According to a recent national survey, 25-33 percent of family business shareholders who are nearing retirement haven’t completed any estate or succession planning other than writing a will. Some experts project that 75 percent of all family businesses will fail after the death of the founder. Business succession planning involves much more than just deciding how your assets will be divided after you die – it contemplates how the business will thrive after the founder is long gone.

A good business succession plan creates a road map for partners, heirs and successors to follow in the event of your death, disability or retirement. This plan can include a program for distribution and/or sale of business equity and other assets, repayment of business debts, purchase of life insurance policies to ensure liquidity, buy-sell agreements between partners and their families, division of responsibilities and authority to run the business among successors, and any other elements that affect your business assets. The plan usually contains guidance on how to determine the value of your business. It also must be flexible, recognizing that business, family and health situations are dynamic, and your plan must be easy to modify and amend.

Part of the business succession planning process involves an understanding of how the business will be taxed for estate planning purposes. Will the business cause the founder’s estate to incur significant estate taxes that must be paid within nine months of death or will there be sufficient liquidity from life insurance proceeds to negate the tax burden? Alternatively, does the founder control enough equity in the business so that taxes can be deferred under Code Section 6166 for up to 15 years? Can you mitigate the impact of the estate tax by engaging in lifetime gifts and sales of equity interests to your family, successors or trusts for their benefit?

To obtain assistance with your business succession planning needs, please call Wayne Zell at 703-218-2177 or email him at wayne.zell@ofplaw.com.

Latest Blog

  • Estate Planning for Business Owners, Management Succession Planning, pt. 4/7 Please join Wayne M. Zell, Esq., for this video presentation of his Estate Planning Bootcamp for Financial Advisors, Session 4, part 4 of 7. This video focuses on the creation of management succession plans for a business. https://youtu.be/qkdZm7yiLBA Read more
  • Estate Planning for Business Owners, Buy-sell Agreements, pt. 3/7 Please join Wayne M. Zell, Esq., for this video presentation of his Estate Planning Bootcamp for Financial Advisors, Session 4, part 3 of 7. This video continues discussion of buy-sell agreements. https://youtu.be/Ush_lVJOn1Y Read more
  • Estate Planning for Business Owners, Buy-Sell Agreements, pt. 2/7 Please join Wayne M. Zell, Esq., for this video presentation of his Estate Planning Bootcamp for Financial Advisors, Session 4, part 2 of 7. This video focuses on business succession planning and buy-sell agreements. https://youtu.be/_gamlUHjBBI Read more
  • Next Business Success(ion) Planning Bootcamp: Planning for the Exit/Landing – June 21! Please join Wayne Zell for the 4th Business Success(ion) Planning Bootcamp of 2017, Planning for the Exit/Landing, on June 21 at 7:30am at 1775 Wiehle Ave., S. 400, Reston, VA 20191. For more info and to sign up for the event, please click here. Read more
  • Estate Planning for Business Owners, Beneficiary Planning, pt. 1/7 Please join Wayne M. Zell, Esq., for this video presentation of his Estate Planning Bootcamp for Financial Advisors, Session 4, part 1 of 7. This video focuses on business succession planning and planning for beneficiaries and heirs.   https://youtu.be/DJJku1mkueg Read more
  • Legislation Introduced to Prevent Enactment of Valuation Rules Sen. Marco Rubio (R-Fla.) and Rep. Warren Davidson (R-Ohio) reintroduced legislation to prevent the IRS from enacting its highly controversial estate valuation discount proposed regulations introduced in August 2016. The proposed regulations were purportedly designed to stop abusive practices where valuation discounts were being used solely as an estate tax dodge on transfers of interests in closely held businesses. But the rules arguably went way beyond what the statute (Code Sec. 2704) originally intended. During the last Congress, similar legislation introduced by Davidson (H.R. 6100) and Rubio (S. 3436) attempted to stem the regulations by blocking funding. The bills garnered ... Read more
  • Another Summary of the Valuation Discount Proposed Regs. Here is another excellent summary (from Bessemer Trust) of the new Section 2704 proposed regulations that severely limit the use of valuation discounts for transfers of interests in closely held entities to family members or trusts for their benefit.  Please call us at 703-218-2177 or email us at wayne.zell@ofplaw.com for assistance in making transfers prior to year-end, the expected effective date of the regulations. Read more
  • Tax Extenders Package Includes Permanent S corporation Relief As you may know by now, on December 18, 2015, President Obama signed into law “The Protecting Americans From Tax Hikes Act”, which made permanent many expiring or expired provisions of tax law and further extended other provisions.  Hidden among the provisions as a significant change affecting S corporations and their shareholders. S corporations generally pass through income, income tax liability and tax attributes to their individual shareholders.  One major exception to this rule is where an S corporation was previously treated as a “C” corporation and converts to an S corporation.  In that event, the S corporation may have to pay corporate tax ... Read more
  • Premium Financing-Pros May Outweigh Cons Listen to Wayne M. Zell, Esq., discuss the pros and cons of using premium financing for life insurance. This technique is particularly useful for high net worth individuals and for businesses and non-profits seeking to retain key employees. http://www.blueprintforwealth.org/wp-content/uploads/2015/11/Premium-finance-insurance-11.2015.mp3Podcast: Play in new window | Download | Embed Read more
  • New IRS Rules Expected Restricting Valuation Discounts For a recent, relevant summary of the anticipated IRS regulations restricting the ability to use valuation discounts, please see this August 7th New York Times article.   Read more

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