Many business owners convince themselves that they will never retire, and thus they fail to plan for the eventual transition of their business ownership to others.
An owner of an interest in a business is faced with special estate-planning challenges. This is true whether the interest is in the form of a sole proprietorship, a partnership, a limited liability company, or a corporation.
The typical business owner's business interest, next to personal earning power, is probably their most valuable income-producing asset. Both the owner and his/her family depend heavily upon this asset; as such, the owner must give careful thought to the business retention or disposition in the event of the "three Ds": Death, Disability, or Departure.
With the help of a well-thought-out transition strategy, business owners and their families can receive the fair market value for their business when it comes time to sell.
It is important to develop a plan that will maximize value in the business, provide competent management, and spell-out a succession plan.
A properly funded buy-sell agreement is an important document that can address the issue of future ownership transition - especially when there are two or more owners involved. If little or no planning has been done in advance, the business is often disposed of at liquidation prices simply because no one is in line to operate the business. However, even if a capable employee can operate the business, the financing of the sale may be inadequate for the previous owner to receive a fair market value. Without proper planning and guidance, the business owner may also end up paying unnecessary taxes.
For a free no-obligation consultation, please provide us with your contact information and a Hantz Financial Services (HFS) advisor will contact you to answer any questions you might have about your financial situation.