Business Succession Planning
Every business is an entity that should not be constrained or irrevocably harmed by the death of one of the principals. If you don’t have a plan, the succession will happen without you, and the results may not be as good as if you had made a plan. If you have a farm, or a business – whether you have this with your family or with independent people, all of you in the business entity need to make a plan to move forward as smoothly as possible.
With farms, forests, nurseries – other businesses attached to and dependent upon land and space and seasons – husbandry and stewardship of the land is ingrained in the business plan. However the IRS and the Commonwealth view that underlying asset, not in your terms but in the terms of highest and best use. They want to tax you the most they can and they want the value of the land to be a high as possible. There are many ways reduce the value of land and to preserve the use for the benefit of your business and your heirs.
Businesses based on manufacturing or sales have the same issues, just a different set of assets. Planning for and, as much as possible, controlling outcomes require diligence, thoroughness and a firm grasp of tax consequences.
Many businesses based in a rural economy are based on the lifestyle of the family or business principals. Said another way, we could all move to Boston or New York City and become captains of industry and finance. That would be the highest and best use approach. But we don’t.
We live here. We want to live here. We want our business to continue after us for the benefit of the area or our family or the planet. The business tools of life insurance, long term care insurance and annuities can be used for great benefit – here in the Berkshires (and the Taconics). Gifting of business assets while keeping control of the business (and other approaches) need to see the light of day and be discussed. Using trusts to avoid probate or using trusts to remove assets from your taxable estate, or using trusts to protect your disabled child or Alzheimer’s spouse – all things are possible. But they don’t happen without a plan.
Often just by talking with me or the attorney of your choice, the fear factor is diminished or even goes away. So call or email – I’ll ask you some questions and ask you to bring the answers to the first meeting.
Katherine Kiefer 413-528-0265 or katherine.kiefer.esq@gmail.com