succession and estate planning
Succession planning for your business encompasses any strategy in relation to you exiting from the business and passing it onto someone else. This could be the next generation taking over the family business, to selling the business, to an orderly closing down of the business. Obviously every business exit has its own strategies to maximise the chance of success, and it is important to get good advice along the way from an experienced business and tax accountant.
Estate planning involves putting in place strategies to handle your affairs appropriately after you pass away. This may not seem like a fun dinner topic to discuss, but it is critical to spend time on this for your family's sake, both financially and emotionally. When a business is involved, estate and succession planning can get a lot more complex.
The following are matters to consider for various succession and estate planning issues, to help you understand where Kennas can assist.
Passing on the family business
Have you heard the old saying that the first generation builds the business, the second makes it a success, and the third destroys it?
It seems harsh on the third generation but as families grow over the generations and more people are involved, family businesses become very difficult to keep on going. Aspects to consider are how the existing family members survive financially, how the next generation funds a purchase, what roles do family members play in the business, when and how do mum and dad pass over control and ownership (taking into account tax, stamp duty, wealth protection, and family issues) and how are decisions reached and debates managed.
Selling your business
For many people their business is their retirement money. All they own is ploughed back into the business and maybe some investments, and they need to maximise the sale price for their business while paying as little tax as possible. Strategies need to be put in place early for the business to ensure it can operate as little as possible without the owner, it maximises its profitability (to help maximise the sale price), and it has systems and processes in place to enable the business to be easily passed to a buyer. Careful tax planning can help reduce tax on a business sale, and in many situations we can structure a business sale so there is no tax payable.
What happens if someone dies
If you are involved in a business and pass away, what happens to your share of the business? Who will inherit this and is this in the best interest for the business and other owners? Does your share pass to the right person to own and operate the business, or are there other beneficiaries of your will outside the business who will come into ownership? There are many questions and also many strategies to manage such business succession when an owner passes away, but careful planning and thought is needed before hand to help give the business the best chance of survival.
For more information and advice in relation to succession planning, exiting your business, and estate planning, please call one of the Kennas partners, who can all assist you.