business-succession

When Businesses Don't Make Plans... They Plan To Fail.

We make sure your estate plan includes business succession planning. For closely-held or family-owned businesses, a solid succession plan can drive the growth of the business, reduce taxes, and set an exit strategy.

A business succession plan ensures that your small business does not come to a stand still at your death or incapacity. There are simple ways to ensure your business continues seamlessly.

Business plans, raising capital, compliance... are all a given when starting a business. How come so many business owners overlook a planning for incapacity or death?

Business Succession Attorney

Small businesses are an integral part of New York. From shoe repair, florists, coffee shops, landlords, dentists, bars and bodegas - entrepreneurs are everywhere.

A simple business succession component to your estate plan can mean the difference between your hard work crumbling at your death or giving the next generation a fighting chance.

A business succession attorney is an estate planning attorney experienced in passing on your legacy to the next generation.

 

Bars Trusts Wills

Restaurants
& Bars

Business Succession Estate Plans

Professional
Practices

Creditor Protection Trusts

Income
Properties

Closely Held Businesses

Family
Businesses

We Make the Process Simple

We serve all types of small businesses. LLC, Corp, S-Corp, Professional practices, sole proprietorship and partnerships.

During the estate planning process, we ask all about any business interests, review agreements and formation documents.

 

Our Process

  • 1

    Free 1 Hour Consultation - online or in person

  • 2

    Client Portals for Easy Communication

  • 3

    Draft Review Meetings

  • 4

    Signing Date that fits your Schedule

Our consultations are always thorough
and always free

Book online, schedule through email
or call our office at (212) 739-1736

Restaurants
& Bars

New York is known for its incredible variety of restaurants and bars. Many are single member LLCs or sole proprietorships.

These establishments cannot wait for ownership to pass through the Surrogate’s Court - this can take more than 9 months.

What would happen in the meantime, without anyone having the power to run the business or access the bank account?

Solution: A Revocable Living Trust
Putting the restaurant in a trust allows the business to continue without interruption. You choose a Trustee - someone to either manage the restaurant or sell it —and who the beneficiary. You may be able to easily transfer ownership to a family member who is willing and able to continue running your restaurant.

Solution: Look to the Operating Agreement.
Is your restaurant an LLC or corporation with more than one partner or principal, or silent partners? If you have a multi-member LLC, then generally, the silent partners will receive the managing interest. However, you may be able to name a successor.

Restaurants and Trusts

Professional Practices

Doctors, lawyers, CPAs, architects, brokers cannot legally leave their practices to their families.

You must have an exit strategy.

Solution: Key Person Insurance
The backbone of an estate plan for a professional practice usually involves key person insurance. Key person insurance is a policy that is similar to life insurance, but for your business. This policy provides a death (or disability) benefit to the business itself, or to an owner, upon the death of an owner or another “significant employee.”

Professionals also have certain legal obligations relating to clients and records, in such cases we include a Professional Will template.

Small Businesses

This policy is ideal for situations such as:

  • Buying out shares in a partnership when one partner dies (funding the buy-sell agreement)
  • Recovering losses from the death of a key employee
  • Upholding a business’s reputation and retain key clients in businesses built on the founder’s name, such as a law firm or doctor’s office- either before an ownership change
  • Repaying business loans that were in the person’s name, or were co-signed
  • Combined with a Trust or a Family Limited Partnership, growing the business after the death of the key person

Income Properties

If your family had the foresight to invest in real estate decades ago, they may be in the enviable position of sitting on a goldmine. The problem for property owners in NYC is the tax exposure when transitioning to the next generation.

You have heard the expression property rich, cash poor? These properties have appreciated so much over the years that their heirs will have to pay estate tax but lack sufficient cash.

Income Producing Properties

Solution: Get Married

Okay, so this may not be feasible but a couple has twice the exemption amount! $12.06 million each under the federal exemption and $6.11 million each under NYS exemption. The owner can leave some or all the buildings to the (new) spouse that then pass on to the children at the surviving spouse’s death

Solution: Life Insurance Trust

Life insurance is often a simple solution - use the life insurance proceeds to pay the estate taxes. If the buildings exceed the NYS estate tax exemption but not the federal, gift the proceed to an Irrevocable Life Insurance Trust (ILIT) to eliminate all estate taxes.

Solution: Intentionally Defective Grantor Trust & LLC

Sometimes it is too late or too expensive to get life insurance. Place properties in LLCs and then gift and/or sell non-voting interests an Intentionally Defective Grantor Trust (IDGT). You can get a valuation discount because of the lack of control and marketability for transferring non-voting shares of corporations or LLCs.

Family Business

Family-held businesses are usually sole proprietorships, S Corps, or partnerships.The loss of the owner can cause problems between the family members who are involved in the business and those who are not.

Family Business Planning

Solution: Trust & Life Insurance
A revocable living trust combined with an ILIT – Irrevocable Life Insurance Trust. A revocable trust allows a smooth seamless transition and an ILIT can either equalize inheritance between beneficiaries or cover estate taxes. Family-run businesses benefit the business and the family by focusing on preserving harmony.

Solution: Family Limited Partnership or FLLC
An FLLP or FLLC is a business structure that allows tax-free transfers of assets between close family members as well as providing liability protection. It consists of general partners and limited partners. The general partners are typically parents or grandparents (or LLCs owned by them) who manage the business. They get a pro rata share of net income but are restricted from selling their interests.

The idea is to leverage the annual gift tax exclusion and valuation discounts to gradually transfer the FLP interests to the limited partners. This moves the money out of the elder generation’s estate.

This method does not work as well with appreciated assets because of capital gains issues or S-Corps - but may be worth a discussion.

Business Succession Frequently Asked Questions

Jessica Wilson Estate Planning & Probate

© Jessica Wilson Law
Disclaimer & Disclosure

Office:
221 Columbia Street
Brooklyn,NY 11231

Ph. (212) 739-1736 Fax (212) 202-5263
jwilson@jessicawilsonlaw.com

Estate Planning Guides:

Artists
Seniors
Families
Small Business Owners

*Please note that our office does not provide notary service to the public. If you drop in for notary, the attorney will accommodate you if possible. However, we do not under any circumstances take appointments or calls regarding notary services. Thank you for understanding.

Jessica Wilson Estate Planning & Probate

221 Columbia Street
Brooklyn, New York 11231

Ph. (212) 739-1736 Fax (212) 202-5263
jwilson@jessicawilsonlaw.com

© Jessica Wilson Law | Disclaimer & Disclosure

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