Business succession planning is sometimes called business exit planning. Succession planning for business should be undertaken whether you wish to keep the business within your family or sell it, before or after you pass away. Careful planning can help ensure the business can stay up and running and be protected from large, unexpected tax liabilities when you plan to pass your business on to family members or heirs. To protect your business from going through probate, you may want to work with a financial advisor such as Iron Plan Solutions in conjunction with tax experts and estate attorneys. There are different types of trusts that can help you take advantage of lifetime gift tax and estate tax exemptions and other tax mitigation strategies that also follow all applicable estate laws, including federal IRS and state tax rules.
If your business has more than one owner, you might consider establishing an agreement that upon the death of any owner, their interest is automatically conferred or purchased by the other owner(s). Known as buy-sell agreements, these arrangements can help ensure that beneficiaries of any deceased owner (including their spouse or other family members) don’t unintentionally become owners of your company. Again, trusts might come into play. Sometimes life insurance as part of an irrevocable life insurance trust (ILIT) can be used to fund buy-sell agreements and provide the necessary liquidity.
