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Senior Spectrum Newspaper
June 2018
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Senior Spectrum Publications

Facing Reality: The Essence of Family Business Succession Planning
by Gerald M. Dorn, J.D., EPLS, AEP
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Gerald Dorn
Gerald Dorn

A simple search online these days can turn up lots of advice regarding the importance and benefits of buy-sell agreements, deferred compensation agreements, and life insurance in family business succession planning.

While knowing this information is valuable when thinking about the transition of a family business from one generation to the next, none of it will come into play until a business owner is prepared to face reality and take action. Believe it or not, very few entrepreneurs implement any sort of succession plan, and those that do may fail to create the most successful strategy for passing on their business.

As an owner, the sooner you’re able to face the reality that your current stage of succession planning, or lack thereof, has predictable and negative consequences for your family’s business, the sooner you’ll be able to take action and create an effective succession plan to ensure your business will survive after you’re gone.

Let’s take a closer look at what is meant by “facing reality.”

Questions to Answer

Answering questions focused on the circumstances of your business after you’re no longer around can give you a better idea of where you are in terms of planning, and where you would like to be. Here are some of the most important questions:

Did you answer “no” to one or more of these questions? If so, you’ll begin to realize that both your heirs and the family business will be in jeopardy unless appropriate steps are taken in the near future.

Another Big Question

In addition to the above, here is another question to consider: when you die, will your heirs have to sell some or all of the family business just to pay the estate taxes?

If the answer is “yes,” then as an owner, you should take immediate action! Here are your options when moving forward.

  1. You can enter into a buy-sell agreement to ensure the owner or the owner’s heirs are paid the value of the owner’s interest.
  2. Purchase Life insurance or make other arrangements to fund payments required at the owner’s retirement or death.
  3. You can implement a gifting strategy to reduce or eliminate estate taxes otherwise due

Facing the reality of business succession planning can be challenging, but you can act now to ensure your business passes to your heirs as intended – protecting a lifetime of hard work. When planning your estate, the best course of action is to seek the assistance of an experienced estate planning attorney, so call our office today to schedule an appointment.

Gerald M. Dorn has been practicing estate planning law for 23 years and is the managing shareholder of the law firm. Mr. Dorn is a Certified Specialist in Estate Planning Law and an Accredited Estate Planner by the National Association of Estate Planning Councils. Mr. Dorn has also been awarded the designation of Academy Fellow from the American Academy of Estate Planning Attorneys.

The law firm of Anderson, Dorn & Rader, Ltd. is devoted exclusively to estate planning and estate and trust administration. The attorneys at Anderson, Dorn & Rader, Ltd. offer guidance and advice to clients in every area of estate planning and estate and trust administration. For more information or to attend an upcoming seminar, contact us at (775) 823-WILL (9455) or visit www.wealth-counselors.com.