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Succession Plan

My Lawyer Retired-What Happens to my Estate Planning Documents Now? 

My Lawyer Retired-What Happens to my Estate Planning Documents Now?

What happens to your Will or estate plan if your estate planning attorney dies, retires, quits practicing, or is otherwise not available when you or your family need estate legal services in the future?

Clients mistakenly believe that their estate legal program will fall apart if the attorney who prepared and implemented the plan is not around at a later date.

People who put an estate legal program in place typically have either a Will-based plan or a Living Trust-based plan.

Over the years, many people have gone to “other” attorneys or firms to get their Will done. Later, when they need to change their Will (perhaps change the heirs; or change the executor) they go to another attorney to either make the changes, or, when someone dies, to handle the probate,When new services are provided,  the previous attorney or firm does not have to be located or communicated with. It is often easy to make the transition.

When someone creates a Living Trust-based estate planning program, they often mistakenly believe that legal documents must be updated every time they buy or sell property, or even open an investment account. That assumption is incorrect. The key is, simply, to buy the new property, or open the investment account, in the name of the trust. And when the Settlor of a trust dies, note that many Living Trusts are settled with no attorney involvement whatsoever. So if the attorney who helped you implement your Trust-based plan is not around when you need to name new beneficiaries, or settle the trust when you die, it’s OK.

It is not unlike when you lose the services of your doctor, your CPA, or your financial advisor. You simply find someone else that you know, like, and trust to pick up where you left off with the other professional service provider.

Read more related articles here:

What Happens if Your Estate Planning Attorney Dies Before You?

Why Should A Solo Practitioner Do Succession Planning?

Also, read one of our previous blogs here:

Succession Planning vs. Estate Planning – Why They Are Both Important

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.


Business succession

8 Keys to Passing Down a Family Business

8 Keys to Passing Down a Family Business

8 Keys to Passing Down a Family Business. Learn how to transfer a family business to the next generation.

When it comes to transferring a business to a new generation, do not improvise.

At least half of the companies in the U.S. — even those listed on the stock exchange — are family businesses, according to Harvard Business School.

These businesses are not only “the backbone of the American economy,” but also tend to perform better than nonfamily companies during economic crises, says Pramodita Sharma, a professor at the University of Vermont School of Business and an expert in family businesses.

But what happens when the founders decide to retire and hand over the reins to a new generation? For many family businesses, that involves one of the most complex processes and generates the most challenges.

3 Pitfalls to Avoid

A successful transition

Henry Suárez had a career in the pharmaceutical industry. His last job was as an executive for Upjohn (now Pfizer). In 1990, at 50, he decided to go out on his own and created Suiphar, a drug distributor. He started the business with his three sons.

That was the first step in a successful generational transition, years before it happened. The sons not only learned the details of the business, but also contributed to creating the company. “My father always got us involved in his business, ever since we were just kids,” said Jaime E. Suárez, a board of directors member of Suiphar group and company shareholder along with his two brothers, Henry H. and Luis A. The three of them have equal shares.

Eight years ago, their father gave them control of Suiphar, a group of nine companies with headquarters in Sunrise, Fla., and offices in five Latin American countries, including a production plant in Bogota. The company generates annual revenue of almost $50 million.

The Suárez family’s generational transition was successful for several reasons: The sons were trained to run the business; they had a clear interest in the company; and they had earned their participation through effort and not simply by being the boss’ sons. They contributed their own capital and effort to the enterprise.

The following are the eight most important aspects in the generational transition of a family business, according to several experts.

1. Business plan

The transition from one generation to the next must be thoroughly planned. “The family must meet to define where the company is now and where it wants to go in the future: the technology it will need, what will be the capital requirements, and what type of human resources will be needed, among other subjects,” says Wayne Rivers, president of the consulting firm Family Business Institute. “This is part of a business plan that, in 95 percent of the cases, [the companies undergoing this process] don’t have.”

Jaime E. Suárez adds: “When we transitioned, we did the strategic planning for the company for the 2010-2015 period. And it’s a plan we revise every five years.”

2. Real commitment

The new generation must never think that their place in the company is guaranteed because they are part of the family. Working for a family business must be an opportunity, and the owners must be very clear about the employment conditions of their children — from benefits to performance policies — to avoid giving the rest of the employees the wrong perception, says Paul Karofsky, a family business consultant.


3. Corporate governance structure

Every company must have a professional management system. Establishing a board of directors composed of industry experts, attorneys, accountants and others from outside the family will lead to better decisions. However, “having a good board of directors that includes mom and dad as advisers is essential,” says Greg McCann of McCann & Associates, a consulting firm specializing in family businesses. A small business that cannot afford to have a board of directors with paid professionals can have a board of advisers made up of relatives, friends, attorneys and accountants.

4. Gift or sale?

A common dilemma is whether the new generation should get stock as a gift or should contribute capital to buy the company. “The most advanced usually have a combination of both in the transition plans,” Sharma says. “Showing economic commitment to the company is important for the company’s success throughout the generations.” For Suiphar, the commitment from the second generation was clear from the beginning because the sons worked with the father to create the company.

5. Preparation

The generation taking over must receive the training required to take control. The generation giving up ownership needs a plan that clearly defines the conditions of their exit, and whether, for example, they will remain as advisers or keep a position with specific duties. “In my experience, the time needed to make sure all parts are ready for a successful transition is between five and 10 years,” McCann says.

6. Management first, then ownership

Transferring the company to the next generation is not only a matter of naming the children as owners. The first step is transferring the management of the company and ensuring that the new generation is trained to lead the business. “When the new leadership is strengthened and it is shown that they are competent, then the property transition process can begin,” Rivers says. If needed, professional managers can be hired until the relatives are ready to take over complete control of the business.

7. Resolution of conflicts

All families have problems and conflicts to be resolved. Karofsky says it is vital to remove interpersonal conflicts from the day-to-day operations of the business and to define ways for the family to resolve differences. Conflicts not only “can destroy the family, but also the business,” he says. According to Jaime Suárez, it is fundamental to have a family pact, a document that governs how relatives behave inside the business and within the family, and “how conflicts are resolved among family members.”

8. Key documents

The generational change process includes documents that family businesses should pay attention to. According to Karofsky, they are:

  • Family pact: Establishes the terms and restrictions for a family member to be able to transfer their shares of stock. It also establishes the rules to join and leave the company, how conflicts will be resolved, educational requirements, and compensation and promotion policies.
  • Will: Specifies what will happen with the stock if a shareholder dies.
  • Code of conduct: Establishes the rules of behavior for family members within the company and information-confidentiality matters.

Read more related articles at:

Four Considerations When Passing The Family Business To The Next Generation

Transferring Power in The Family Business

Also, read one of our previous Blogs at:

How to Start Family Business Succession – The Earlier the Better

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

family business succession planning

How to Start Family Business Succession – The Earlier the Better

How to Start Family Business Succession – The Earlier the Better

Thinking about retirement? It’s important to get started on family business succession issues early, even as many as 10 years or more before you are ready to retire. Starting that far in advance gives you time to ponder what you would like to accomplish and talk to your advisors and your family about your ideas.

Items to initially consider are:

What is your “event” for retirement?

  • Your age?
  • Younger generation age?
  • Personal financial benchmark?
  • Company financial benchmark?
  • Other?

What does “retirement” mean for you?

  • Reduced operational work hours?
  • No operational work hours?
  • Special projects only?
  • Board meetings?
  • Are you emotionally and intellectually ready to give up control?


What does succession look like?

  • Need or desire to retain some involvement, control or profits?
  • Transfer business interests in lump-sum over period of time?
  • Transfer voting and/or nonvoting business interests?
  • Retain some portion of business interest? If so, voting or nonvoting?
  • Are all younger generations the recipients of transferred business interests?
  • What if only some younger generation members work at the business?
  • Transfer business interests in trust for younger generation and/or free of any trusts (outright ownership)?
  • Involve philanthropy in your succession plan?

Use a “business first” or “family first” approach?

  • Make decisions and take action that are first in the best interest of the business?
  • Take primarily family considerations into account?
  • Which approach is used in present operation of the business?

How and when to raise succession with younger generation family members?

  • Family meeting?
  • Meet with legal and tax advisors first before larger family meeting?
  • Include business counselor/psychologist in initial family meetings?
  • Include legal and tax advisors in initial family meetings?

What information is given to younger generation family members during succession discussion and process?

  • Open the family business books and tax returns?
  • Complete transparency?
  • Confidentiality and/or noncompetition concerns?

Is there family tension now or might there be once the succession process begins?

  • Differing skills and roles among the younger generational family members?
  • More than one descendant line to be involved and/or own the family business?
  • Animosity and/or mistrust or distrust among younger generation family members?
  • Animosity and/or mistrust or distrust between you and younger generation family members?

The further out you begin the succession planning process, the more planning options. The lower the value of the business, the less gift exemption used, gift tax paid, or purchase price paid. If succession planning involves a sale of any portion of your business to a third party, it is even more important to involve your legal (corporate and estate planning counsel) and tax counsel as early as possible; some planning options are not as tax efficient once there is a binding obligation to sell.

Read more related articles at:

Succession Planning in a Family Business: Benefits, Challenges, and Guiding Principles

Succession Planning – Start Early and Revisit Regularly

Also, read one of our previous Blogs here:


Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

Florida Business Plan




Your business is your baby, your pride and joy. You’ve invested so much time into your Florida business it is an extension of who you are. From inception to the early stages to maturity, you have worked hard on your business. You may need legal help along the way, and getting things right is very important.

Our dedicated Jacksonville business lawyers and trusted legal counsel, Legacy Planning Law Group, know that the best way to help Jacksonville business owners understand their Florida business planning needs and ultimate goals.

If you’re interested in learning more about our Jacksonville business planning services, please book your free 15-minute phone call with us today! 904-880-5554

Business Plan


A business plan is a written document that describes in detail how a business—usually a startup—defines its objectives and how it is to go about achieving its goals. A business plan lays out a written roadmap for the firm from marketing, financial, and operational standpoints.

Business plans are important documents used for the external audience as well as the internal audience of the company. For instance, a business plan is used to attract investment before a company has established a proven track record or to secure lending. They are also a good way for companies’ executive teams to be on the same page about strategic action items and to keep themselves on target towards the set goals.

Although they’re especially useful for new businesses, every company should have a business plan. Ideally, the plan is reviewed and updated periodically to see if goals have been met or have changed and evolved. Sometimes, a new business plan is created for an established business that has decided to move in a new direction.


  • A business plan is a written document describing a company’s core business activities, objectives, and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • Businesses may come up with a lengthier traditional business plan or a shorter lean startup business plan.
  • Good business plans should include an executive summary, products and services, marketing strategy and analysis, financial planning, and a budget.

A business plan is a fundamental document that any startup business needs to have in place prior to beginning operations. Banks and venture capital firms indeed often make writing a viable business plan a prerequisite before considering providing capital to new businesses.

Operating without a business plan is not usually a good idea. In fact, very few companies are able to last very long without one. There are definitely more benefits to creating and sticking to a good business plan—including being able to think through ideas without putting too much money into them and, ultimately, losing in the end.

A good business plan should outline all the projected costs and possible pitfalls of each decision a company makes. Business plans, even among competitors in the same industry, are rarely identical. But they all tend to have the same basic elements, including an executive summary of the business and a detailed description of the business, its services, and its products. It also states how the business intends to achieve its goals.

The plan should include at least an overview of the industry of which the business will be a part, and how it will distinguish itself from its potential competitors.

While it’s a good idea to give as much detail as possible, it’s also important to be sure the plan is concise so the reader will want to get to the end.


Elements of a Business Plan

The length of the business plan varies greatly from business-to-business. All of the information should fit into a 15- to 20-page document. If there are crucial elements of the business plan that take up a lot of space—such as applications for patents—they should be referenced in the main plan and included as appendices.

As mentioned above, no two business plans are the same. But they all have the same elements. Below are some of the common and key parts of a business plan.

  • Executive summary: This section outlines the company and includes the mission statement along with any information about the company’s leadership, employees, operations, and location.
  • Products and services: Here, the company can outline the products and services it will offer, and may also include pricing, product lifespan, and benefits to the consumer. Other factors that may go into this section include production and manufacturing processes, any patents the company may have, as well as proprietary technology. Any information about research and development (R&D) can also be included here.
  • Market analysis: firm needs a good handle on the industry as well as its target market. It will outline who the competition is and how it factors in the industry, along with its strengths and weaknesses. It will also describe the expected consumer demand for what the business is selling and how easy or difficult it may be to grab market share from incumbents.
  • Marketing strategy: This area describes how the company will attract and keep its customer base and how it intends to reach the consumer. This means a clear distribution channel must be outlined. It will also spell out advertising and marketing campaign plans and through what types of media those campaigns will exist on.
  • Financial planning: In order to attract the party reading the business plan, the company should include its financial planning and future projections. Financial statements, balance sheets, and other financial information may be included for already-established businesses. New businesses will instead include targets and estimates for the first few years of the business and any potential investors.
  • Budget: Any good company needs to have a budget in place. This includes costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.

Types of Business Plans

Business plans help companies identify their objectives and remain on track. They can help companies start and manage themselves, and to help grow after they’re up and running. They also act as a means to get people to work with and invest in the business.

Although there are no right or wrong business plans, they can fall into two different categories—traditional or lean startup. According to the Small Business Administration, the traditional business plan is the most common. They are standard, with much more detail in each section. These tend to be much longer and require a lot more work.

Lean startup business plans, on the other hand, use an abbreviated structure, highlighting key elements. These business plans aren’t as common in the business world as they are short—as short as one page—and have very little detail. If a company uses this kind of plan, they should expect to provide more detail if an investor or lender requests it.1

Special Considerations

Financial Projections

A complete business plan must include a set of financial projections for the business. These forward-looking projected financial statements are often called pro-forma financial statements or simply the “pro-formas.” These statements include the overall budget, current and projected financing needs, a market analysis, and the company’s marketing strategy.

Other Considerations for a Business Plan

The idea behind putting together a business plan is to enable owners to have a more defined picture of potential costs and drawbacks to certain business decisions and to help them modify their structures accordingly before implementing these ideas. It also allows owners to project what type of financing is required to get their businesses up and running.

If there are any especially interesting aspects of the business, they should be highlighted and used to attract financing. For example, Tesla Motors’ electric car business essentially began only as a business plan.

A business plan is not meant to be a static document. As the business grows and evolves, so too should the business plan. An annual review of the plan allows an entrepreneur to update it when taking markets into consideration. It also provides an opportunity to look back and see what has been achieved and what has not. Think of it as a living document that grows and evolves with your business.

Read more related articles at:


Without Sound Financial Projections Your Business Plan Is Merely Conceptual

Also, read one of our previous Blogs at:

How To Create a Strong Succession Plan for Your Business

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

business succession planning

How To Create a Strong Succession Plan for Your Business

How To Create a Strong Succession Plan for Your Business

Are you thinking about retiring from business? Or maybe your business is finally going well and you want to make sure it continues the way you want it to. Business succession planning can help you establish the next line of leadership, maintain continuity, and preserve your wishes for your business into the future.

Key Takeaways

  • A succession plan is a general plan for continuity of a business in a change of ownership in planned or unexpected situations.
  • The goal of a succession plan is to keep the business running smoothly during and after a transition.
  • A major part of a succession plan is legal documents with language that guides transitions.
  • The best time to create a business succession plan is immediately and then update it often.


Why You Need a Business Succession Plan

A business succession plan isn’t a separate document that the owner puts together. It should be primarily part of your business’s legal structure and be included in the governing documents of your business from the get-go. Think of a succession plan not as just determining who will succeed you, but as a continuity plan, to be used in case of both planned transitions and unexpected disruption, like a public health or economic crisis.

The key pieces of your succession plan are:

  • Identify possible successors
  • Consider the value of your business and how to improve it
  • Include tax and estate planning
  • Anticipate uncertainty
  • Decide how to transfer ownership


Preparing for Your Succession Plan 

Begin your business succession planning by looking at the governing documents of your business and making changes to include your specific wishes for what happens if you no longer run the business.

If your business has several owners, like a partnership or limited liability company (LLC), you’ll need to make sure the governing documents take into account changes in the business structure if an owner leaves, dies, or is divorced.1

The specific governing documents for each type of business include:

A sole proprietorship has no governing document, which means you need to create a written record of your wishes for your business with the help of an attorney, as part of your overall personal estate planning. These documents might include a will or revocable trust.34

A succession plan and an exit strategy are slightly different. Both are plans to deal with planning for business changes, but an exit stegy focuses more on the decision to close or sell the business.


Choosing Your Successors  

The key to a business succession plan is to consider how you want the management and control of your business to look in the future.

In an email interview with The Balance, attorney Haley Ayure said that a complicated part of business succession planning is figuring out who should make the decisions in the future, and how to control that after you’re no longer involved with the business. This is tied to ownership and the governing documents because the owners typically vote to appoint directors, managers, and officers if they are not going to make business decisions themselves.

In a family business, for example, the ownership interests of a parent might pass to a child upon the parent’s death. Unless the governing documents say otherwise, the child might then have the ability to appoint themselves as the manager or officer.


What To Include in Your Plan 

The language in a partnership agreement delegates specific instructions on what to do in the event of a dispute, a termination, a death, or other life-changing scenarios. This language ensures that your wishes will be carried out regardless of circumstance.

In an email interview with The Balance, attorney Nance Schick explained that, when changes occur, a partnership agreement can be a great guiding document. A few examples may include:

  • A dispute resolution clause that could provide the steps necessary to resolve conflicts among partners
  • A termination clause that can provide the steps necessary for resignation or removal
  • Additional provisions that detail limitations on ownership by heirs or other outside parties, and what to do if a partner becomes disabled or dies

Without a clear, written agreement on such terms, business ownership can pass to multiple beneficiaries who may have no experience or interest in the business.

If you aren’t sure you need a business succession plan, consider that the cost of hiring a lawyer to draft good documents may be much less expensive than a legal battle with family or business partners in court.


How To Ensure a Strong Succession Plan 

Here are some other tips for creating a succession plan that will keep your business successful after you leave.

Decide Who Will Run the Business

Decide what role you want to play in your business during the transition and afterward. Do you want to remain in a position of authority, and if so, how long? Or maybe you want to leave a legacy by serving as a consultant or board member after you leave active management.

Run a Financial Checkup

One quick way to spot financial weaknesses is to run some financial ratios for your business and to analyze them in comparison to industry standards. Look especially at long-term indicators like solvency ratios that measure the ability of a company to pay its debts and liquidity.

Get a Business Valuation

business valuation will help you spot weaknesses and fix them. You will need to find an accredited business valuation appraiser for this task, to be sure they are following standards. Check the website of the American Society of Appraisers to search for an appraiser.

Review Company Policies

According to Ayure, reviewing company policies is important in making sure your succession plan does what you want it to. Prepare by setting your policies in place now. These may include setting criteria for positions and having job descriptions for key positions, up to and including CEO, board members, and managers, and setting policies for reviews and promotions.

Review and Update Your Plan

Creating a succession plan isn’t just a “one and done” proposition. Set up regular reviews of the plan to see what’s changed, both inside and outside your company. Tax laws change frequently, so you’ll need to consult a licensed tax professional and an attorney to make changes in documents.


Frequently Asked Questions (FAQs)


What is business succession insurance?

Business succession insurance isn’t available, but you can use life insurance to provide benefits to co-owners of a business. For example, a partnership or the partners can buy a life insurance policy on other partners (not themselves). If a partner dies, the policy pays death benefits to the business or the other partners. The proceeds then go to the insured’s family members or heirs, while the living partners continue to own the business.5

A business can also get a key person insurance policy on a business owner or key executive. This insurance protects the business if the insured dies unexpectedly. This type of insurance is very helpful in a small business that might have trouble surviving the death of a founder or owner.6


When does business succession planning need to be done?

Small business owners should do business succession all through the life of their business. A succession plan isn’t just for retirement, but for unexpected emergencies or just a general review of the business.

Create a succession plan as soon as possible and review it at least once a year. Consider changes in the economy, employment, taxes, and the legal landscape. Get a new business valuation every few years to make sure the value is up to date. Consider the changes in the structure of the business, and in the plans of the owner.

Read more related articles at:

What is business succession planning?

Why Your Company Needs a Succession Plan

Also, read one of our previous Blogs at:

Did Robert Redford Have a Business Exit Plan?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.


business Plan

Business Succession Planning: 5 Ways to Transfer Ownership Of Your Business

Business Succession Planning: 5 Ways to Transfer Ownership Of Your Business

WRITTEN BY: Robert Newcomer-Dyer

Business succession planning is a series of logistical and financial decisions about who will take over your business upon retirement, death, or disability. To write a succession plan, the first step is to identify the ideal successor to take over the business, then determine the best selling arrangement. This usually involves a buy-sell agreement, secured with a life insurance policy or loan.

There are five common ways to transfer ownership of your business:

  1. Co-owner: Selling your shares or ownership interests to a co-owner.
  2. Heir: Passing ownership interests to a family member.
  3. Key employee: Selling your business to a key employee.
  4. Outside party: Selling your business to an entrepreneur outside your organization.
  5. Company: For a business with multiple owners, you can sell your ownership interests back to the company, then distribute them to the remaining owners.

How a Business Succession Plan Works

business succession plan is a document that is intended to guide through a change in ownership by providing step-by-step instructions. If a purchase is involved, the sale price and purchase terms are clearly outlined, relieving stress for the departing owner’s family. A well-crafted succession plan aims to benefit everybody—the departing owner, the business, employees, and the successor.

A small business succession plan should include the following:

  • A succession timeline: Details regarding the circumstances when a succession would take place and specific dates as applicable.
  • Your potential successors: A list of potential successors, including strengths and order of consideration.
  • Formalized standard operating procedures (SOPS): A collection of documents, procedures, employee handbooks, and training documentation.
  • Your business’s valuation: The valuation of your business should include the method by which is valued and be updated frequently.
  • How your succession will be funded: Details including whether the succession is funded through life insurance, a seller’s note, or other funding options.

Who Should Create a Business Succession Plan

Succession plans are commonly associated with retirement; however, they serve an important function earlier in the business lifespan: If anything unexpected happens to you or a co-owner, a succession plan can help reduce headaches, drama, and monetary loss. As the complexity of the business and the number of people impacted by the exit grows, so does the need for a well-written succession plan.

You should consider creating a succession plan if you:

  • Have complex processes: How will your employees and successor know how to operate the business once you exit? How will you duplicate your subject matter expertise?
  • Employ more than just yourself: Who will step in to lead employees, administer human resources (HR) and payroll, and choose a successor and leadership structure?
  • Have repeat clients and ongoing contracts: Where will clients go after your exit, and who will maintain relationships and deliver on long-term contracts?
  • Have a successor in mind: How did you arrive at this decision, and are they aware and willing to take ownership?

Many business owners ignore succession planning because they don’t believe it’s necessary or put it off until they’re ready to retire. For small, simple businesses, a succession plan may not be necessary. However, consider what would happen to your business if you were no longer able to run the day-to-day operations. Who would take over? Would the business be viable?

When to Create a Small Business Succession Plan

Every business needs a succession plan to ensure that operations continue, and clients don’t experience a disruption in service. If you don’t already have a succession plan in place for your small business, this is something you should put together as soon as possible.

While you may not plan to leave your business, unplanned exits do happen. In general, the closer a business owner gets to retirement age, the more urgent the need for a plan. Business owners should write a succession plan when a transfer of ownership is in sight, including when they intend to list their business for sale, retire, or transfer ownership of the business. This will ensure the business operates smoothly throughout the transition.

The 5 Common Types of Succession Plans

There are several scenarios in which a business can change ownership. The type of succession plan you create may depend on a specific scenario. You may also wish to create a succession plan that addresses the unexpected, such as illness, accident, or death, in which case you should consider whether to include more than one potential successor.

Here are the five most common types of small business succession plans in detail.

1. Selling Your Business to a Co-owner

If you founded your business with a partner or partners, you may be considering your co-owners as potential successors. Many partnerships draft a mutual agreement that, in the event of one owner’s untimely death or disability, the remaining owners will agree to purchase their business interests from their next of kin.

This type of agreement can help ease the burden of an unexpected transition—for the business and family members alike. A spouse might be interested in keeping their shares but may not have the time investment or experience to help it blossom. A buy-sell agreement ensures they’re given fair compensation, and allows the remaining co-owners to maintain control of the business.

Potential Drawbacks

A buy-sell agreement with a co-owner requires a lot of cash kept on-hand. Your co-owner should be prepared to buy-out your shares, theoretically, at any moment. Many businesses will fund this plan with life insurance. Term life insurance is relatively inexpensive and can offset a lot of costs in the event of an owner’s death. Permanent life insurance is a bit more expensive with the added benefit of a payout in the event of retirement or disability.

If you choose to draft a buy-sell agreement with your co-owner, you’ll want to make sure a life insurance policy is stipulated in the agreement. The company can also purchase key person insurance that pays out in the event a key member of the business dies or becomes disabled. We recommend speaking with an expert for specific help on the type of policy you’ll need.

2. Passing Your Business Onto an Heir

Choosing an heir as your successor is a popular option for business owners, especially those with children or family members working in their organization. It is regarded as an attractive option for providing for your family by handing them the reins to a successful, fully operational enterprise. Passing your business on to an heir is not without its complications.

Some steps you can take to pass your business onto an heir smoothly are:

  • Determine who will take over: This is an easy decision if you already have a single-family member involved in the business but gets more complicated when multiple family members are interested in taking over.
  • Provide clear instructions: Include instructions on who will take over and how other heirs will be compensated.
  • Consider a buy-sell agreement: Many succession plans include a buy-sell agreement that allows heirs that are not active in the business to sell their shares to those who are.
  • Determine future leadership structure: In businesses where many heirs are involved, and only one will take over, you can simplify future discussions by providing clear instructions on how the structure should look moving forward.

Failing to address these steps may lead to a chaotic transition. For example, if a future leadership structure is not implemented, and the business passes on to more than one heir, the resulting power struggle may negatively impact the business. Alternatively, each heir may incorrectly assume the other will take over day-to-day responsibilities.

Before instructions can be given on who will take over leadership of the business, a future leader should be chosen. This is likely to be complicated when more than one heir is interested in taking over. Business owners can reference current business contributions and responsibilities from potential heirs to assist in choosing a successor.

Potential Drawbacks

Making business decisions within a family can get messy. Emotions can run high, especially after an untimely death or disability. Further, second-generation businesses rarely survive the transition, as they’re often sold by the inheriting family member, or fail outright.Only about 30 %  keep the same name and ownership following an inheritance.

Altogether, this should beg the question; is inheritance even the best idea? If your successor is skilled and business savvy, then perhaps the answer is “yes.” If not, you may consider selling your business to a co-owner, key employee, or outside buyer instead.

3. Selling Your Business to a Key Employee

When you don’t have a co-owner or family member to entrust with your business, a key employee might be the right successor. Consider employees who are experienced, business-savvy, and respected by your staff, which can ease the transition. Your org chart can help with this. If you’re concerned about maintaining quality after your departure, a key employee is generally more reliable than an outside buyer.

Just like selling to a co-owner, a key employee succession plan requires a buy-sell agreement. Your employee will agree to purchase your business at a predetermined retirement date, or in the event of death, disability, or other circumstance that renders you unable to manage the business.

Potential Drawbacks

A common drawback to key employee succession is money. Most employees aren’t in the financial position to buy the business they work for. Even if they are, having enough liquid cash on hand is another challenge.

One solution is seller financing, in which your employee pays you (or your family) back over time. There’s typically a down payment of 10% or higher, then monthly or quarterly payments with interest until the purchase is paid for in full. The exact terms of the loan will need to be negotiated and then laid out clearly in your succession plan.

4. Selling Your Business to an Outside Party

When there isn’t an obvious successor to take over, business owners may look to the community: Is there another entrepreneur, or even a competitor, that would purchase your business? To ensure that the business is sold for the proper amount, you will want to calculate the business value properly, and that the valuation is updated frequently.

This is easier for some types of businesses than others. If you own a more turnkey operation, like a restaurant with a good general manager, your task is simply to demonstrate that it’s a good investment. They won’t have to get their hands dirty unless they want to and will ideally still have time to focus on their other business interests.

Meanwhile, if you own a real estate company that’s branded under your own name, selling could potentially be more challenging. Buyers will recognize the need to rebrand and remarket and, as a result, may not be willing to pay full price.

Instead, you should prepare your business for sale well in advance; hire and train a great general manager, formalize your operating procedures, and get all your finances in check. Make your business as stable and turnkey as possible, so it’s more attractive and valuable to outside buyers.

Potential Drawbacks

One of the main drawbacks to an outside sale succession plan is the unexpected: It’s nearly impossible to predict exactly what the sales process will have in store. The process of selling a business to an outside party is complex and could encounter roadblocks like: your business not being as valuable as you anticipated, lack of credible buyers, your business not being able to sell at all, and more. Business brokers, like VNB Business Brokers, are experienced and well-versed in all aspects of selling and purchasing businesses on their clients’ behalf.

Consider outsourcing to a business broker so that you can focus on running your business and maintaining its value while professionals handle the sale. In addition to taking care of potential problems, VNB will ensure all steps of the process including finding and vetting buyers, structuring your deal, preparing documents, and negotiating terms. After one quick call, VNB Business Brokers will be able to tell you things like: what your business is worth, if the valuation price can be increased and how long it will take to sell your business.


5. Selling Your Shares Back to the Company

The fifth option is available to businesses with multiple owners. An “entity purchase plan” or a “stock redemption plan” is an arrangement where the business purchases life insurance on each of the co-owners. When one owner dies, the business uses the life insurance proceeds to purchase the business interest from the deceased owner’s estate, thus giving each surviving owners a larger share of the business.

Potential Drawbacks

An entity purchase is similar to a cross-purchase, in which you sell your shares to a co-owner or co-owners. In most circumstances, a cross-purchase is more financially viable. When co-owners purchase shares directly, they get a “step-up in basis,” which means the stock’s basis is revalued at its current price. With an entity purchase, the original basis remains, and your co-owners will be liable for potentially higher capital gains.

Despite this drawback, entity purchases can still be beneficial when you have a large number of co-owners. Drafting cross-purchase agreements with each owner can be cumbersome. An entity purchase agreement, in comparison, is much simpler to implement. It can typically be funded with a single life insurance policy for each co-owner.

How to Create a Succession Plan

There are several key steps necessary to create a comprehensive small business succession plan, and several ways to go about creating your plan. Some business owners may choose to create their own succession plan, while others may wish to engage the help of a professional, depending on the complexity of the plan and the business.

Whether you create your plan yourself or engage a professional, the five steps to writing a succession plan are:

  • Determining timeline: Define when the succession should take place, either on a predetermined date or in the event of death or disability.
  • Choosing your successor: If this is not a purchase by a specific party, consider choosing three or more potential candidates, filling out a profile for each.
  • Formalizing your standard operating procedures: Document your standard operating procedures (SOPs), including an organizational chart, employee handbook, operations manual, and any other recurring meetings or processes.
  • Valuing your business: Several methods exist to value your business. Once you have calculated your business’s value, it should be updated frequently.
  • Funding your succession plan: Define a specific path that lays out how the successor will purchase the business. Options include life insurance, loan, and seller financing.

Read more related articles at:

Your Business Needs a Succession Plan: Here Are the Basics

Strategic Business Plans: Why This Success-Focused Tool Is A Must-Have

Also, read one of our previous Blogs at:

Does My Business Need a Succession Plan?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.


Trust vs. LLC: What’s the Difference?

Trust vs. LLC: What’s the Difference?

Mark Henricks

Trusts and limited liability companies (LLCs) are both legal vehicles that can be used to protect assets. Both are also created at the state level but they have different features and different uses. Trusts are primarily used to avoid taxation when transferring family assets from generation to the next. LLCs are legal business entities, similar to simplified corporations, that have as their main feature the ability to shield owners of the business from legal liability for actions of the business. Consider working with a financial advisor as you make key estate planning and business decisions.

LLC Features

An LLC is created by filing documents including a certificate of formation with the secretary of state for the state where the business will be legally based. It is one of the most common types of business entity, along with sole proprietorship, partnership and corporation.

An LLC is a legal entity with an existence separate from its owners. This means that the owners’ personal assets are protected from creditors in the event the business takes on debt that it fails to pay back. Similarly, should the business be required to pay monetary damages as the result of a lawsuit, the payment has to come from the business assets while the owners’ personal assets are protected.

LLCs offer a simplified management structure compared to regular corporations. They also avoid the double taxation levied on corporate profits by passing dividends directly through to their owners, who pay income taxes at their individual rate.

LLCs can also be useful when passing on business assets to heirs. In many states, a business organized as an LLC can be transferred to the next generation without going through the lengthy process of probate. In addition to business assets, the owners of an LLC can place other types of assets in it, allowing more of their estate to avoid probate.

Trust Features

Trusts are also organized at the state level and are used to hold assets and transfer them to beneficiaries. A trust is not a business entity, as an LLC is, however, and creating one doesn’t require filing any documents with a government agency. Trusts can hold many different types of assets, including cash and bank accounts, real estate and securities, as well as ownership interests in an LLC or other business entity.

The assets in a trust are transferred from the original owners’ control to the trust, where they are overseen by a trustee. The trust also contains instructions describing how the assets are to be distributed to beneficiaries in the event of the owner’s death.

When the owner dies, the assets do not have to go through the probate process and can significantly reduce the estate taxes that would otherwise be levied on the intergenerational transfer of assets. Rather than going through probate, the trustee just distributes the assets as specified in the trust documents.

While trusts are useful for managing estate taxes, they don’t protect the personal assets from liability to any lawsuits, as LLCs do. They also lack the income tax benefits of the LLC.

The choice between LLC and trust depends on individual situations. LLCs are better at protecting business assets from creditors and legal liability. Trusts can handle many types of assets and are better at avoiding probate and reducing estate taxes. In some cases, both an LLC and a trust may be the best way to manage the estate.

Bottom Line

LLCs and trusts are two legal vehicles used for managing assets and protecting them from liability and taxation. LLCs are a type of business entity that shields owners from liability for business debts and avoids double taxation while providing for a flexible structure to manage the business. Trusts are used as repositories for assets that will be distributed to beneficiaries after the death of the original owner. Trusts help people avoid the time-consuming probate process while minimizing estate taxes.

Read more related articles here:

Tax Implications for an LLC Owned by a Living Trust

Can a Trust Own an LLC?

Also, read one of our previous Blogs at:

Should I Create an LLC for Estate Planning?

Click here to check out our On Demand Video about Estate Planning.

Click here for a short informative video from our own Attorney Bill O’Leary.

A Financial advisor's Role in estate Planning

A Financial Advisor’s Role in Estate Planning

A Financial Advisor’s Role in Estate Planning

 Katie Camann  November 3, 2020

A Financial Advisor’s Role in Estate Planning. When forming an estate plan, a financial advisor plays a crucial role. As a financial advisor, you are focused on the client’s finances, and you can help prevent important financial information and procedures from slipping through the cracks. Let’s explore some important aspects of a financial advisor’s role in the estate plan and how you can help clients plan for retirement and beyond.

How Does a Financial Advisor Help with Estate Planning?

Although you play an important role in the entire estate planning process, here are some of the most vital areas where you can help your clients as their financial advisor.

Retirement Planning

As a financial advisor, you can help set up 401(k)s, IRAs, and other retirement accounts for your clients as well as explain the tax benefits and beneficiary details for each one. You can also help them decide which type of account is best for their specific situation, financial goals, and budget.

Updating Beneficiaries

Since most estate plans involve investment accounts, retirement accounts, and insurance policies, all of which have beneficiary designations, it’s important that you ensure your clients keep these designations up to date. You can provide recommendations for adjusting beneficiaries after any significant life change, such as a divorce, remarriage, or death of a loved one.

Considering Significant Life Changes

In addition to affecting beneficiaries, a significant life change can also impact other pieces of your client’s estate plan. As their financial advisor, you can point out how these changes might affect their financial future and provide suggestions for adjusting their accounts, income, and the other financial pieces of their estate plan.

Planning for Long-Term Care

One of the most important aspects of an estate plan is long-term care. Some clients may plan ahead with trusts or Long-Term Care Insurance, while others might wait and conduct Medicaid planning once they need care. Either way, you can help by speaking to the financial ramifications of long-term care and helping them find a solution that works for their financial situation.

All in all, as their financial advisor, your role involves examining the financial impact of their estate plan and providing recommendations accordingly.

Other Important Professionals for Estate Planning

In addition to a financial advisor’s role in estate planning, other professionals also play important roles throughout the process. In many cases, you will work in tandem with these individuals to form an estate plan for your client. For starters, an attorney is crucial to provide necessary legal advice and documentation, such as power of attorney, for the client. Next, an insurance agent can help with any insurance products that may be included in the estate plan. It might also be helpful for your client to consult with a tax professional if their estate plan involves any potential tax consequences.

Read more related articles at:

Seven Ways Your Financial Advisor Can Protect Your Estate Plan

Estate Planning Strategies: How Your Financial Advisor Can Help

Also, read one of our previous Blogs at:

Why you should have a Financial Advisor help with your Estate Plan.

Click here to check out our On Demand Video about Estate Planning.

Estate Planning

Estate Planning Meets Tax Planning

Estate Planning Meets Tax Planning


Estate Planning Meets Tax Planning.  Not keeping a close eye on tax implications, often costs families tens of thousands of dollars or more, according to a recent article from Forbes, “Who Gets What—A Guide To Tax-Savvy Charitable Bequests.” The smartest solution for donations or inheritances is to consider your wishes, then use a laser-focus on the tax implications to each future recipient.

After the SECURE Act destroyed the stretch IRA strategy, heirs now have to pay income taxes on the IRA they receive within ten years of your passing. An inherited Roth IRA has an advantage in that it can continue to grow for ten more years after your death, and then be withdrawn tax free. After-tax dollars and life insurance proceeds are generally not subject to income taxes. However, all of these different inheritances will have tax consequences for your beneficiary.

What if your beneficiary is a tax-exempt charity?

Charities recognized by the IRS as being tax exempt don’t care what form your donation takes. They don’t have to pay taxes on any donations. Bequests of traditional IRAs, Roth IRAs, after-tax dollars, or life insurance are all equally welcome.

However, your heirs will face different tax implications, depending upon the type of assets they receive.

Let’s say you want to leave $100,000 to charity after you and your spouse die. You both have traditional IRAs and some after-tax dollars. For this example, let’s say your child is in the 24% tax bracket. Most estate plans instruct charitable bequests be made from after-tax funds, which are usually in the will or given through a revocable trust. Remember, your will cannot control the disposition of the IRAs or retirement plans, unless it is the designated beneficiary.

By naming a charity as a beneficiary in a will or trust, the money will be after-tax. The charity gets $100,000.

If you leave $100,000 to the charity through a traditional IRA and/or your retirement plan beneficiary designation, the charity still gets $100,000.

If your heirs received that amount, they’d have to pay taxes on it—in this example, $24,000. If they live in a state that taxes inherited IRAs or if they are in a higher tax bracket, their share of the $100,000 is even less. However, you have options.

Here’s one way to accomplish this. Let’s say you leave $100,000 to charity through your IRA beneficiary designations and $100,000 to your heirs through a will or revocable trust. The charity receives $100,000 and pays no tax. Your heirs also receive $100,000 and pay no federal tax.

A simple switch of who gets what saves your heirs $24,000 in taxes. That’s a welcome savings for your heirs, while the charity receives the same amount you wanted.

When considering who gets what in your estate plan, consider how the bequests are being given and what the tax implications will be. Talk with your estate planning attorney about structuring your estate plan with an eye to tax planning.

Reference: Forbes (Jan. 26, 2021) “Who Gets What—A Guide To Tax-Savvy Charitable Bequests”

Read more related articles at:

5 Estate Planning Tips to Keep Your Money in the Family

Estate Planning Strategies to Reduce Estate Taxes

Also, Read one of our previous Blogs at:

Big News for Trust Taxation

Click here to check out our On Demand Video about Estate Planning.

Asset Protection

About Asset Protection Plans

About Asset Protection Plans


With the economy slowly plugging along and credit remaining tight, asset protection is still a hot topic. So what is asset protection, and how can you make an asset protection plan that will work for you and your family?


Asset Protection

Asset protection means keeping your property safe from being taken by someone who wins a lawsuit against you. It can range from a lawsuit related to a negligent act that you performed, such as causing a car accident, to a lawsuit related to the foreclosure of property for which you have stopped paying the mortgage.

How can you protect your assets from lawsuits? It is achieved through the process of asset protection planning, which means taking assets that are subject to creditors’ claims, called nonexempt assets, and repositioning them as assets that are out of the reach of creditors’ claims, called exempt assets.

Asset protection planning cannot begin when a judgment creditor is already on the horizon. Why? Because each state has laws that protect a judgment creditor against people who transfer their assets out of their names with the intent to hinder, delay, or defraud a creditor. In these situations, a court will see right through these “fraudulent” transfers and simply order that the transfers are reversed, and the assets turned over to pay the creditor.1 Instead, asset protection planning must begin long before there is any sign of a lawsuit. Aside from this, to put together a comprehensive asset protection plan you will need to integrate two important goals:

  • Your short term and long term financial goals
  • Your estate planning goals.


Financial Goals

In examining your short term and long term financial goals, you will learn about your current and future sources of income, how much money you will need to retire, and how much will be left over to pass on to your heirs through your estate plan after you die. It will then lead you to a detailed financial plan. Once your financial goals have been examined, and your financial plan is in place, you can review your current assets to determine if they are exempt from creditors and, if they are not, then reposition them to become exempt. A financial plan will also allow you to plan for positioning assets that you intend to acquire in the future to be protected from potential creditors.

Once you have your financial plan in place, you will know your current net worth and an estimate of how much wealth you can expect to accumulate in the future. From this information, you will be able to create a comprehensive estate plan. This plan will address issues such as who will take care of you and your assets if you become mentally incapacitated, who will take care of your minor children if you die unexpectedly, and who will manage your assets and take care of your spouse or other family members after you die. Your estate plan can also encompass asset protection planning through the use of advanced estate-planning techniques such as family limited liability companies and irrevocable trusts for you, your spouse, and your children or other beneficiaries.

Financial and Estate Planning Results

Once you have integrated your financial goals with your estate planning goals and positioned or repositioned your assets to be protected from creditors, you will have a comprehensive asset protection plan in place. Then, if a creditor holding a judgment against you does show up at your front door, you will be in a better position to negotiate a quick settlement for pennies on the dollar instead of having all of your hard-earned money on the table.

Most Common Mistake

As I warned above, if you try to start asset protection planning after a lawsuit has been filed against you, or even if before the lawsuit is filed you anticipate it being filed, then you will be exposing any asset protection planning that you attempt to do to attacks and reversal by a judge or jury. Unfortunately, too many people are learning far too late that asset protection planning is also long-term planning not something that can be done as a quick or temporary fix. Thus, the time to put your asset protection plan together is long before a lawsuit is on the horizon.

Read more related articles at:

The Basics of Asset Protection Planning – The Rules You Need To Know

How Does an Asset Protection Trust Work?

Also, read one of our previous Blogs at:

How Can I Protect Assets from Creditors?

Click here to check out our On Demand Video about Estate Planning.

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