Business Sucession Planning
A Business Succession Plan is a financial and tax plan that can:
- give your business every chance of survival when your partner is gone or suffers from a long term illness or accident
- ensure your family and yourself receive the true value of your interest in the business
- allow for an orderly transition of ownership to the remaining partners, family members, or key employees - rather than suffer a fire sale
- provide a ready market for your business interests
A Business Succession Plan considers the best way to:
- structure your affairs to reduce unnecessary Capital Gains Tax for you, your family and your remaining partners
- fund the transfer of your interest in the business to your outgoing partner
- trigger the events to allow the succession to take place, eg death, total and permanent disability and a trauma event, like a heart attack or a stroke
Where do my partners find the money to buy out my interest?
After you get your agreement in place you need to decide how the remaining partners will pay out the deceased partner's interest.
Few people have cash reserves or available credit to make such a purchase, especially when the business is already suffering by your absence.
The safest and usually the most economic answer is insurance.
There are 3 types of insurance that you should talk to your Insurance Adviser about:
- Life Insurance (if your partner dies)
- Trauma (if your partner suffers an event like a heart attack, stroke and cancer)
- Total and Permanent Disability (for example, loss of function in an arm)
You and your partners may be able to qualify for all 3 types of insurance.
Contact us at Amazon Financial Planning if you require further information or advice on this highly complex (and very important) matter.
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