Business succession planning is a crucial part of owning a business, especially if you want your business to outlive you and benefit future generations. However, business succession planning can be complex and is typically best done with the help of an experienced business succession attorney. Many legal issues factor into planning for the future of a business, especially when planning for minimal business disruption. Legal issues surrounding the structure or control of the company are the most common. Still, other issues include deferred compensation plans (such as whether to structure the transfer as a gift or sale) and tax implications.
When planning for business succession, company owners should do everyone a favor and clearly name a successor. If they don’t, disputes will inevitably arise over who should control the company. It should also be made clear what kind of business structure the company is built on and who will fill other roles, especially those at or near the top. Each type of business has implications and requirements for succession, and those will need to be followed.
As a business owner, it’s only natural that you want to ensure your company’s success, growth, and sustainability far into the future. Your staff is your best ally in pursuit of these goals. Rewarding key employees for their performance with additional incentives and encouraging their ongoing efforts as they plan for the future is an integral part of succession planning. For example, a nonqualified deferred compensation plan can be an extremely effective incentive to motivate critical employees and help ensure the company you worked tirelessly to build continues to thrive once you are gone. However, deferred compensation plans can present legal issues if they are not planned for and managed correctly.
Suppose the business owner’s objective is to transfer ownership of your business to family members. In that case, it’s best to use a systematic plan of sale of stock and/or gifts in the family business from the owners to the successors. When completed over several years, it will serve to benefit both generations. Without a plan in place for this, the owner’s unexpected death or disability can cause various tax implications to arise and may cause the value of the company to diminish significantly. Additionally, a lack of planning may have an impact on the successors ability to continue.
Minimizing legal concerns and complications often requires the knowledge and support of outside professionals, primarily financial and legal experts. Hiring business lawyers is strongly recommended when working to secure the future of your business after you are gone. You can decrease the risk of legal complications by hiring a seasoned business attorney from Hackstaff Snow Atkinson & Griess to help you with your business succession needs and planning. However, there may be options or considerations that you have yet to think of that they can help you navigate. Our attorneys are well-versed in the ins and outs of business law and business succession. Give us a call today to learn more about how we can help you.
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