Business succession planning is the process of choosing the people that will manage your business after you leave while ensuring that they are well-equipped, prepared, and motivated to continue your organization’s successful legacy. It often overlaps with estate planning, which differs in that it pertains to strategies for managing both business and personal assets owned by a person during their life, in periods of incapacity, and following their death.
At Schneider, Garrastegui & Fedele PLLC, we are business succession planning lawyers with extensive experience in developing plans for business owners who seek to strategically transfer ownership and control of their businesses when they leave the leadership positions in their companies.
In this article, our succession planning attorneys answer frequently asked questions regarding succession planning in Long Island and New York State.
While it takes significant effort early on, business succession planning can save your company from eventual ruin. The future of your business hangs in the balance, and creating a business succession plan is your opportunity to guide your successor(s) and protect your legacy. Neglecting to take this opportunity means relinquishing your control.
You can prevent an unexpected issue from forcing your hand. Devoting time and energy to a carefully-designed business succession plan is worth it if you believe your business deserves to remain successful in your absence.
Ideally, you will begin working with a New York business succession planning lawyer at least five years before your intended retirement date. Starting earlier can result in more time to train and prepare your successor. We can work with you at an accelerated pace if you have less than a five-year window, but you should not delay getting started.
You need to understand your intentions for your business can be dashed by a sudden event if you do not have a succession plan in place. Some major organizational threats that an effective strategic business succession plan can avoid include:
These threats can be mitigated by the development of a plan that not only recognizes the legacy and objectives you have set for the organization but also identifies leaders and leadership qualities that should be fostered in coordination with a practical process for training and installing those leaders. A plan should account for contingencies and be managed over time to address any new developments in the family or business conditions.
The transfer of your business can involve Gift Tax or Estate Tax if it meets certain thresholds. Gift Tax can be applicable if the transfer happens while the owner making the transfer is alive, and the sale is made for less than full fair market value, whereas Estate Tax can apply if the transfer is made after death. Capital Gains Tax is tied to taxable income and can apply if assets are sold for more than their purchase price. There may be benefits to transferring some assets incrementally before death.
Depending on the details of what is included in your business and the nature of the transfer, tax benefit opportunities may be incorporated into your optimized succession plan.
Several considerations are involved in creating the overall succession plan for your business. Your plan will incorporate:
Your company’s goals and broader objectives will be considered concerning the skillsets of successor candidates, as will a potential successor’s financial capacity to acquire and maintain your company, if applicable. You will assess your confidence in the successor’s motives and interests concerning the company's future and the interests of employees, customers, and invested community members.
Valuation methods and timelines will vary depending on the nature of your business, its assets, and the type of succession plan you choose. The size of your business will also affect how much you might incorporate training and retention planning into your organization’s succession plan. Milestones will be developed to aid in keeping the leadership transition on track with the future you visualize for your company.
The current condition of your business, any foreseeable issues, and your preferred path will influence the type of business succession plan you will want to prepare. You may plan on keeping the company's ownership within the family, or you may be planning to pass it on to a well-established employee who is capable of managing the business. Alternatively, you may be interested in a possible sale or merger opportunities. Here are some considerations for different types of business succession plans:
Pursuing a business succession plan is a wise and responsible decision for your company's and your family's future. Our experienced business succession lawyers can help you through each step of developing your plan:
At Schneider, Garrastegui & Fedele PLLC, we have extensive experience in succession planning. Our knowledgeable business succession planning lawyers will guide you through drafting required documents and other conscientious preparations in advance of the strategic transition of your business. Let us know your additional questions before searching for a “business succession planning attorney near me” in New York. Call us today at 631-756-6006 or complete our online form to schedule a consultation.
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