Ease into Succession Planning

Posted by Jeffrey N. Berman on

Many business owners fail to start the succession planning process simply because they feel overwhelmed by the process. There is no need to feel overwhelmed. Simply begin the process by taking small steps.

For starters, consider reviewing and, if necessary, updating your estate plan and buy-sell agreement.  Your estate plan and buy-sell agreement should be reviewed and updated in conjunction with each other rather than as stand-alone items. It is important that your estate plan does not conflict with your buy-sell agreement. For example, your estate plan should take advantage of certain estate tax savings strategies by providing for transfers to your spouse. At the same time, it is not uncommon for a buy-sell agreement to prohibit transfers to a spouse. In addition, it may be advisable to make gifts during your lifetime to your children but the buy-sell agreement may prohibit lifetime gifts. These are just two examples of potential conflicts that might exist. There are several other areas to review. For example, is the method in your buy-sell agreement for determining the value of your ownership interest in the company still the appropriate method?  Make sure the valuation method produces the value you intend.

By taking small steps, the succession planning process will be less daunting.  Finally, be sure to use a professional advisor who is well versed in both business succession and estate planning.  Let me know if we can help you get started.