According to a recent national survey, more than 25 percent of family business shareholders who are entering their senior years haven’t completed any estate or succession planning other than writing a will. But succession planning for a business owner involves more than just deciding how your assets will be divided after you die.
At its most basic, a succession plan is a documented road map for partners, heirs and successors to follow in the event of your death, disability or retirement. This plan can include a program for distribution of business stock and other assets, debt retirement schedules, life insurance policies, buy-sell agreements between partners and heirs, division of responsibilities among successors, and any other elements that affect your business assets.
The true value of Business Succession Planning is in the details, not just for your family but also to establish the value of your business.
As you are probably already aware, our state is rich with families who have started businesses here and watched them thrive through the generations. However, there are also many examples of family businesses that have failed to weather the changes in generational management and ceased to exist. In many cases, this could have been avoided through careful business succession planning.
A good succession plan provides for a smooth transition. While it may take many months — or even years — of negotiation and fine-tuning, a viable succession plan increases the chances that the family business will survive through the years. After all, it’s your legacy – one you worked hard to build and one we’re sure you want to last!
When you meet with us to talk about your business succession plan, we will talk about a number of things, including:
The firm’s future ownership and leadership and what steps need to be taken to get there; i.e. How much control of the business do you want to maintain? Is there someone capable of running the business once you step down? Are there key employees who must be retained?
How to minimize taxes and make provisions for the retiring generation without adversely affecting the firm’s financial stability;
Or if something happens to you, are there sufficient assets to pay the estate tax, equalize the estate and keep the business?
What information will be communicated to employees and other family members about the transition; and
Development of a valuation appraisal and buy-sell agreement in case a family member decides to exit the business.
Consulting with a Creative Business Lawyer™ can help you bypass the pitfalls of passing the family business to future generations and help ensure a smooth transition process.
We’ll be happy to show you how you can accomplish a smooth transition for your business to the next generation of leaders when you schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.