When you start planning early, it may afford you more options especially when it comes to mitigating tax liabilities. There may be a smaller estate tax bill if you start transferring ownership to your children earlier. Acting ahead may also allow you time to correct any errors or issues dealing with your business. Some situations that may require you to correct or deal with issues ahead of time are; for instance, if one of your children realizes they do not have an interest in the business or there are changes in IRS tax policies that need to be complied with. Planning ahead will provide you the opportunity to alter the course of your business and prevent any grave issue your family or successors will have to deal with in the future once you are gone.
Remaining unbiased may be the most beneficial approach to determining what your business requires to survive and grow. What is best for each of your family members is not always what is best for your business. Preparing to admit that your spouse, business partner, or children may not be fit for a role or task is part of remaining unbiased.
Do Not Overlook Key Employees and Staff
An effective succession plan should address the key employees, vested interests of company officers and loyal staff. It could be a significant detriment to the business to overlook their contributions and value to the business when having your succession plan drafted. Some of the potential ramifications of overlooking key employees and staff are that they could possibly leave and take your best customers or clients along with them.
Clear and Effective Communication
An open and direct method of communication is essential when explaining your desires and wishes for the future of your business. Even though your family members and business partners may not be in full agreement with you, it is imperative to not equivocate or be ambiguous over such serious matters. An essential part of communicating early is having the necessary legal instruments prepared such as your business succession plan, appropriate written agreements between your family members and/or your business partners, and your probate documents.
Obtain Professional Assistance
Consulting your attorney and accountant goes hand in hand with clear and effective communication. A knowledgeable and experienced business attorney should assist you in preparing your business succession plan and applicable written legal instruments and agreements. Self-created legal instruments without assistance of counsel may lead to a magnitude of legal pitfalls dealing with your family members and business partners after your death. The proper care and investment in your business’ future now may ensure the survival of your business later.
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