What is succession planning for business owners? How does this affect the short and long-term interests of your company and its value? Why should you be concerned about succession planning if you own a business or a significant interest in an LLC, S-Corporation or C-Corporation?
Key Takeaways about the Importance of Business Succession Planning:
- Business succession planning protects the value and continuity of your company during unexpected events such as accidents, health emergencies, illness, incapacitation, or loss of life.
- Succession planning increases the value of your company by retaining smooth and profitable operations through any challenge, and avoiding loss of business or a forced sale of the company for less than it is worth
- Succession planning reduces capital gains, estate taxes, family or revocable trusts hold business interests to reduce taxation and protect this valuable asset from creditors
Your business is a valuable asset, often one of the most valuable assets you own or control. It is not only an income producing venture, it is a legacy you can leave to your heirs and beneficiaries. You have poured your life’s work, energy, time and money into your company. Doesn’t it make sense to protect that company and position it to seamlessly transfer to your designated beneficiaries or to ensure its ongoing successful operations if you become incapacitated or in the event of your passing?
Who will manage your business interest(s) if you are seriously injured in an accident or experience a health emergency? Have you considered disability insurance to protect against the loss of any key manager or employee (including yourself) resulting from injury, illness or an unexpected death? What insurance may be required to protect your ownership interests and fund related buyouts or protect your family’s interests while funding a buy-sell agreement? Have you considered “key person” or “business interruption” insurance options? All of these options can protect the ongoing operations of your business, as well as the company’s value.
A strong, well-crafted business succession plan takes advantage of trust and estate planning to protect or freeze the value of your company and transfer ownership to a spouse or other heirs without triggering taxable events. How will an ownership interest be protected and preserved within the family trust or other estate planning vehicle(s) to provide reduction in tax exposure through income splitting or the division of transferred value?
Succession planning for business owners ensures your company is protected when unexpected events occur in your life, and the lives of other key personnel. It provides a plan that protects all you’ve worked so hard to build, while allowing your spouse, heirs, and beneficiaries to retain and transfer ownership interests, or sell them in a controlled profitable manner that retains value while reducing the impact of taxation. Preserving the value of all you’ve invested and insuring smooth transitions are part of the advantage and necessity of succession planning for business owners.
We invite business owners to contact the experienced estate planning, business advisory, tax, accounting and legal team at Allen Barron or call today to schedule a free and substantive consultation at 866-631-3470.
We will discuss the trust and estate planning strategies to protect your business, reduce taxation and provide for your financial retirement needs. What do you ultimately intend to do with your business? If you intend to sell it instead of passing it on, what is the best way to structure the ownership interest to minimize taxation, while preserving the maximum amount of wealth for the rest of your life and for future generations?
The integrated services of the experienced professional team at Allen Barron and Janathan L. ALlen, APC, are ready to help you to address the necessity of succession planning for business owners with a unique blend of professional services in a single source. We take a comprehensive approach to business succession, and help to integrate all business-related legal, tax and accounting services to deliver exceptional value in a cost-effective and efficient manner. This leads to deeper and more effective strategies you can rely upon.
