Business Succession Planning
Business succession planning is essentially putting together an estate plan for a business to ensure that the business can continue to functionally operate and adjust as needed over the years in alignment with the established business philosophy (as particular individuals retire, become incapacitated, or pass away). Further, after a family’s patriarch or matriarch passes, oftentimes tax planning trusts are established for the surviving spouse or descendants, and it is critical that the business structure work in tandem with the new owners (including trust owners).
Studies show a high failure rate when a business passes from one generation to the next. We can help families improve the odds by preparing now and addressing issues such as:
Clarifying responsibilities and expectations of family members in the business
Clarifying current and future family governance of the business
Finding resources to prepare younger family members and enhance overall family communications
Implementing restrictions in the business structure to maintain family control before third parties may be brought in
Our group is very experienced with the special issues that arise when a family is operating a business. We can help with operational issues now and can help the family with the long-term plan for the business, whether that is a hand-off to the next generation, the eventual sale of the business, or something else (for example, a transition to an employee-owned company). Here are just a few of the ways we help families with businesses:
Planning for liquidity drain of estate tax on the business
Clarifying transfer restrictions and other rules in shareholder/operating agreements
Reviewing entity structure for tax efficiency and/or improved creditor protection
Clarifying employment agreements, leases, or other arrangements to coordinate with overall plan
Evaluating ESOP and other retirement plan concepts
Our group designs family offices and investment entities to manage family wealth for the long term and offers innovative design ideas that may reduce the family’s overall income taxes. We also help families develop family mission statements and governance models, which we have found helps balance family members’ mindsets into a more “business” mode rather than a familial one when dealing with business decisions.