What Does Business Succession Planning Accomplish?

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Estate planning and business succession go hand-in-hand.

You own a business.

Perhaps you built it yourself.

Maybe you inherited it from your parents.

Regardless, your business and its future are an important part of your legacy.

You do not want it to die when you do.

A recent Phoenix Business Journal asks business owners this question: “Which comes first for Arizona business owners: estate planning or exit planning?”

According to the article, “yes” and … you need to make arrangements for both now.

Business succession is similar to estate planning.
Business success cannot be an afterthought.

Why?

You never know when you will die or become incapacitated.

You should take care of your estate planning and your business succession planning.

Both have similar goals.

While your estate planning provides financial security for your heirs, allows you to arrange who receives your assets, and minimizes estate taxes, with your business succession planning will provide financial security to your love ones, arrange for the transfer of business leadership, and minimize the income tax bill.

So, how do you get your affairs in order?

Working with an estate planning attorney who has experience in business succession planning will help you align your personal and business objectives.

You will need to figure out how to get an income stream from your business, if you are not able to exit your business (e.g., if you disabled) at the ideal time.

How will you maintain (or even increase) the value of your business and make sure your family receives the full value?

How will you legally ensure that your inheritance planning instructions and your business succession vision are followed when you die?

At the same time you will want to minimize any creditor debt left when you die, as well as any tax consequences attending the transfer of the business to new ownership.

Taking the time to merge your personal and business succession goals now will help you create the best future for your loved ones, employees, suppliers, and customers later.

Reference: Phoenix Business Journal (October 8, 2019) “Which comes first for Arizona business owners: estate planning or exit planning?”