Succession Planning

Succession Planning

Many small business persons haven’t planned to make sure their companies stay in the family after they’re gone.  Estate planning with an emphasis on succession can help prevent unwanted consequences upon the business owner’s passing.  Not only does small business succession planning make sure that the right people inherit and manage your company, but it also helps minimize taxes.

Don’t make the mistake of assuming that you can simply pass your small business down to your children. Lack of planning can lead to unwarranted estate or gift taxes.  Add in the expense of your last illness and funeral and your heirs may be left with a serious hurdle to keeping your company in the family.  Also, if you fail to consider who should best manage your small business after your passing and communicate your wishes to family members and other business partners, you can easily leave your small business in limbo.

I’ll help you assemble a succession plan for your small business.  That way, you, your family and your partners can rest assured that your company will transition smoothly.

Looking at your small business’ organization and wishes for succession, we’ll address these key topics:

Operations Transfer

After a small business owner passes, his family, partners, employees, customers and vendors are often left insecure and unsure with regard to decisions about daily operations and relationships with the company.  A “smart business” succession plan doesn’t just address ownership transfer, but can also help transition daily management and operations.

Tax Considerations

With most small business owners, a majority of personal wealth is tied up in the company.  In this situation, it’s necessary to protect both the company and the small business person’s heirs from unnecessary tax payments. Without a “smart business” succession plan, family and partners who may be taking over the company could become liable for an estate tax that eats into the company’s value. Because few small businesses possess sufficient liquid assets, the new owners may be forced to sell the company.

Legal Documents

Properly drafted legal documents customized to the small business person’s unique situation are crucial to successful succession planning.

Current Risk Management

Steps must be taken during your lifetime to minimize the risk of liability arising from business activity.  Unresolved, accruing, risk complicates your company’s valuation and restrains your succession planning capabilities.  I’ll help you develop and maintain a solid risk management plan by carefully examining the quality and adequacy of liability insurance; making sure your small business’ operations are founded upon well-drafted contracts dealing with issues of liability and indemnification; reviewing your employee relationships (human resources) program for compliance; and possibly, forming a corporate or limited liability entity to shield you from personal liability.

Key Persons’ Retention

We’ll consider options for maximizing retention of personnel essential to your business’ continued operations through equitable compensation planning.

Lifetime Transfer Option

The timing of a transfer of your small business during your lifetime, but optionally retaining operational control, may be advantageous.  Advantages include the opportunity to mentor successors, minimizing the risk for discounted sale and tax planning.

Estate Planning and Wealth Management Specialists

After initial review of your small business’ succession needs, I’ll access other professionals as necessary with estate planning and wealth management expertise to consult and assist in the development of your “smart business” succession plan.