| Planning for Family Succession |
For a family-owned business to survive its founder, a plan for succession must be in place. Your answers to the following questions will reveal whether you have given adequate thought to such a plan. If you answer “yes” to fewer than 14 questions, you should consider developing a plan for family succession of your business
- Is there an overall strategic plan for business succession?
- Will the succession plan be fair to family members (usually children) not in the business?
- Can family members work together harmoniously in the family business?
- Can the business function without the entrepreneurial personality of the founder?
- Is the business saleable?
- Is there sufficient capital to continue ownership of the business in the family?
- Has a plan for management continuity been prepared and reviewed with family members and key employees?
- Is competent management in place, with duties and responsibilities clearly defined?
- Have compensation and ownership goals been clearly defined and reviewed with family members?
- Have estate planning documents providing for ownership succession been prepared and signed?
- Are buy/sell agreements in place?
- Are business agreements, such as employment agreements, death benefit agreements, and leases in place?
- Has a plan been developed to deal with personal guarantees of business obligations?
- Have federal estate and state inheritance tax liabilities been calculated?
- Is there sufficient cash available to cover the estate tax and inheritance tax?
- Has the business been professionally valued, with the valuation updated on a regular basis, so as to make buy/sell and similar succession agreements fair and valid?
- Is adequate life insurance in place?
- Has a plan been developed (and possibly implemented) for the lifetime transmission of family business ownership to the next generation?
- Does the business have a funded pension or profit-sharing plan, or an unfunded or indirectly funded deferred compensation agreement, that would provide the owner with some independent financial security upon retirement?
- Is there a mechanism in place for resolving internal conflicts pertaining to the management of the family business?
| LEGAL DISCLAIMER:The information provided at this web site is advertising material and is for general information purposes only. The material on this site does not constitute legal advice. DO NOT act upon this information without first consulting an attorney. No Attorney-Client relationship is formed unless agreed to in writing. |
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