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Creating a Plan for Business Transfer

A man writing out an estate planning document

Anyone who runs a business knows that it more than a full-time job. It can take up much time and energy managing the daily operational tasks. 

It is important though that you take the time to ensure that you have the proper plans and protections in place for your business’s future. This includes creating a succession plan that will allow for the smooth transfer of your business when it is time to step away from it. You may not have any plans in the near future to relinquish control of your business, but, at some point, you will have to decide how you want to set your business up for a successful future after you have left it, whether it be for retirement, to pursue other ventures, or something else.

Business Succession and its Main Purpose

Creating a plan for the transfer of your business is also referred to as business succession planning. Whether you want to keep your business within your family or sell it to an outside party, carefully planning for this transfer is critical and can make the difference between your business flying or falling after you are gone. Here are some things you should consider including in your business succession plan.

First, you should put a detailed plan in place for who will take over in management positions. You will want to set your successors up for success and this will include implementing support structures to aid in the transition. You should consider establishing methods of development and training for key people who will be assuming new managerial positions to help them adjust and learn the ropes. Be clear in what responsibilities and authority you are going to be delegating to management successors. Delegating prior to and during the transition can afford you the opportunity to assess how new managers take on and handle tasks.

It may also be the case that who ends up owning your business and who ends up managing your business after you leave will be two different people. Be prepared to coordinate between the new owner and manager to facilitate the creation of an open communications between them. It will be an important relationship and you can help start it off on the right foot.

Understanding the Overlap Between Business Succession and Implications

Business succession planning can, of course overlap with and have significant implications for your estate planning as well. If your business employs family members, you will want to coordinate your business succession planning with your estate planning so there is no room for ambiguity or dispute.

Business succession planning and estate planning should be considered in tandem to ensure that your personal and business assets have a smooth transition and in that way, the value of both are enhanced.   Considering how to most effectively and efficiently have your business assets transferred after you pass away is a key consideration. With a business, the transferring of this entity can have significant tax consequences without proper planning.

There are various tools available to transfer a business. Depending on your situation, you may consider establishing a trust, forming a family limited partnership or forming a family limited liability company. The key will be to find the correct vehicle to make the transition and to enjoy the availability of discounted gift tax liability. You will want to seek the guidance of trusted professionals to assist with this process. 

Contact an Experienced Estate Planning Attorney

Make plans today to ensure the success of your business tomorrow. Talk to the estate planning team at EA Goodman Law about your options. Contact us today.

Posted in: Estate Planning