Succesion and Estate Planning

Succession and Estate Planning

Do you have a plan for the best tomorrow possible?

Succession planning is a formal statement of what will happen to the management of the business when the owner is no longer running it. Consider it to be a will for the business.

There are six main benefits to implementing a succession plan for your business, which include:

  1. Ensuring the continuity of your business
  2. Building a legacy to pass onto other family members
  3. Providing for heirs and the funding for your retirement
  4. Enabling an orderly transition
  5. Avoiding possible disputes
  6. Preparing for contingencies

A number of important questions need to be considered, some of which are provided below:

  • When do you plan to retire and how do you feel about retirement?
  • What are your plans for retirement?
  • Have you considered to whom you would sell the family business: such as family members, a group of employees, a competitor or another third party?
  • What is your business worth?
  • What are the tax implications of selling the business?
  • What are your financial needs going to be in retirement?

Succession Planning

Passing on the family business or selling an interest in the company you worked so hard to build has a number of tax traps. Often large sums of income tax are avoidable by talking through your future plans for succession and coming up with an action plan.

After all, everyone retires eventually, so how would you prefer to handle the situation – a last minute panic when the realization of the sums involved suddenly hits you, or by planning ahead and arranging your affairs in the most tax efficient manner possible?

From Father to Son, Mother to Daughter, Founder to Buyer, each option has its own tax implications. Even the age at which you plan to do this has a tax angle, so please, for your own sake, let’s talk about your options early and devise a plan to minimize the taxman’s share.

The transfer of assets to the next generation can attract a significant amount of income taxes if not well planned.

For the owner-managed business, this can threaten the viability or continued family ownership of the business. Our firm can provide very practical advice in such areas as equity ownership, management succession, financial restructuring, tax planning, wealth preservation and wills.

To build the business you have today, you’ve invested years of your life and the bulk of your assets, but sooner or later, it’s inevitable that someone other than you will own and run your business. Perhaps you’ll transfer your business to family members. Maybe you’ll sell to a third party. You might also sell to an outside investor.

Whatever path you choose, there’s a lot to consider before you make your move. It’s important that succession planning isn’t a short-term exercise or a one-time event – effective succession is a long-term process, and it only makes sense to get the right advice.

Our firm brings together a variety of specialists from various fields to put together a plan that works for you. Some of the services provided include the following:

Tax Planning

Is your succession-ownership transfer structure tax-effective? The tax implications associated with the transfer of assets and death will be reviewed.

Business Valuation

Valuation is an important issue in your succession plan. What is your business worth? It is essential that a reasonable value be determined early in the process.

Retirement Planning

A secure stream of retirement income must exist for the founder to comfortably retire.

Strategic Business Planning

A three-to five-year business plan is a fundamental base upon which your succession plan can be built.

Transfer of Management

Successors must develop management skills in order to successfully transfer the business for the future. Without good management, the business will not thrive.

If your family business does not prepare a succession plan, then its chances of survival are minimal, despite the best efforts and intentions of the owners and the children. We can assist you in:

  • Focusing on your objectives
  • Work with you to assess the business skills and commitment of the potential successors (your children)
  • Work with you to arrive at solutions that will result in a realistic and workable succession plan

Please feel free to Contact our office with your questions.