Business Succession Planning – A Contingency Plan

You started a business, and over time, it’s done well. But you won’t be here forever to run it. Maybe you’re already thinking of retirement and want the business passed on to your heirs. The Voeller Law Firm is one of the top business law firms in San Antonio. For people like you who want your business to pass smoothly to heirs or partners, you need to create an iron-clad business succession plan.

Why Create a Business Succession Plan?

Business transitions can be tricky. It’s not as simple as designating ownership in your will. Splitting ownership among heirs can create animosity over who’s in control and who should have more say or all say over the others. The scenarios are endless. The business succession plan must be airtight. It might even be wise to discuss your ideas with family or partners so that when the time comes, no one will be surprised, and the business succession can go off as planned.

The Voeller Law Firm and our experienced business lawyers have created business succession plans that hold up against the most stringent challenges. It is a contingency plan. It is not a one-time event and should be reevaluated and updated each year or as changes dictate within the company. As such, it provides a new opportunity to evaluate each leader’s skills, identify potential replacements within and outside the company and, in the case of internal replacements, train those employees to assume new roles.

Reducing Taxes During Business Transitions

All business succession plans should include methods of limiting tax impact.

  • Set up a holding company or family trust to take advantage of tax deferrals and savings, income splitting opportunities, and ways to protect assets from creditors.
  • Create a spousal trust to protect a privately-owned business. Shares of the business can be put into a spousal trust so taxes aren’t immediately payable if one of them passes away.
  • Use life insurance to pay capital gains tax when there’s a forced succession due to death or incapacitation. Insurance premiums often cost less than the capital gains tax owed when a business owner dies.
  • Use your lifetime capital gains tax exemption on qualifying small business shares, adjusted annually for inflation. 
  • Transfer company assets over time to spread the tax bill out into smaller, more manageable chunks.
  • Gift or sell shares of the company to a successor who is a family member. The successor will not be required to pay taxes on it, but the owner will be responsible for capital gains tax on the fair market value when the gift is made.

We Can Formulate Your Succession Plan

Thinking about your business’s succession? Let the business succession attorneys at The Voeller Law Firm help you formulate a plan that works. Get peace of mind knowing that you and your company are in good hands now and in the future. Contact us by calling (210) 651-3851 or using our online contact form to send a message and set up a consultation.

We serve San Antonio, Schertz, and the surrounding communities of Bexar County.

The Voeller Law Firm

19311 FM 2252

Suite 103

San Antonio, Texas 78266

[email protected]

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1 Response
  1. It was interesting to me when you mentioned that splitting ownership in a business can be tricky. Working with an accounting firm could be the best way to go about splitting business ownership. I would think that the accounting firm would work to make that both sides get what they feel is fair.

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    A law practice limited to estate planning, elder law planning, probate and business planning. Through seminars and free initial consultations, the lawyers at the Voeller Law Firm can help area residents and businesses evaluate their legal needs and determine what their options are.