To get started on the assessment of your business succession plan, I will review:
1. Key Individuals and Entities.
- Key advisors, including accountants, investment advisors, trustees, and financial service providers
- Family tree, showing business owners and family members
- Organizational chart showing the entities that constitute the family business and how each business is taxed (LLC, S corporation, partnership)
- Governing board members and key executives, such as general counsel, CFO, controller and family member employees
2. Business Governing Documents.
- Articles of Incorporation or Organization
- Bylaws
- Shareholders' Agreement or Operating Agreement
- Voting Agreements or Voting Trusts
- Current Ownership or Capital Accounts
3. Related Party Contracts.
- Leases or other agreements between one family business entity and any other family business entity
- Employment contracts
- Any deferred compensation or other nonqualified retirement benefit contract
- Any personal guaranties of business debt and related business loan activities
4. Estate Planning Documents.
- Wills
- Revocable Trust or Trusts
- Irrevocable Trusts
- Marital Property Agreement
- Powers of Attorney for Health Care
- Powers of Attorney for Financial Matters
- Gift Tax Returns
5. Business and Asset Valuation(s).
- Formal or information valuation of the business and component businesses
- Valuation of business or farm real estate and statement of mortgage debt
- Business debt and related security documents
6. Owner Financials.
- Statement of assets and liabilities including face value of life insurance
- Summary of retirement plan assets and benefits, including social security and any pensions for owners
- All contracts of insurance on lives of owners including policy owner, beneficiary designations, pledges or assignments
There is a step-by-step process for family business succession or wealth transfer. On review of the documents listed above, a process to pass ownership of the business and wealth of owners to one or more of their descendants, or for alternative disposition of ownership interests and be implemented. The process can also assist business owners who plan to sell their interests to non-family insiders or who have not yet decided on a particular exit strategy.
I noticed that most of my clients say this part of the planning is what keeps them up at night!
I will be pleased to discuss your wealth transfer and business planning. Please call me at 307.200.1914.