Business Succession Planning
The greatest failure of small businesses is the lack of a plan to transfer the business, however large or small, to the next generation. The key to a successful transition is starting early enough to take advantage of certain tax benefits. One such benefit could be the annual tax exemption or using an estate freeze by selling a growing business. These concepts should be analyzed by both an estate planning attorney and a CPA in order to maximize savings.
Running Your Business After Death or Disability
Who will run your business if you become disabled? Who will run your business when you die? How will you get your business to stay in your family effectively? You need answers to these questions.
Small business owners bear the responsibility of owning and operating the greatest asset in their estate, their business. Too often, however, small business owners do not prepare for their own disability or death, creating havoc for the family when an unexpected event occurs.
- Are you the only person who knows how to run your business?
- Does anyone in your family wish to operate your business?
- Are you sufficiently insured to pay taxes if you die?
- Is your business sufficiently capitalized to pay estate taxes?
- Do you have someone you trust in place to operate your business?
- How is the continued operation of your business set to occur legally?
- Who will inherit your business and when?
- Is the Business structured the most efficient and tax-smart way to operate?
- Get a Cross-Purchase or Buy-Sell Agreement in place;
- Establish ground rules for running your business if you are disabled or die;
- Establish the people who will operate your business;
- Establish a plan during life for death that will get your business to your family and reduce costs and estate taxes;
- Create an effective plan that will eliminate the need to sell the business in order to pay estate taxes and expenses;
- Create an effective plan to keep your family’s peace and harmony when you die;
- Create a plan that effectively provides for non-participating children
In order to properly plan, consult with an experienced estate planning attorney with a small business and/or corporate background. Seek counsel that will be sensitive to your needs and the needs of your family as they relate to your business.
Using a Trust, while alive or created under your Will, will allow your business to be run by the person(s) you appoint ahead of time, not by a court-appointed person unfamiliar with your business. Stay in control of your business now and in the future for the benefit of your family by planning.