Succession Planning – Financial Options…Options…Options
January 11, 2018 by Jeff Farrington, MSM
When you start thinking about business succession, it can be so overwhelming you might be tempted to procrastinate. But before you get too stressed out, consider all the possibilities.
There are a number of ways to transition your business during succession planning. Previous blogs discuss outright selling the firm or setting up an IDGT. Here are several other ideas to consider.
- You can set up a Family Limited Partnership. You start by creating a partnership with both limited and general partnership interests, then transfer your business over to the partnership.
- Another option is to set up a Private Annuity so that the new owner provides a promissory note to make payments until your death.
- There are also Self-Canceling Installment Notes (SCINs) that are similar to private annuities.
- An option many people use is to set up a Buy-Sell Agreement (a legal contract). Upon some pre-determined event such as your retirement, divorce, or death, the buyer is obligated to purchase your interest at a fair market value.
As you can see, there are many financial options to consider when going through your succession planning. To help eliminate the stress, use the resources of a CPA who specializes in estates and trusts to help you decide on the route that is best for your personal situation. Contact Gordon Advisors to learn more about how we can make your business succession easier.