Succession Planning
Unlocking the fair market value of a closely-held company is often the single most important financial event in the lifetime of a business owner and his family. And having an up-to-date, tax efficient and properly funded business succession plan may be the most essential ingredient for the survival of a firm that has lost a shareholder and/or a key person due to retirement, death or disability.
Keys to Unlocking Value
All businesses, from the two partner law firm to the family-owned car dealership and public biotech company need to develop, implement and monitor a coordinated strategy which incorporates one or more of the following elements of a successful plan:
- Current buy / sell agreement
- Tax and cost efficient funding
- Up-to-date business valuation
- Keyperson life & disability insurance
- Coordinated estate and gift plans
WorthPartners works closely with clients and their advisors to assure that each business, the shareholders and their families are beneficiaries of planning by design, not default.
To learn more about how we help our clients unlock the value of a business enterprise and assure its long term continuity, please call us at 781.849.7200.
The Father-Son Wealth
Preservation PlanA Case Study
Managing family wealth and dynamics in a family owned business is both an art and a science.
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Profile: Small, heavy construction contractor was near retirement. Company had a pension plan in place, but no buy/sell or estate plan. Father and son operated the business. Company had 37 employees.
Challenge: Company was too valuable to gift outright to the son. Family was concerned about equalizing estate values with other son who was not active in the business. Company was continuing to grow making the challenge bigger.
Solution: The company was appraised using discounts to reduce the value. Total value was reduced 60%. WorthPartners then set up a retirement plan for the father which created a liability equal to book value. Father was able to recapitalize the company and gift the stock to the son for $100,000, making the purchase price totally tax deductible in the form of a retirement benefit. To equalize with the son, WorthPartners arranged for the retirement plan to be payable to the son at the parents' death, estate and income tax free.
