In a post last month, I emphasized that a business can be lost or severely damaged by lack of a meaningful succession plan. The title of an article in yesterday’s New York Times says it all — “Lack of Succession Plan Puts Family Venture at Risk“. The article has some useful suggestions for closely held business owners, and it outlines some of the items that should be addressed in a succession plan.
In a February post I noted that business succession planning should be a team effort. Some matters require business expertise; but many issues require sophisticated legal planning. For example, the New York Times article mentioned some fifth generation family owners in Columbus, Ohio who prepared a fifteen year plan to pass on the company to the next generation, using a mix of grantor retained annuity trusts and family limited partnerships. These vehicles can lower tax liabilities as well as provide a legal framework for succession in the business. This is a good reminder that careful business succession planning may help save taxes and provide other benefits in addition to simply determining who will run the company.