SUCCESSION PLANNING RESOURCE LIBRARY

Planning for succession prepares the business, its owner, and the owner’s family for the day when the owner no longer participates in the business. Without planning, that day can create crisis and conflict in both the business and the family. A Succession Planning Course for Farmers, Ranchers, and Family Business Owners will cover:

1. A SYSTEMATIC APPROACH TO BUSINESS SUCCESSION PLANNING

How to plan for succession including:

  • Converting business wealth to assets that can be used to fund the owner’s retirement.
  • Transferring ownership in the business to the desired successors.
  • Treating the owner’s children equitably while considering how to divide ownership between those active in the business and those who are not.
  • Addressing estate planning concerns associated with the transfer of a closely held business, including minimizing estate and gift taxes, providing liquidity to the estate, and planning for a surviving spouse. (Read more)

Tools: List of Planning Concerns (download)

2. TRANSFERRING OWNERSHIP IN A PARTNERSHIP OR LLC TO FAMILY MEMBERS

All business owners are exposed to the risk. Owners who have the majority of their wealth invested in their business should seek transfer options that reduce their dependence on the business and sufficient assets outside the business for a comfortable retirement. (Read more)

3. EQUALIZING TRANSFERS TO CHILDREN

Treating children fair does not mean an equal. Transferring operations to both active and inactive children may result in equal interests, but can create unwelcome and unnecessary tension. The goal should be an equitable, rather than equal division. (Read more)

4. FUNDING THE TRANSFER

Unless the owner is willing and able to transfer his or her business interest as a gift, the succession plan must determine how the successor will fund the acquisition. Since the proceeds of the sale are often the source of the owner’s retirement income, the plan must be sound and should consider the owners retirement needs and tolerance for risk. (Read more)

Tools: Comparison of Valuation Methods (download)

5. THE ROLE OF BUY-SELL AGREEMENTS

A buy-sell agreement is a contract that restricts business owners from freely transferring their ownership interests. A buy-sell prevents unwanted individuals from becoming owners, and if combined with a mandatory purchase obligation, may ensure a ready market for closely held ownership interests. (Read more)

Tools: Checklist for Reviewing Buy Sell Agreement (download)

6. RETAINING KEY EMPLOYEES

An ownership transition can cause key employees [read: loyal] to question their continued importance to the business. They may have concerns about the business’s future and their job security. It may be necessary to offer the key employees incentives to ensure they remain with the business and support the succession plan. (Read more)

Tools: Comparison of Monetary Incentives (download)

7. ESTATE PLANNING FOR BUSINESS OWNERS

The goal of most business succession plans is to provide for an orderly transition of management and ownership when the owner retires. Unfortunately, this goal may be defeated if the owner dies before retirement. A complete plan will include measures that minimize the impact an owner’s death may have the business. (Read more)

Tools: Life Insurance Needs Analysis (download)

A Comprehensive Succession Solution

Kevin Spafford, CFP® Succession Planning Specialist

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