April 28, 2022
Succession Planning is an important strategy for public and private businesses. Most family businesses don’t survive past the second generation. Public companies are often criticized for not having an adequate succession plan in place. Just last year, Warren Buffet finally named his successor.
Succession planning for family businesses is a combination of:
The founder has spent many years building up their business. The business becomes another family member for the founder. The founder’s family members working in the business can present many challenges. If there are two families involved in the business, it is further complicated.
The founder, in many instances, is going to hold on to control of the company as long as possible. Warren Buffet is 90 years old and has just last year named his successor.
The founder will have the following concerns:
The family members will have the following concerns:
Retirement and Financial Considerations
Income and Estate Planning
The owner can gift, sell or bonus shares to family members. What are the income and estate planning implications? The business can buy out the owner. What are the tax implications?
If the family is not going to succeed to the business, what is the exit strategy:
All of the questions raised above will be discussed in our next issue regarding Succession Planning. If you have questions with regard to these matters, consult your advisor at Perlson LLP.
If you are not yet a client, contact Michael Deo, Managing Partner, at (516) 541-0022.
It’s hard to believe, but once again it’s time to think about year-end and all the things you need to do to be ready for the 2023 tax season