The attorneys at Gillespie, Shields, Goldfarb & Taylor have been creating business succession plans since 1985. Business succession planning is an integral part of your estate plan. Using wills and trusts will effectively outline your property, assets, and health care wishes for the future of you and your family, but you may also need to plan for the future of your business.
Family businesses are a major factor in the American economy, accounting for over 60% of the total jobs in the country and 50% of our country’s product output. Strangely, only one-third of these businesses are successfully passed on to the second generation. There can be many snags when dealing with business succession planning, but with the help of experienced attorneys, most of these issues will be planned for and avoided.
When a family business owner is planning for the future of his or her business, there are a few key issues that need to be addressed:
- Choosing a successor. Many business owners choose to pass on their business rather than sell it. However, choosing a successor can be a difficult decision. You may have many qualified family members, but an unrelated employee has worked for you for 20 years. You may have two children who both want to run the business, but one is more qualified than the other. You will have to weigh their strengths and weaknesses and carefully plan to avoid animosity between multiple candidates.
- Determining the worth of your business. To cash out your business you will need an accurate appraisal of its worth, whether it is solely yours or it is held in a partnership. This step includes a lot of complex valuation formulas and capitalization models. It also requires the help of a professional.
- Creating a business owner/estate plan. To sell or pass on the business, you will need to draw up several agreements in writing. These documents will address tax liabilities to the owner on transfer and liabilities when distributing stocks to owners or spouses. Additionally, you will need to come up with a balanced buyer/seller agreement that accurately reflects the value of the business while keeping taxes to a minimum.
- Determining the means of transfer. There are several ways to officially transfer your business to someone else and many more choices revolving around each of those. Between cross-purchase agreements, entity purchase agreements, gifting, life insurance, and any combination in between, creating a transfer plan can quickly become complicated. An attorney well-versed in business succession planning can come up with the best strategy to suit your needs.
Experienced Business Succession Planners
Don’t leave business succession planning up to an inexperienced person. Even a slight mistake in the valuation of your business or the language of a buy/sell agreement can lead to a lot of confusion in the future. Experienced business succession planners work within your estate plan to represent your wishes for the future of your family and assets. A good business plan, in addition to other well-planned estate strategies, will help keep the process smooth and timely, save you money, and should avoid probate.
Based out of Phoenix, AZ, the attorneys at Gillespie, Shields, Goldfarb & Taylor are fully experienced across a variety of practices. We specialize in family law, estate planning, business law, employment law, and catastrophic injury cases. We take the time to carefully listen to each of our clients before strategizing a comprehensive plan based on their needs.
We respect our clients and represent them with passion and skill. Our practice continually receives recognition for our services, including superb AVVO ratings and Martindale-Hubbell client recognition awards. We are committed to providing exceptional and ongoing value to our clients. We hope you will contact us for any of your legal needs.