A business succession plan addresses what happens when you retire, become disabled, divorce or pass away at a young age. For business owners, an estate plan should include an ownership succession plan that takes account of your spouse, children or partner’s ability and interest in running the business. It can also address who will take over your business and how the business can take care of your family.
A functional business succession plan takes into consideration the state and federal tax ramification of a transfer of ownership as well as the personal consequences. Business succession planning incorporates tax and estate planning. For example, establishing a trust during your lifetime may allow for the growth the trust assets outside of the taxable estate that can result in a significant estate tax savings. Every business has different needs just like every family. Many business owners justifiably concentrate their energies on daily concerns. But, with a little advance planning the problems of the future may be forestalled.
Many family businesses do not survive the transfer from the founding generation to the next generation. Most of these businesses fail because of discord between family members or taxes that too heavily burden the business. Independent thinking and entrepreneurially spirited business owners are not accustomed to using outside advisors for business decisions. However, with business succession planning, consulting a knowledgeable professional helps to ensure that you have the funds needed to retire and that your business continues to prosper in the reins of a new generation.