How to Transfer a Family Business to the Next Generation
FSKS Answers, “How to Transfer a Family Business to the Next Generation”
If you are one of the nearly 8,000,178 small business owners in the U.S., it is beneficial to consider how to transfer your company when you retire. Having a succession plan can prevent confusion and operational disruption upon your exit. It also ensures your company goes to your designated beneficiaries for a smooth transition.
Discover how to transfer a family business to the next generation with business succession legal services from Fein, Such, Kahn, & Shepherd (FSKS), P.C.
Work with a Business Law Attorney
Working with a business law attorney is essential when transferring your business. An experienced business law firm like FSKS can ensure that every aspect of a business transfer follows necessary legal guidelines and ensures a seamless transition of business operations and ownership rights according to your wishes.
For example, the business law attorneys at FSKS can work with you to restructure or reorganize your business in preparation of a transfer or draft purchase and sale agreements between you and your family members or partners. They can also help you with succession planning, creating business operating agreements, creating a Family Limited Partnership, and making annual transfers of business shares to family members.
Approaches for Transferring Your Business
Your business law or estate planning attorney at FSKS can help you decide on the best strategy for transferring your business. Discuss the following approaches with your attorney to determine which works best for your business structure and transfer objectives:
- Transfer it in your will. Transferring your business in your estate documents ensures that it passes to your chosen beneficiary when you pass away. Specifying who receives ownership or portions of your shares can eliminate conflict if you pass away before you make other succession arrangements.
- Give it away now. Giving your business away now may incur a gift tax, but it will ensure it’s not subject to an estate tax if you leave it to your children in your will. You may want to give your business away now to ensure a smoother transition while you can still help the company grow.
- Sell it to children. Selling the business to children is a good option for those who want to transfer their business but want to continue receiving income. You can work with your attorney to draft a promissory note or set up a private annuity arrangement if your children don’t have the capital to pay for the business outright.
- Transfer to a trust. Transferring the business to a trust can help save on capital gains, gifts, or estate taxes. This is also an excellent way to partially give up control, allowing your children to be co-trustees but still retain a portion of the business.
Get Help Transferring Your Family Business at FSKS
The experienced attorneys at Fein, Such, Kahn, & Shepard, P.C. can help you transfer your family business. Our attorneys can ensure a smooth and successful transition for your business for future generations by creating a transition plan and drafting the required legal paperwork.
Contact FSKS today to discuss your business transfer goals and start the succession planning process.