It’s time to wrap this up. We’ve covered five questions to ask yourself about succession planning and now it’s time for #6. This one is more about you personally. All the dialogue so far has been about the management transition. But what about the ownership transition? Ask yourself: Are your estate-planning goals in line with the succession plan?
Estate planning the past few years has become more complicated than ever. Gift exclusions have changed, estate tax exemptions have changed, tax rates have changed – we even had a year with no estate tax whatsoever (congratulations to those who saved billions!). Regardless of the complexity, it’s an issue you need to consider.
I’m not going to put you (or me) to sleep with a recitation of dozens of tax planning strategies related to asset transfers. I’ll just make two points. First, how are you going to transition the ownership of the business? Are you going to sell it to your kids? Are you going to sell it to someone else? If you sell it, do you want all the money now or spread over time? Are you going to gift it? The point of these questions is that you need to understand what your financial needs are for retirement and make sure that when you sell/gift/whatever the business, you left with the money you need, or at least some way to get it. You’ll probably need some income stream during retirement – what will that be? Where will it come from?
The second point is simple – GET HELP! Estate & financial planning are so complicated that trying it yourself is like jumping out of an airplane without a parachute – everything will seem OK for awhile, but barring a miracle, it won’t end well.
When you think about those six questions, how does your current succession plan rate? Have you at least started? There are so many issues involved with succession planning that many business owners get overwhelmed and decide not to do anything at all. That is the path to disappointment and conflict. You have the opportunity to create a positive change for you and your family, and to set them up for success for years to come. Take advantage of it.