Planning for Succession

To manage your business for long-term value, you need to build on a solid legal and ethical foundation. If you stay disciplined and constantly exercise due caution, succession will be easier. Plan every important step. Success (in the end) in succession planning is achievable. Succession can be accomplished according to your plans.

Estate Planning

Business owners need to consider, among other things, who will succeed them as owners. There are big tax and logistical implications–the costs–probate and the estate tax burden–and the risk that a financial future could weigh in the balance. Estate planning is not only a necessity, if is a unique opportunity to accomplish so many goals-

Enhance the long-term value of the business;
Enhance the value received by your survivors;
Reduce the tax burden;
Avoid being in business with strangers who possibly are unsuitable;
Avoid strangers managing, operating or controlling your business;
Avoid delays and costs;
Retain key employees; and
Ease the other challenges to successful succession.

A lack of proper estate planning by a business owner can financially jeopardize the business owner’s then-living family.

The estate tax creates particular problems for both businesses and families–the business often constitutes a large percentage of the deceased owner’s net worth. The estate tax is a very high percentage of a large estate, and when that happens to be the case, insufficient liquidity is a debilitating hardship. Without proper planning, the estate tax is devastating, and the business and the family members who survive may be forced to sell the business at the worst possible time. A forced sale should be avoided through proper planning.

Lifetime Transfers

There are often tax advantages in making lifetime transfers. Gifting interests in your business during your lifetime allows you to avoid estate tax on the transferred interest itself and any appreciation n value that occurs after the gift. There are several ways to make lifetime transfers of ownership interests.