Business Succession and Estate Planning – 4 things business owners should consider now!
- Do you have a structured succession plan?
Your business legacy is important!
Do you want your business to continue after your retirement or death? If you answered yes, then you need to start implementing a succession plan now.
A structured succession plan not only allows for survival of your business, it can encourage expansion, promote prosperity and preserve the working relationships for those left to run the business.
- Examine your current business structure:
Sole-trader and partnership structures are common in family businesses and small businesses, however are not always ideal when considering succession as it can be difficult to transfer the business to successors and may be vulnerable to estate claims.
Discretionary trusts are often used to mitigate liability, protect assets, overcome transfer issues in estate planning and enhance financial flexibility. A discretionary trust allows the trustee to hold assets including the business and business-owned assets on behalf of the beneficiaries.
Structuring your business as a company also offers ease in succession as the structure assists with asset protection and income planning because:
- Assets are owned by the company – not you – so they are not governed by a Will; and
- You are able to leave shares in the company that owns the asset/s to beneficiaries in your Will.
- Buy/sell agreements and insurance:
Buy/sell agreements are useful because:
- The agreement can be binding on executors;
- They allow surviving business partners to buy the other out in case of death or incapacity; and
- Buy/sell arrangement can be linked to insurance and the insurance premiums can be paid from the business.
- Assign roles and responsibilities with continuity in mind:
If you prepare a proper plan to transfer business ownership, it will support business solvency and continued operations, avoid potential family conflict and minimise estate challenges.
You need to consider what makes your business unique and what is in the best interest of your business! Who would be best placed to take over the ownership or running of the business. Key personnel should be consulted as the best business succession plan is a collaborative one!
Where advice and documents are required for business purposes the costs may be deductible for your business and you should check with your accountant or tax adviser.
McLaughlins Lawyers have been helping people with businesses, structuring, succession and estate planning for over 60 years. We understand how important it is to plan for the future and ensure your business will continue in the best possible way. Please call or email Teresa Kearney, Pip Davis or Dianne Ball on 07 5591 5099 and [email protected] for help.
McLaughlins Lawyers, your experienced Gold Coast lawyers, we stand beside you and are here to help you with your business succession and estate planning.
Author: Teresa Kearney, Senior Associate and Pip Davis, Solicitor.
Director: Ian Kennedy
Date: 30 September 2021