Handing It Over

Businesses need a plan for passing the torch

costs for these plans is difficult; the more complex the transaction, the higher the fee. Levychin says $400 per hour is reasonable for a tax attorney, with succession plans requiring anywhere from two hours for a simple transfer of assets to an heir, to more than 10 hours for something more complicated such as setting up a trust for heirs with their equity stake distributed in intervals.

Here’s a list of things a business owner should consider prior to having a succession plan drawn up:

  • Have personal goals and visions for the transfer of ownership and management.
  • Determine which family members have the interest and capability to participate in the business.
  • Determine if there is enough liquidity to avoid the forced sale of the business should the proprietor pass away.
  • Formulate a contingency plan in case a disability prevents the proprietor from continuing work.
  • Contact a business appraiser to have your firm valued.
  •  


The bottom line is that a succession plan should be a part of every business plan. “That’s the key mistake,” points out Olearcek. “If you don’t prepare, things might not be the way you want them to be done.” Without those preparations, millions of families can wind up with the short end of the stick.

 

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