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Procrastinating Succession Plan Can Leave You Open to Costly Mistakes
Author: Scarinci Hollenbeck, LLC
Date: June 10, 2013
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Running a business requires a great deal of time and commitment, and owners who are operating a busy enterprise may sometimes make the mistake of putting their succession plan on the back burner. However, an accident or unexpected medical disaster can change a business owner’s circumstances quickly, making it imperative that they plan for the worst and establish a succession plan to protect their venture.
A recent Wealth Management article highlighted the common mistakes many entrepreneurs and business people make when holding off on establishing a plan, one of which is assuming that the successor will be ready on the owner’s timeline. It’s not uncommon for new successors to lack the proper training, a relationship with employees, financial know-how, and overall industry experience when they take on the job, but this scenario put the company in jeopardy.
This is a situation in which it pays to develop a succession plan early on and ease new owners into the transition so that they will be fully equipped to take on the responsibilities of the company with confidence.
The source also noted that some owners consider succession to be an all or nothing transaction and believe they must give up all legal rights to the company. However, more of today’s company heads are relying on trusts as a strategy to pass wealth onto new generations, maintain a measure of control in how the business is operated, and benefit from many estate tax law advantages.
As there is no one-size-fits-all approach to choosing the right trust for a succession business plan, contacting an attorney to set up the transaction may help owners make a more informed decision about their options.
As the current economic and regulatory climate continues to shift and business owners seek out new ways to protect their company assets, establishing a solid succession plan should be a central part of their overall wealth management strategy.
- Practices: Tax and Trusts & Estates, Corporate Transactions & Business, Estate & Trust Litigation, Real Property Tax Strategies, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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