Successfully owning and operating your business to where it is today took commitment, strategy, and sweat equity. It is important to plan what will happen to your business if you are unable to lead it with the same dedication. A Manalapan Township business succession lawyer could have the experience necessary to help you plan your business legacy. A trust and estates attorney could help you make the right strategic decisions to guarantee your vision survives.
Business Succession Planning Topics
It is essential to determine the manner of business succession that works best for each individual situation. Understanding the exact worth of a business in both revenue and capital could help generate cash flow for retirement, allow the liquidation of assets for unforeseen circumstances, or transferring the business to the next generation.
Employee Stock Ownership Plans
An owner could create a trust to hold stock sold by the owner to then be distributed to the employees. This is called an employee stock ownership plan (ESOP). These plans could get owners the market value of their share in the company and increase employee loyalty and productivity by giving them a stake in the company’s welfare and legacy. A business legacy attorney in Manalapan Township could help set up the financial instruments necessary to ease an owner out of their business with an ESOP.
Grantor Retained Annuity Trusts
A grantor retained annuity trust (GRAT) is ideal for individuals who want to keep income from their business for retirement purposes. These are especially useful if the value of the business is projected to increase over time. This financial instrument allows you to retain an interest in the company before assets are distributed to any beneficiaries of the trust.
Gifts or Sale to Relatives
One of the most classic methods of transferring a business to family members is using an intra-family loan. This strategy allows owners to take advantage of the minimum interest rates between a lender and a borrower as mandated by the IRS.
Another option is using an installment note sale to create an intentionally defective grantor trust (IDGT). This process involves executing an asset installment sale into an IDGT in exchange for a promissory note. “Defective” does not mean that the instrument is flawed. The title simply allows the grantor to gain more control while deferring, eliminating, or shifting tax implications related to the sale.
Lastly, owners could use a self-cancelling installment note (SCIN). Take caution there are risks associated with using a SCIN. Furthermore, those who are terminally ill cannot take advantage of this strategy.
Hiring a business succession lawyer in Manalapan Township allows you to make an informed decision and assess all risks involved with strategies available to you.
Shutting Your Doors
Closing the doors on a business is not easy and there are often many matters that must be handled along the way. In New Jersey, businesses must be removed from both tax and public records. Depending on the business you operate your business may be required to dissolve, terminate, or both. A Manalapan Township business succession lawyer can help you review what steps are necessary to close your doors and the relevant tax impactions associated with doing so.
Business Planning With A Purpose
A Manalapan Township business succession lawyer could help answer all your questions and ensure that no stone remains unturned. Regardless of the size of your business, contact us for a consultation today.