Business Succession Planning

Simply put, a Business Succession Plan is an estate plan for a business.  It contains a set of written agreements that detail what happens when a business owner leaves the company, becomes incapacitated, or dies. In any of these circumstances, a Business Succession Plan will ensure a smooth transition to new ownership and management, meanwhile accounting for tax and estate planning consequences for the exiting owner.

This type of planning is especially important for closely-held family businesses, where the success of the business is so dependent on the vision and guidance of the founders. Without a plan, these businesses often struggle to succeed or survive in their absence. By thinking about ownership, management, and continuity issues in advance, the founders can rest assured that the family business they built from the ground up will enjoy continued success after they are gone. A properly drafted plan will do exactly that.

Consider the following ways a Business Succession Plan might benefit you:

  • Established a formal policy regarding family participation in the business
  • Provides standards and plans to assure that the “next generation” of management is capable and willing to run the business
  • Specifies successors, legacies, or an appointment process
  • Integrates the company business plan into the owner’s estate plan
  • Develops plans for the financial security of the retiring generation
  • Sets up an infrastructure within the business to assist in the business’s eventual succession or transfer
  • Reduces the business transfer tax burdens, income tax consequences, and estate tax consequences
  • Helps a business retain key employees
  • Helps a business maintain the value of its stock and assets during management or ownership transition
  • Provides peace of mind to the business owner that their life’s work will survive them

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