When the time comes to sell your business, pass it on to a family member, or make a change in management, proper planning may help you reduce tax consequences and can ensure that the transition takes place on your terms.
Estate Planning
It is vitally important to properly structure and regularly review your estate plan to be sure it addresses your family's needs.
Create (and update) your will. As the essential component of your estate plan, your will is a primary document for transferring your wealth upon your death. Time spent now deciding how you wish your legacy to be passed on to your heirs will avoid problems for your heirs later.
Review your estate plan. Lifestyle changes trigger a need to review your estate plan. Changes in marital status, having or adopting children, changing jobs, and moving are good times to consider a reassessment.
Choose your executor. Settling an estate is a complex process that often spans many months. Choosing an executor or personal representative who is knowledgeable and will be available to settle your estate is important to your peace of mind as well as the security of your loved ones.
Succession Planning
Succession planning is a way of transitioning your business through a sale, merger, or succession to help you preserve your assets for future generations. Here are the steps you and your Financial Advisor might consider to ensure a sound transition:
Create a succession plan. Set up a team, including your attorney, accountant, and family members. Write down, step-by-step, your plans for the continuation of your business, and include it in your will. Keep your family and management team fully informed.
Draft a buy-sell agreement. This can help ensure your business will remain with your family or business partners in the event of your death or disability, by requiring one party to buy, and the other to sell his or her interest in the business after a triggering event, such as the seller's (owner's) death or disability.
Use insurance to ensure adequate transitional funds. Life, disability and disability overhead expense insurance provide the dollars needed to keep your business running smoothly, as well as providing a fair share of the company's worth to all involved.
Develop an estate plan. Consider transferring part of your business ownership to family members involved in the business using certain gifting or sale techniques. While turning over some control of the business may be a challenge, it will shrink your assets and reduce the estate tax liability.
Keep your succession plan updated. Review your plan periodically with your team of professionals to address any financial or lifestyle changes that may be required.
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The information provided in this Web site is not intended to be nor should it be construed as tax or legal advice. As with any tax planning matter or strategy, please consult with your attorney and/or tax advisor.