year old Life & Health Insurance business. Both of my parents run the business but there is trouble.

Father is 80 and Mother is 78 - both have significant chronic health issues.

I returned to SoCal from Denver recently to assess the situation. Here's what I have found with my parents and the business:

1.) Lack of energy to produce - both parents are tired and battling fatigue, old age and burn-out
2.) About $70k in debt on credit cards and business loans
3.) Some cognitive degeneration in both parents - more so with my Father
4.) Father is in denial about his reduced ability to produce

Retirement funds were lost/never saved so the business is the last asset and retirement. But I am trying to figure out if it's really an asset or more of a liability. Basically my folks are in business to pay their debt.

What I do know is that neither parent can continue to effectively run the business.

From what I am told from my parents, the business is not worth much. Certainly not enough to retire on. Parents are living on Social Security, very little new business monies and renewals. Parents did a reverse mortgage which has helped. And trust me, I know that reverse mortgages are liked by some and hated by others. Thankfully, they do have Long Term Care Insurance policies which helps for future issues.

So now what? Who can help me with assessing the options? Our CPA? An attorney? I need someone who can give me a non-biased opinion on what to do. Bankruptcy? Selling the business for whatever it's worth? Letting the business die on it's own? I am gathering our P&Ls along with a debt tally to see where things really stand.

Very sad...I am willing to help financially as much as I can but I have my own issues. This is a good lesson for people to always keep sight of retirement. Not only is this a financial toll but it's also an emotional toll as 50 years of work has ended like this. As my Mom said, "it wasn't suppose to end like this".

I would like my parents to have some dignity and peace throughout their final years if possible. My Father is stubborn and prideful so that's a challenge within itself. My Mother realizes the problems and is open to ideas.

Thanks in advance for any constructive opinions you may have.
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Old 01-11-2017, 10:12 AM
 
1,228 posts, read 1,270,136 times
Reputation: 4320
Google "Business Broker". They are people who sell businesses (like a Realtor sells homes). They can assess the business and let you know whether it is worth selling or closing.
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Old 01-11-2017, 12:19 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,796 posts, read 40,227,184 times
Reputation: 24071
1) see the CPA and find out why they allowed parents to get into debt w/o contacting siblings (as a friendly, not required gesture)
2) visit their attorney to assess their financial risk / options for negotiated repayment.
3) get them 'Out-of-business', and into a sustainable 'retirement' cash flow / finance situation (you mention 'family', are their others?)
4) have a 'continuing care plan' in place. (finance and health)


Health and Life is not so hot of a resale business (very dependent on owner dynamics / relationships.)
ongoing revenue (without stream of new clients) is minimal.

Do you know any competitors / friends who could take over clients?

Is agency independent? (presumed) or a franchise / affiliated with a national company?

It is not uncommon to find parents / elderly in crisis, as they tend to 'ignore' important details (Out of convenience?)

For CC debt, I would not be so personally concerned and would work out a negotiated settlement. I was taxed with $100k in parent's debt (friends and family) when I started caring for them at age 18. I worked 3 jobs and eventually paid it off, and bought them (us) a house (on $2/hr wages).
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Old 01-11-2017, 12:32 PM
 
754 posts, read 873,256 times
Reputation: 974
Quote:
Originally Posted by StealthRabbit View Post
1) see the CPA and find out why they allowed parents to get into debt w/o contacting siblings (as a friendly, not required gesture)
2) visit their attorney to assess their financial risk / options for negotiated repayment.
3) get them 'Out-of-business', and into a sustainable 'retirement' cash flow / finance situation (you mention 'family', are their others?)
4) have a 'continuing care plan' in place. (finance and health)


Health and Life is not so hot of a resale business (very dependent on owner dynamics / relationships.)
ongoing revenue (without stream of new clients) is minimal.

Do you know any competitors / friends who could take over clients?

Is agency independent? (presumed) or a franchise / affiliated with a national company?

It is not uncommon to find parents / elderly in crisis, as they tend to 'ignore' important details (Out of convenience?)

For CC debt, I would not be so personally concerned and would work out a negotiated settlement. I was taxed with $100k in parent's debt (friends and family) when I started caring for them at age 18. I worked 3 jobs and eventually paid it off, and bought them (us) a house (on $2/hr wages).
Thanks for the tips. What kind of attorney? They do not have a go-to attorney
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Old 01-11-2017, 01:31 PM
 
6,429 posts, read 5,144,495 times
Reputation: 13140
That is so sad. I hope things work out for you. I always wonder what is it in people that makes them not see things clearly? Are they afraid of death if they quit?
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Old 01-11-2017, 02:05 PM
 
Location: Close to an earthquake
890 posts, read 683,589 times
Reputation: 2390
So long as your parents have their cognitive abilities, you'll be at the mercy of their decisions to allow you to help them do something different than what they're now doing. I'd start by talking to either their CPA or attorney, whoever they have the closest relationship with, but you'll need your parents consent for either of these advisors to talk to you.

Stubborn elderly parents challenge us more than we'd like so be patient and realize that you may not be in the control position you'd like unless your parents give you this control.

This is a tough one and I wish you the best. Maybe recite the serenity prayer during those moments of extreme frustration.
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Old 01-11-2017, 02:17 PM
 
6,429 posts, read 5,144,495 times
Reputation: 13140
Quote:
Originally Posted by borninsac View Post
So long as your parents have their cognitive abilities, you'll be at the mercy of their decisions to allow you to help them do something different than what they're now doing. I'd start by talking to either their CPA or attorney, whoever they have the closest relationship with, but you'll need your parents consent for either of these advisors to talk to you.

Stubborn elderly parents challenge us more than we'd like so be patient and realize that you may not be in the control position you'd like unless your parents give you this control.

This is a tough one and I wish you the best. Maybe recite the serenity prayer during those moments of extreme frustration.
So true. Parents sometimes don't want to be told "what to do" by their kids. Best for a professional step in to guide them.
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Old 01-11-2017, 03:53 PM
 
Location: Saint John, IN
11,043 posts, read 4,046,321 times
Reputation: 13561
Talk to the person who does their taxes and see what type of income they are actually receiving from the policies on the book of business. If it's significant then try to keep the business, but have your parents step back. See about hiring someone to run the business instead or a family member. If the book is small or not generating a lot of income then sell the book or business to another agent to take over. This happens all the time and can be quite lucrative for your parents.
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Old 01-12-2017, 10:22 AM
 
176 posts, read 511,899 times
Reputation: 303
I am wondering about the $70,000 in debt. Frankly my guess is that your parents are living beyond their means--spending more each month than they are bringing in. So you need to look at their lifestyle too.
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Old 01-12-2017, 03:03 PM
 
12,825 posts, read 20,227,719 times
Reputation: 10914
Quote:
Originally Posted by UEHelp View Post
I don't even know where to start. Our family has a 50+ year old Life & Health Insurance business. Both of my parents run the business but there is trouble.

Father is 80 and Mother is 78 - both have significant chronic health issues.

I returned to SoCal from Denver recently to assess the situation. Here's what I have found with my parents and the business:

1.) Lack of energy to produce - both parents are tired and battling fatigue, old age and burn-out
2.) About $70k in debt on credit cards and business loans
3.) Some cognitive degeneration in both parents - more so with my Father
4.) Father is in denial about his reduced ability to produce

Retirement funds were lost/never saved so the business is the last asset and retirement. But I am trying to figure out if it's really an asset or more of a liability. Basically my folks are in business to pay their debt.

What I do know is that neither parent can continue to effectively run the business.

From what I am told from my parents, the business is not worth much. Certainly not enough to retire on. Parents are living on Social Security, very little new business monies and renewals. Parents did a reverse mortgage which has helped. And trust me, I know that reverse mortgages are liked by some and hated by others. Thankfully, they do have Long Term Care Insurance policies which helps for future issues.

So now what? Who can help me with assessing the options? Our CPA? An attorney? I need someone who can give me a non-biased opinion on what to do. Bankruptcy? Selling the business for whatever it's worth? Letting the business die on it's own? I am gathering our P&Ls along with a debt tally to see where things really stand.

Very sad...I am willing to help financially as much as I can but I have my own issues. This is a good lesson for people to always keep sight of retirement. Not only is this a financial toll but it's also an emotional toll as 50 years of work has ended like this. As my Mom said, "it wasn't suppose to end like this".

I would like my parents to have some dignity and peace throughout their final years if possible. My Father is stubborn and prideful so that's a challenge within itself. My Mother realizes the problems and is open to ideas.

Thanks in advance for any constructive opinions you may have.
Hey "cuz" - you must be family to know all this. Perfect description of one of the couples in my family! Except in the case of my relatives, its' worse. The wife is completely in denial, a spend thrift and a debt addict. Pretty sad state of affairs for people that old.
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