Business Succession Planning
If you worked hard to establish, develop, and run your own business, chances are you want to have a plan for passing your business to your next generation. Business Succession Planning is the art of transferring your business to your heirs.
You can employ a number of techniques to transfer your business. These include:
- Purchasing Life Insurance for a Key-Man in the business so that if the Key-Man dies, there will be a source of initial funding to replace the Key-Man and give the next generation an opportunity to step into the Key-Man role. The insurance can also be used to pay the estate tax so that the business does not have to be sold or liquidated to pay the taxes. The Key-Man police would then be placed into an Irrevocable Life Insurance Trust (discussed in Wealth Planning) so as not to be includable in your estate.
- Creating a Buy-Sell Agreement.
- Creating a Family Limited Partnership or a Holding Company and transferring shares of the asset to your next generation slowly and overtime by utilizing the annual gift tax exclusion.
- Speaking with your business partners to figure out how much control you want to continue to have.
- Recapitalizing your interests into voting and non-voting. You could then place all of the value into the non-voting shares but keep all of the control in the voting shares. You could gift the non-voting shares to your family members over a period of years.
We strive to provide you with a customized plan to fit your individual needs. Please Contact Us to discuss your Estate Planning goals.