Business Planning

Business Succession - Something Happened to You?

Uncertainty Requires Planning

You’ve put too much into your business to have it unravel when you’re no longer actively involved.

When you are no longer in the business…

• Will it provide income for you? For your spouse and family?
• Will your family sell your interest? If so, at what price?
• Will potential estate taxes jeopardize its continuation?
• Who will inherit your co-owner’s interest in your business if something should happen to him or her?

Need for a Plan

Questions like these need answers that should be well thought out. Planning for ownership succession of a business can seem complicated and, therefore, business owners often avoid it or approach it unwillingly. However, successful owners of sole proprietorships, partnerships and corporations need to remove any uncertainty over what will happen to the business when they’re gone.

Without a plan for ownership succession your departure may have a serious financial impact on your family, employees and surviving owners. Outsiders may determine the fate of your business, possibly jeopardizing a lifetime of hard work.

Estate Planning

“Estate Planning” means different things to different people. One aspect of estate planning is the creation of your estate. This involves the accumulation of assets over your lifetime.

Another aspect of estate planning is deciding who should inherit your assets at you death and how they should inherit them. This aspect of estate planning involves personal choices and legal documents such as wills and trusts.

A third, and vey important aspect of estate planning, focuses on minimizing and paying any costs associated with dying.

For affluent individuals, the most significant of these costs is usually the federal estate tax. The federal estate tax is essentially a “transfer” tax. It is a tax upon your right to transfer property at your death. Generally, the estate tax is due and payable in cash within nine months of your death.

Whether or not a particular estate will be subject to this “transfer” tax depends upon several things….the estate tax law in effect at the time of death, the size of the estate, and to whom the estate is transferred. It is important, if not already done to begin planning now. Points to consider in planning your estate…

Important Points to Consider in Planning your Estate

Will - Have you made a will and been diligent about updating it to keep it consistent with your objectives and family changes?

Management – Have you provided for the sound management of your assets if you are unable to manage them? Will assets passing to your heirs be prudently managed?

Health Care – Have you considered your health care in the even to f terminal illness? Have you investigated a living will or health care proxy?

Property Distribution – How will the distribution of property under your current estate plan affect your family?

Insurance & Trusts – Is your life insurance in harmony with your estate planning objectives? Have you considered the benefits of irrevocable trusts?

Charitable Giving – Does your current plan take advantage of charitable giving in order to support those causes most meaningful to you?

Business Interests – If you own a business, will your currently plan carry out your wishes regarding the retention of transfer of the business?

Preserving Wealth – Is your estate large enough to be subject to estate tax? If so, does your current plan provide funding for this tax liability?

Key Person Coverage

Your key employees are your most valuable business asset. Their skill, knowledge and experience are your real profit makers. Without them, the success and growth of your business could be in jeopardy. Key employee insurance is designed to protect your business from the adversities associated with the loss of a key employee, manager or executive. The death or disability of a key employee could result in a substantial financial loss due to hiring and training a replacement, lost sales, and/or slowed production.

Buy / Sell Protection

If you have a partner in business, you have a need for insurance so that in the event of death or disability, you can buy out your partner's interest without having to take out a loan or liquidate company assets. This is also important where children and taxes are involved.