Do You Need Help Passing On Your Business?
Did you know that your business can make a will? It’s called a business succession plan, and it’s just as important to have in the event of your death or incapacitating illness. No matter what your business is, it’s essential that you plan for its future after you’re no longer in charge.
The team at Kreisher Marshall & Associates, LLC, has firsthand experience dealing with the messes created by the sudden departure of a business owner. We’ve found it’s never too soon to plan your estate, because you never know when something unexpected is going to happen.
To schedule a confidential consultation, call us today at 570-798-1084.
Who Needs a Business Succession Plan?
Every business, no matter its size or structure, needs to have a business succession plan in place. Of course, for a large corporation with a leadership team and a board of directors, power isn’t typically consolidated in a single person’s hands. For smaller businesses with a single owner or a small group of partners, a sudden loss of one of their leaders can be devastating.
For many business owners, their company is their primary asset. If your company is family-owned, and you have several children, it can be challenging to figure out how to divide it among all of your heirs. Whether you are interested in maximizing the value of the business to fund your retirement, liquidating the company and dispersing it among your loved ones, or designating whom you want to take over after you have passed on, these tasks can be handled with a business succession plan.
Another consideration is taxes. A high-value business is likely to be subject to estate taxes. If the owner hasn’t planned for the future, the long-term viability of the business could be in danger due to the sudden tax liability that has been assumed during a handover. Even if you meant your family to retain the family business, they will have no choice but to sell it in order to pay the taxes involved.
How Can You Protect Your Company’s Future?
One of the primary options for handing over a company is through a sale. Even if you want your family to continue with the company, a sale might be the most convenient way of passing it on. For instance, in a situation where you and your spouse are co-owners in the company, you can establish a buy-sell agreement. Your buy-sell agreement can even be funded with life insurance, so the proceeds will be paid to your spouse or partner. Better yet, you can establish a revocable trust.
Another option is an ESOP. This stands for Employee Stock Ownership Plan, and it is a way to remunerate employees by giving them shares of the company. It then allows the company to buy back the shares, for instance, upon retirement of the employee, allowing for a creative and cost-effective way to pay out employees.
It’s also possible to make an inter-family loan at an extremely low interest rate. Or you can make an installment note sale to an Intentionally Defective Grantor Trust. These are ways of lowering the tax burden during a business transfer while giving the original owner a high degree of control over how to disperse the business among his or her heirs.
Call a Columbia County Estate-Planning Lawyer
As you can see, business owners have a lot of options when it comes to succession. But it’s easy to make a mistake and leave your family and your business exposed. That’s why it’s imperative to consult with an experienced Columbia County estate planning attorney who understands how to structure business succession plans. At Kreisher Marshall & Associates, LLC, we have a proven track record of success when it comes to helping our clients protect their businesses.
Call us today at 570-798-1084 to schedule a consultation.