If you are a business owner, your business is important to you both personally and financially, meaning that you should plan now for its ultimate disposition or transition to new ownership. This type of planning is called “succession planning” and involves the consideration of a variety of legal and personal issues. All business owners should have a succession plan and should revisit it from time to time to see whether changes in applicable laws or personal circumstances dictate an update.
A properly structured succession plan will allow you to pass on your business in a tax effective and commercially efficient manner. The key to developing such a plan is choosing an advisor who not only understands the complex interactions of the various areas of law involved, but one who is committed to getting to know you, your family and your business. At Patterson Law, we are dedicated to exploring your unique circumstances. We make sure to take the time to have discussions with you and your business advisors about your retirement goals, the nature of your business, your family dynamics, your non-business assets, life insurance, shareholders’ agreements, your existing Will and other estate planning documents. We then assist you in structuring your personal, business and financial affairs so that you can meet your goals and maximize your tax savings now and in the future.
There are a number of ways of passing on your business: you can sell to an unrelated party, including an employee, or you may wish to transition your business to one or more of your children. Depending on which strategy you want to pursue, there are a number of legal and tax issues that need to be considered. Our lawyers combine their experience in tax planning, commercial transactions, corporate structuring and estate planning to ensure that your succession plan will be successful. Even if you are uncertain of your future plans, proper structuring now can maximize your flexibility going forward and keep your succession options open.
The tax implications of selling or transitioning your business can be significant and proper early planning can help to ensure that various tax advantages (including the “capital gains exemption”) are available to you when the time comes to sell. When designing a succession plan, our lawyers focus on corporate structures and reorganizations that are tax efficient now and that will help ensure that these tax savings are available to you in the future. We creatively employ holding companies, estate freezes and family trusts to maximize your tax savings, preserve your assets and fund your retirement. In the case of family transfers, we have experience negotiating shareholders’ agreements among multiple generations and helping everyone understand what their role in the business will be going forward. We also make sure that your current estate plan is consistent with your business objectives and how you wish to provide for your family on your passing. Most importantly, our experience will help to ensure that when you decide you are ready for retirement, the transition is a smooth and financially successful one.
Whether you are just starting out or have been running your business for years, it is never too early in the life-cycle of a business to begin discussing succession planning. In fact, the earlier you begin this type of planning, the better you will be positioned to take advantage of tax savings both now and in the future.
To discuss your own succession plan, contact one of our team leaders listed here or your Patterson Law commercial lawyer.