As we conclude the third quarter of 2024, the economy continues to grow steadily, yet the balance of risks is shifting. Small cracks have begun to emerge in consumer sentiment, manufacturing, and within the labor market. Employment has now overtaken inflation as the Federal Reserve’s primary concern within its dual mandate as progress on disinflation has been satisfactory, thus paving the way for the Federal Reserve to join the global monetary easing cycle.

Despite some bumps along the way, the 2024 equity market rally remains intact. The healthy broadening out of the market beyond the mega-cap “Magnificent Seven” and “Fabulous Four” companies, has thankfully materialized. Risk assets were broadly supported by ten-year U.S. Treasury yields falling firmly below 4 percent, although interest rate volatility reached some of the highest levels of the year.

It was a quarter of tail-risk events: There were two assassination attempts on former president Donald Trump, Japanese stocks had the worst crash since 1987, before promptly rebounding, military conflict continued to escalate in the Middle East, and Hurricane Helene ravaged the Southeast, as one of the deadliest hurricanes to make landfall on the U.S. mainland in recent history. With the election around the corner in November, we anticipate elevated volatility persisting into the foreseeable future.

You might associate trusts with the ultrawealthy, or with young adults who don’t have to work. But trusts have benefits for a far wider swath of the socioeconomic spectrum — a swath that likely includes you.

“Not knowing how trusts work or what they’re used for, other than passing down assets to children, can keep people from setting one up,” said Michele Collins, director of advanced sales at MassMutual’s Boston office. “So can being afraid of the cost as well as being uncomfortable planning for death, which is when trust discussions often come up.”

Here’s a rundown of the most common types of trusts and their purpose.

We’ve all heard stories of contested wills and disinherited ne’er-do-wells among the rich and famous. Hollywood has used this storyline countless times, creating a motive for the bad guy or a righteous quest for good. It makes for great theater and even better supermarket tabloid headlines, but for the rest of us, it’s something we actively seek to avoid.

In theory, providing equal shares of your estate to your children is a case of simple math. Add up the assets and divide by the number of kids. But the problem for business owners is that the business, often the estate’s largest asset, is illiquid. There’s no cash to divvy up. And if the business is to be passed down to the next generation — specifically to those actively involved in the business — how do you make the others "whole" while keeping the business in one piece?

Before you embark on a strategy to make your business more valuable and transferable, be sure to identify and correct the risks that might threaten your company’s success.

“All of that work is futile if you don’t de-risk the business first,” said Brian Trzcinski, the director of business market development at MassMutual. Look for red flags that can indicate potential threats and take action to help eliminate any that may interfere with your plans to grow and monetize your business.

Whole life insurance offers an income tax-free death benefit as well as deferred cash value growth.

Baby boomers own approximately 4.5 million businesses with employees in the United States, and it’s estimated that 70 percent of these owners will be retiring over the next decade. According to the 2022 MassMutual Business Owner Perspectives Study, 60 percent of today’s owners say selling their businesses is their preferred exit strategy.

The problem? Historically, 75–80 percent of businesses that get put up for sale never sell.

So why do so few businesses transact? Simple. The business (and the owner) isn’t ready.

The market recently took quite a sudden dip, causing lots of consternation.

• Should we sell?

• Is this the beginning of the end?

• Are we about to enter another Global Financial Crisis?!

Honestly? Markets just go down sometimes and, candidly, it can be healthy … particularly when viewed through the lens of history and rationality.

There’s one question many small business owners ask themselves everyday: “What is the true value of my business?”

It’s an important question because, whether you realize it or not, the value of your business will have a big impact on both personal and professional aspects of your life. So, knowing the answer is vitally important.

The second quarter delivered positive returns for investors across almost all major asset classes. Global equities have continued to make new highs, led by the Artificial Intelligence (AI) revolution in the U.S. While consumer and business sentiment has sunk lower throughout the quarter, the narrative for stocks and bonds has been hard to describe as anything but optimistic.

The fundamental supports have all held in:

• The economy is growing.

• Corporate earnings are strong.

• The U.S. labor market is creating still-plentiful jobs.

• Household wealth continues to reach new records.

June marked the seventh winning month out of the past eight for the S&P 500, bringing year-to-date total returns to approximately 15 percent. There are now officially three U.S companies with equity market capitalizations over $3 trillion. Without question, it’s a bull market, but the probability of something going awry is rising. Specifically, signs are mounting for the Fed that restrictive monetary policy is influencing the economy, consumer spending is slowing, and concerns are rising over the political environment as the presidential election approaches.

When it comes time to sell or transfer your business, what is the best way for you to do it? You have several options at your disposal, from giving it away, to going public, to doing nothing. Each comes with its own rewards, and pitfalls, that you should take into account as you develop your business succession and estate plans.

Employee retention is critical to a healthy, well-functioning business. That’s because employee turnover costs you — in terms of money, productivity and morale.

So how do you hang on to the good employees? Sure, there are some things that as employers you can’t control. But you have a larger influence than you may think.

The Supreme Court recently ruled that life insurance proceeds received by a corporation to cover the repurchase of the deceased shareholder’s stock interest must be included in the value of the corporation for federal estate tax purposes. Those proceeds are not offset by the corporation’s obligation to repurchase the deceased shareholder’s stock.

Issues arise when business owners don’t face the fact that one day they won’t be around to run their business. While many owners have their children’s best interests in mind, their intentions and visions don’t always necessarily align with the reality as seen through the next generation’s eyes. A lot of it has to do with transparency, reasonableness, communication, and a willingness to compromise for the future success of the business and the continued harmony in the family.

You have built your business with the hopes that it will withstand the test of time. Unfortunately, there are a lot of elements out of your control that can affect the success of your business such as death or disability. It is possible to plan for these contingencies and ensure that both your business and the well-being of your family are able to survive an unforeseen event.

One day you’ll sell your business or transfer it to the next generation. You have a succession plan, so you have a good idea who will be eventually taking over, when the planned sale or transition will take place, and how much money you will have after the deal closes.

Regardless of when you plan to sell the business and to whom, it’s important to put a strategy into place now, for how you will manage the proceeds from the sale. This is especially important when the sale of the business is the culmination of a career, and the beginning of your retirement.

Here’s an interesting juxtaposition: According to the 2022 MassMutual Business Owner Perspectives Study, the top goal for business owners upon exiting their business is to maintain their current standard of living in retirement; yet, transitioning ownership when the business owner is ready to retire is ranked last in terms of importance and priority.

What might be the explanation for this? It could be because:

— Nearly half of the business owners we surveyed either plan to work in their business beyond 10 years from now or they have no idea when they plan to retire.

— Two-thirds are waiting for the right buyer to come along.

— Most say it will be an almost even split between funding retirement with both the business and the assets outside the business.

Businesses go through several stages. When they reach the growth stage, they may require additional financing above and beyond what the owner has saved or what friends and family can offer. These improvements may include increasing inventory, retooling existing or purchasing new equipment, expanding the building, or developing a new market.

In fact, a recent Forbes Advisor survey sought to identify how business owners used funds from their business loans. The most common use of the funds was for business expansion, with 42 percent selecting this option. Equipment purchases came in second, cited by 29 percent of respondents, followed closely by marketing and advertising, business franchising, and commercial real estate purchases/remodeling.

Despite stalling progress on inflation and a rebound in interest rates, the U.S. stock market has reached new highs in 2024, driven by a robust economic backdrop, strong corporate earnings, and investor optimism.

With news headlines focused on short-term outcomes especially for 2024, we emphasize the importance of a long-term perspective and focus on fundamentals. The first quarter went well in many respects, yet we remain cognizant of risks and potential surprises to the consensus view.

As Mike Tyson once famously said, “Everyone has a plan till they get punched in the mouth.” The recent market volatility is a stern reminder for retirees of just how important it is to have a plan. It is also a reminder that when it comes to retirement income planning specifically, timing is everything, which is why it is important to understand what financial professionals refer to as “sequence risk” or “sequence of returns risk.”

As you develop a plan for your eventual exit from the business, it is important to consider those risks that may impede your ability to step away when you are ready and limit the value you hope to receive from the business. With proper preparedness, you can exit the business on your terms, no matter when that time comes.