Business Succession Planning/Exit Strategies

Business succession planning can be one of the most important steps you take to ensure the long-term success of your business. Done properly, succession planning allows business owners to smoothly transfer ownership and management of a company to their heirs or other successors.

Whether you are interested in forming, selling, or merging a business entity, The Law Offices of Laura A. Davis can guide you safely through the many legal mine fields that lay between you and the success of your business.

The Law Offices of Laura A. Davis will help you confidently plan for and execute your business decisions and orchestrate an effective transition of wealth from one generation to the next. Working together, your plan will be one that is custom-tailored for you, expressing your values and hopes for the future in practical, cost-effective ways.

The Law Offices of Laura A. Davis can assist with:

• Exit strategy planning
• Implementing alternate business entity structures to facilitate the exit
• Buy-Sell Agreements
• Voting Trusts
• Gifting
• Sales to Grantor Trusts or Third-Parties
• Coordination of Business Succession Plan with Estate Plan
• Coordinating Investment, Insurance and Accounting Advisors

The Law Offices of Laura A. Davis: Committed to helping business owners transition to new lives and adventures.

Business Succession Planning In California

The following article will cover:

• Key factors to consider in business succession planning, including identifying who will inherit the business and how to educate and prepare the successor for the transition.
• The ideal timeframe for starting business succession planning and implementing mechanisms to facilitate a smoother transition and prevent conflicts between business and non-business heirs.
• The importance of annual reviews of estate planning documents.

What Is Important To Include In My Business Succession Planning?

Key factors to consider in business succession planning include determining who should inherit the business and ensuring they are willing and capable of taking it forward into the next generation. It’s essential to start educating the successor early on and consider how other parties, such as siblings, will be fairly dealt with if they don’t inherit the business.

At What Point In Time Should That Succession Begin?

Succession planning should begin much earlier than most people realize. Educating the successor and establishing mechanisms to ease the transition are critical steps.

Additionally, addressing how other family members will be fairly compensated is essential in preventing conflicts between the business owner and non-business heirs. Separating the two positions and using assets like insurance to compensate non-business heirs can be an effective approach.

When Is The Best Time To Start Planning For Who Will Take Over?

Ideally, start planning for business succession at least 10 years before you expect to retire. Implementing mechanisms such as insurance or separate trusts early on can facilitate a smoother transition.

There are also tax benefits associated with early succession planning, primarily for income tax reasons. It’s often said that a business should be started with the idea of selling it, so always keep in mind how you develop and structure the business with the eventual goal of passing it on.

How Often Do I Need To Review My Estate Planning Documents? Can I Make Changes At Any Time?

It is recommended to review your estate planning documents annually. This can coincide with seeing your tax professional for tax preparation, serving as a reminder to evaluate any changes in assets or family relationships that may not be adequately addressed in your documents.

You can make changes or updates to your estate planning documents at any time, especially if it is a revocable trust. However, it is important to consult with an attorney when making changes, as they can better understand the interconnected aspects of the documents. Even small changes may affect other aspects of your estate plan, such as the executor of your will, the agent under your power of attorney, or your healthcare directive.

Irrevocable trusts, on the other hand, are generally not changeable. However, some mechanisms may be built into these trusts that allow for adjustments in distributions or trustees, but this depends on the individual document.

One option to consider for updating problematic trust provisions is “decanting” the trust, which involves moving assets from an old trust into a new one with more suitable terms. While this is a potential solution, it is essential to consult with an experienced attorney to evaluate whether decanting is appropriate for your situation.

Do I Need A Monterey California Estate Planning Attorney, Or Can I Use An Online Estate Planning Service?

It is highly recommended to work with a local attorney for your estate planning needs, as this allows for a more personal relationship and greater understanding of your unique situation. While the COVID-19 pandemic has necessitated online interactions, having the option to meet face-to-face with your attorney can make a significant difference in your comfort level and the attorney’s ability to provide tailored advice.

There is a common misconception that the primary goal of estate planning is simply to create a bundle of documents. However, these documents are a byproduct of hours of discussion, Q&A, planning, advice, and education that ensure the estate plan accurately reflects your intentions and needs. Attempting to create an estate plan on your own or using an online service may not provide the same level of personal attention and detail that a dedicated estate planning attorney can offer. For more information on Business Succession Planning In California, an initial consultation is your next best step.