Arrange A No Pressure
Free Consultation 708.390.8936
Experienced. Trusted. Responsive.

Three ideas to help with your business succession planning

You have spent your whole working career building the family business. What will happen it after you pass away?

Here are three different types of business succession plans designed to fulfill your vision and enable your company to live on.

1. Irrevocable Life Insurance Trust

If you have co-owners, you could draw up a buy-sell agreement. This basically states that when any owner dies, his or her interest in the business is automatically purchased by the co-owner(s). The buy-sell agreement protects the co-owners by ensuring that your spouse or other family members do not unintentionally gain ownership in the business. To provide the liquidity that would be needed to purchase your interest, you can set up an irrevocable life insurance trust. The ILIT will cover the gap between the value of the business at the time you are planning your estate and what it is worth when you die. There will be no need for the ILIT to pass through probate, so the funds would be immediately available for tax payments and other needs.

2. Grantor Retained Annuity Trust or Unitrust

If you want to transfer the business to your children, you can set up a grantor retained annuity trust, or a grantor retained unitrust, and retain an income stream for yourself. If the assets grow, estate taxes will not have to be paid on the appreciation. Be aware that this kind of trust must be structured precisely. In addition, you have to outlive the terms of the GRAT or GRUT.

3. Family Limited Partnership or Liability Company

If your aim is to pass the business along to your children, you may want to consider a structure such as a family limited partnership or family limited liability company. The purpose of a limited partnership is to hold the assets of your business. Some of these units can be transferred to your children, which effectively removes them from your taxable estate. Like the other trusts, there are complex rules connected to a family limited partnership or liability company, so a careful review and thorough understanding will be required before you decide which of these tools to use.

No Comments

Leave a comment
Comment Information
Get Help Now

How Can We Help You?

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Zapolis & Associates, P.C.
9991 191st Street
Mokena, IL 60448

Phone: 708-390-8936
Phone: 708-478-5050
Fax: 708-478-5052
Mokena Law Office Map

Review Us