Business Succession Planning
Business Succession Attorney Serving Queens and the New York Area
New York Business Succession Planning Law Firm Serving Clients Throughout New York
While family businesses serve as the foundation of the United States economy, many of them do not survive their founders’ exit from the business. There are three primary reasons for this: family relationships, taxes, and cash flow.
Family Relationships
The disability, retirement, or death of a small business owner often “triggers” the transfer of the business. Sadly, most small business owners do not properly plan for their exit from the business. Proper planning depends on finding answers to difficult questions such as:
- Who will lead the business after your exit—your children, your spouse, an outside party, a key member of your team, or someone else?
- Will your spouse remain financially dependent on the business even if he or she does not take over the business?
- If one of your children will take over the operation of the business, should your other children receive compensation, and if so, how much?
- Is the business vulnerable to threats like your children being sued, falling into debt, or getting divorced?
- Are you sure your children actually want to run the business, and are they capable of doing so?
- What about future generations? For example, are your grandchildren interested in the business?
We will devote all of the time necessary to thoroughly understand both your business and your family dynamics to help you find answers to these questions and many more.
Tax Considerations
The laws governing estate and income taxes, on both the state and federal levels, are constantly changing. This makes it extremely important to monitor the legal, economic, and political climate. Without a proper plan, your family could be forced to sell or liquidate the business to pay estate taxes or back taxes.
Cash Flow
Your estate, financial, and business plans must coordinated to help ensure that an adequate amount of cash is readily available to meet your business objectives and protect your personal assets. A properly designed, implemented, and funded estate plan can help you address your family’s needs and maintain adequate liquidity to pay business debts and tax liabilities. Additionally, life insurance can provide funds to help ensure your business survives your passing.
BSAs can provide for the smooth transfer of business interests following trigger events, which typically include the owner’s retirement, death, or disability. Interests in any type of business entity can be transferred with a BSA. BSAs are also effective in situations that involve multiple business owners, and they are binding on third parties such as a business owner’s heirs and estate representatives. A BSA can even assist in the determination of business value for estate tax purposes. All of this helps explain why BSAs are such an important and effective tool for business succession. It is worth noting that a BSA must be adequately funded to meet its objectives.
Contact a New York Business Succession Planning Attorney
If you are giving thought to exiting your business, we can counsel you on the most profitable and efficient approach. Contact us at your earliest convenience to schedule a personal meeting with our experienced New York business succession attorney.