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Business Planing – Helping Business Owners Plan for The Future

Succession Planning for Family Businesses
When your client owns a business, planning can add some additional challenges and complications.  They may need insurance protection for their family and their business.  The most important thing you can do as an advisor is ask questions and educate your client about the value of planning and protecting their family and business. 
For those who grew up in Chicago, the Pritzker family is well known.  They are one of the wealthiest families in the nation.  The patriarchs of the family, Jay & Bob, thought they did a great job in planning the succession of their enterprise; but in the end things didn’t quite turn out as planned. 
The below article discusses the considerations a family business owner should address in designing a succession plan and the pitfalls frequently encountered in structuring such plans. 
Considerations in Succession Planning for Family Businesses – shared with us by George Schoenbeck, a local estate and business planning attorney we work with.  Please feel free to pass this article onto your business owner clients so they can avoid the same mistakes as the Pritzkers.

The Family Business Meeting
Have you ever held a family business meeting?  The dynamics involved in creating a family business succession plan, may necessitate you work with other experts.  Kyle Danner is a business consultant and coach, whom we have the pleasure of knowing.  He shares some tips on how to broach the subject. 
How to Encourage Family Business Clients to Have That Difficult Conversation

Business Valuation & The Buy-Sell Plan
Setting up a buy-sell plan takes time and must address 4 key items:

The price must be fixed by, or determinable from, the agreement.

  1. The agreement must be binding on the parties during life and after death.
  2. The agreement must have been entered into for bona fide business reasons.
  3. The agreement must not be a substitute for a testamentary disposition to transfer the business interest for less than adequate consideration. 

For a family business these items are required if you want the buy-sell to determine the business value for estate purposes too.  Launch the below link to learn more about valuation and the family business? 

Buy-Sell Agreements and Estate Valuation: IRC §2703

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