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Palm Springs Business Succession Attorney

Client: Heritage Legal Custom Content: Business Succession Planning Business Succession Planning in California

While it is certainly true that, as Robert Burns noted hundreds of years ago, “the best-laid plans of mice and men often go awry,” we are still better off making plans for future contingencies than leaving ourselves and our loved ones floundering. Some aspects of the future are predictable -- death and taxes, for example. Preparing for these and other likely or possible occurrences is reasonable and responsible. This is certainly true in regard to business succession planning when your finances, your family’s future, and your legacy all hang in the balance. Whereas large corporations have succession built into their structure, family businesses do not.

If you are the owner of a family business, or a family member who may one day inherit such a business, you probably have concerns about how to protect the business as inevitable changes occur. While no one can be sure of how the economy will progress, you can be certain that, at some point, the person at the helm of your family business will retire or become incapacitated and eventually die. It is also possible that partners will come to a parting of the ways, requiring that the business be purchased by one of them or be restructured.

If the family business is to survive and thrive, there must be a carefully conceived succession plan in place. This is where Heritage Legal, an esteemed estate planning legal practice in Palm Springs, comes in. We have in-depth knowledge of business succession law and experience in its implementation. Our lead attorney, Chris Heritage, is both capable and caring. He will assist you in crafting a business succession plan that meets your specific needs. Chris routinely works with clients who have all kinds of businesses and all types of families. At Heritage Legal, we pride ourselves on being inclusive and family friendly, serving clients of all backgrounds and orientations.

Why a Business Succession Plan Is Essential

Without a business succession plan in place, the stress of a sudden death or illness, or even an expected retirement, can throw the company into turmoil. The result can be lost assets, lost employees who abandon ship amidst the chaos, and/or serious disputes among family members about who should take control. Very few businesses can ride out such a period without substantial financial damage.

Any business requires enough stability to ensure that daily decisions are made: creditors and taxes have to be paid; payments have to be collected; sales and services have to be recorded; maintenance work has to be completed, and so on. Unless a business succession plan has provided for a relatively seamless transition, it doesn’t take long, in the competitive, unforgiving world of business, for declining profits and increasing debts to pull your company under.

Types of Business Succession Planning

There are two basic types of succession plans in general use, each of which can be adapted to your specific needs:

Retention Planning

With a retention plan, a family member (spouse, children, or other relatives) will retain control of the company’s assets. Retention planning may designate a capable interim successor to carry the business through the transition period. It is usually helpful if this person is already known and trusted by employees so that they will be more easily reassured about their job security. To these ends, retention planning usually includes pension or retirement funds to be continued or established.

There are cases in which no other family member in the business seems suitable to take over the company. If this is the situation, the family may, in conference with their business succession planning attorney, decide to transfer the owner’s interest in the company into trusts to be paid out to family members, at times including other, non-family, employees. They may then make the decision to hire a professional outside the family to take over as chief executive or may even make the difficult decision to sell the company entirely.

Buy-Sell Retention Planning

Alternatively, Heritage Legal will work with you to establish a buy-sell retention plan, meaning one that offers vital employees or other shareholders a larger stake in the company. If such an arrangement is made, it is customary to offer the closest, most essential employees (often close family members) the “right of first refusal” before shares of the company are proffered to a broader range of shareholders. Buy-sell retention planning also makes provisions for professional appraisal of the business so that all concerned can agree on the value of a share.

Because unexpected occurrences can derail company leadership at any time, it is wise to plan for business succession early on, always with the understanding that succession plans can be re-evaluated on a regular basis and altered as circumstances change. The Heritage Legal team is efficient and responsive. We will make sure to keep your business succession plan updated regularly.

The Necessary Steps of Business Succession Planning

As you work with Heritage Legal on your business succession plan, you will be considering the following:

  • Choosing your successor
  • Developing a training program to prepare that successor
  • Establishing a timetable for succession to take place (often the most difficult step)
  • Planning your own partial or complete retirement

Once Chris Heritage has assisted you in crafting an appropriate business succession plan, you can continue to improve your company’s profits with increased peace of mind.

Business Succession Planning Strategies

There are several strategies available to help you plan your business succession and Chris Heritage knows which of them will work best in your particular case. They include:

  • Selling your business interest (you may have to pay capital gains tax)
  • Transferring your business interest with a buy-sell agreement
  • Creating a Grant Retained Annuity Trust (GRAT) or Unitrust (GRUT)
  • Creating a private annuity
  • Creating a self-canceling installment note
  • Establishing a Family Limited Partnership (FLP)

Many of these business succession planning strategies have the added benefit of enabling you and your loved ones to save on taxes.

Contact Our Palm Springs Business Succession Planning Attorney

At Heritage Legal we realize how much time and effort it has taken to create a family business and keep it thriving, a process that may have started before your birth. That’s why we are committed to helping you come up with the business succession plan that is best for you and your loved ones.

We pride ourselves of listening carefully to what you have to say because we realize that a successful plan is one that makes you feel fulfilled and comfortable. Whether that means passing on your business to a competent heir, letting your hard work pay off by supporting you through a long retirement, or allowing you to keep a finger in the pie well into old age, we are ready to help you meet your goals. The sooner you contact us, the sooner we can protect your interests, your future, and your family.


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