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Business and estate planning: Tips for successful succession

Have you caught yourself using the old adage about time flying more frequently these days? Perhaps you're a parent who describes a son's or daughter's growth spurts as blinks in time. Witnessing the growth of the business you created, launched and sustained through the years is likely similar in some ways. It's probably easy to think back to the time when your California business was a mere glimmer of a dream in your thoughts.

How quickly the years passed, right? You've no doubt had your ups and downs while raising your children and growing your business. Now that you're navigating your own midlife, you may be thinking more about protecting your interests and preparing a solid succession plan.

Practical tips for passing the baton

You obviously want to preserve the legacy you worked so hard to build. You may already have had discussions with your adult children regarding your wishes to carry on your business after you're gone. When considering including a business succession plan in your estate's portfolio, there are several things you may want to keep in mind, including the following:

  • Remember that taxation on your business as an inheritance will be determined according to the value of your business at the time of your death, not the value of your business when you execute your estate plan.
  • Various trust options are often available that may help you protect certain business assets from estate taxation.
  • You may also wish to include specific instructions and wishes regarding business management and other details pertaining to structure and functionality when you write your succession plan.
  • Details in your plan may vary depending on whether you are handing down your business to your own children or other family members, or parties outside your family circle.
  • If you transfer your business during your own lifetime, it may allow you to oversee the transition phases.

Just as you are surely proud of your children as they grow in age and wisdom, it's understandable that your business means a lot to you as well and you want to do whatever you can to enable continued success when you pass the torch to those who will carry on your legacy when the time comes.

Some of your main concerns regarding business succession may be to help your loved ones avoid probate and minimize taxes. Many California business owners consult with estate planning advisers to obtain guidance as to which options are most viable to help mitigate financial risk.

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Law Office of Jeffrey B. Pape, P.C.
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