How Business Succession Planning Can Help You Preserve Personal and Family Wealth
Business succession plan is vital. For privately run, owner-operated, or family owned companies, a well-organized business succession plan can help you drive growth, ensure long-term stability, and set the stage for the owner’s eventual retirement.
Yet, a significant percentage of companies lack an effective business succession plan. According to recent data cited by SmallBusiness.com, only 40% of small business owners nationwide have any formal business succession plan in place.
The lack of a proper succession plan can put the future of the company—and personal and family wealth—at risk. In this article, our North Carolina estate planning attorneys for business owners explain how succession planning can help you preserve personal and family wealth.Time Moves Forward—A Succession Plan Ensure Long Term Viability
Building, managing, and growing a small business takes a tremendous amount of work. Over the years, most business owners have put blood, sweat, and tears into their company. Thinking about leaving the company—either to retire or to move on to other opportunities—can sometimes be difficult. That being said, it is critically important. Otherwise the business may not be able to make it through the transition. And that is a problem because it could put the personal and family wealth that you have worked so hard to build at risk. There are many different issues that need to be addressed, including downside risk to the business, loss of revenue/value, and tax liability.A Broad-Based Strategy to Creating Personal and Family Wealth
Business succession plan is most effective when it starts as early as possible, long before there is any immediate need. The sooner you and your partners get started on crafting a succession plan, the better position you will be in to find the right strategy that works for your small/family-owned business. Likewise, a broad-based approach to building enduring personal and family wealth should start early. You can put a comprehensive business retirement plan in place that will help you maximize the amount you are able to get out of your company as you leave the business or transition out of day-to-day operations.Business Succession Plan and Business Retirement Planning
For small business owners, business succession planning is often synonymous with business retirement planning. While there are certainly exceptions, many small businesses transition to the next generation of leaders and decision-makers because their owner has reached the age of retirement. To effectively create and preserve lasting personal and family wealth, your business succession plan should be suited to your individual needs. Among other things, it is important to consider the following questions:
- Do You Have Specific Financial or Business Goals? Successful businesses are often built by entrepreneurs who made and achieved specific goals. With a business retirement plan, it is important to clarify your objectives.
- Are You Going to Sell Your Stake in Business? As you reach retirement age, it may be time to sell some (or all) of your stake in your small business. If you are going to sell, it is crucial that you are able to maximize your family.
- Will You Use Trusts or Other Estate Planning Strategies? In some cases, it is advisable to move a business into a trust as part of a transition. It is crucial that you understand the financial ramifications of any business sale or business transition.
- Have You Considered Tax Implications? When leaving their company, business owners need to carefully consider all potential tax liability, including capital gains taxes, estate taxes and gift taxes. An attorney can help you devise a strategy that limits your financial exposure.
Ultimately, business succession planning is about creating a roadmap to the future. One key aspect of the overall plan should be to ensure that a business owner who is retiring from the company is in the best possible position to maximize their personal and family wealth. You worked hard to build value for your family and your community. A business succession plan and business retirement plan will help to ensure that you are able to access the fruits of your labor.Call Our North Carolina Estate Planning Lawyers Today
At Arnold & Smith, PLLC, our North Carolina business succession planning attorneys have the professional skills and real world legal experience that you can count on. If you have any questions about business succession planning and wealth preservation, we are available to help. Contact us today for a confidential consultation. We serve communities throughout the region, including Charlotte, Belmont, Davidson, Monroe, Mooresville, Concord, Harrisburg, and Gastonia.