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Business Succession Planning

Client Centered

One of the important decisions a business owner must face is when and how to step out of the business. Do you expect to retire from your business? Do you have a plan in place? What would happen to your business if you were to die today? Do you have children you hope to bring into the business? These are questions only you can answer, and your answers will lead you and your financial and legal advisors to a course of action. When you develop a succession plan for your business you have two basic choices: you can sell your business, or you can give it away. Once you choose to either sell or gift, you can structure your plan to go into effect during your lifetime or at your death.

Transferring your business interest with a buy-sell agreement

You can transfer your business interest with a buy-sell agreement, a legal contract that prearranges the sale of your business interest. It allows you to keep control of your interest until the occurrence of an event specified in the agreement, such as your death, disability, or retirement. A buy-sell agreement can help you to solve the problems inherent in attempting to sell a closely held business. When you structure your agreement, you can tailor it to your needs.

  • With a buy-sell agreement, you choose the events requiring a sale
  • A buy-sell agreement provides a ready buyer for your interest
  • Price and sale terms are prearranged
  • A buy-sell agreement can interfere with other estate planning

Sell your business interest

The major benefits when you sell your business interest are control and cash: you keep control of your interest or business assets until you are ready to let go, and you decide how much or how little you want to sell.

  • Selling allows you to receive cash (or convertible assets) and choose the timing
  • A limited market means a sale could be difficult
  • Size of business interest, estate could make sale difficult

Transfer your business interest through lifetime gifts

You can transfer your business interest through lifetime gifts by doing just that--making gifts during your lifetime. You can choose to make smaller gifts of portions of your business interest over a period of time or make a gift in total at your retirement.

  • Lifetime gifting reduces the value of your estate and could lower your estate taxes
  • Lifetime gifting allows you to take advantage of the annual gift tax exclusion, which may help you reduce total gift and estate taxes
  • Lifetime gifting requires you to give up part or all of your business

Transfer your business interest at death through your will or trust

If you wish to keep control of your business until your death and transfer your interest to someone at that time, you could transfer your business interest at death through your will or trust. This method of business succession can be effective when the intended receiver of your bequest is currently active in your business and would be able to carry on the business activities.

  • Will provisions can authorize the continuation of your business
  • With a living trust, you can see your continuation plan in action
  • A living trust can provide income to you or your heirs
  • Use of a trust can be efficient and private

Choosing the right type of succession plan

The various succession strategies can be used to achieve specific goals for your business interest. Depending upon your particular situation, one or more of these tools may be appropriate for you. We work with your tax advisor and legal counsel to determine the best strategy given your unique circumstance.

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