Interestingly, one of the unforeseen side-effects of the 2008 recession was the re-emergence of small family owned businesses. Learn more about business succession plan in this presentation.

1. “Interestingly, one of the unforeseen side-effects of the 2008 recession was the re-emergence of small family owned businesses”
RICHARD B. SCHNEIDER
OREGON ESTATE PLANNING ATTORNEY
ESTATE PLANNING
IN OREGON – INCORPORATING A BUSINESS SUCCESSION PLAN FOR YOUR FAMILY BUSINESS

2. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 2
Family owned businesses have long been the backbone of the American
economy. Interestingly, one of the unforeseen side-effects of the 2008
recession was the re-emergence of small, family owned businesses. With
few other options, many workers decided they had nothing to lose by
pursuing the dream of becoming a small business owner. Today, 50 percent
of the American gross domestic product, is the result of family businesses.
Family owned businesses are responsible for a staggering 80 percent of
new jobs created.

3. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 3
If you own a family business, and have managed to make that business a
success, you undoubtedly want to protect the business in the event of your
death or incapacity. Whether the business is passed down to the next
generation, or is sold and used to support loved ones, the important thing
is to ensure that a business succession plan is incorporated into your
overall estate plan. This is to ensure that the hard work you put into
creating and growing your business is not jeopardized should something
happen to you.

4. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 4
WHY YOU NEED A BUSINESS SUCCESSION PLAN
Regardless of the type of business entity you have created, if you are the
patriarch or matriarch of the business, it will suffer should you become
incapacitated or die. Often, the most effective way to explain why
something is needed, is to consider what will happen without it. Therefore,
imagine for a moment, what would occur should you suddenly be
incapacitated or die as a result of a tragic car accident. In the absence of a
business succession plan, the following common issues will likely surface:
Management of the business –who will handle the day to day
management of the business in both the short-term and the long-term?
If you die, who do you want to run the business?
Control over business assets – for the business to continue to
function, someone must have the legal authority to control the
business assets and make business related decisions. Who has the
authority to do that? Who do you want to have that authority?
Transfer of ownership – either long-term incapacity or your death,
will require a legal transfer of ownership either to the next
generation, or through the sale of the business. Only one-third of all
small businesses make the transition to the next generation
successfully. Selling the business can result in huge losses if
provisions were not made to sell it for full value.

5. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 5
Family disputes – unless it is clear who is to take control of the
business, you can almost count on a family dispute taking place.
Taxes –depending on your business structure, estate taxes could be
the death of the business unless you have a plan in place to address the
tax liability involved in transferring the business.
Liquidity –if the business is asset rich but cash poor, as is often the case,
it can be lost upon the death of the owner. The reason for this is that all
debts, including taxes, must be paid upon the death of the owner.
Sufficient liquidity is necessary to prevent this from happening.
CONSIDERATIONS WHEN CREATING YOUR BUSINESS SUCCESSION
PLAN
With a better understanding of the importance of creating a business
succession plan, it is now time to start thinking about the considerations
involved in creating that plan. Some common questions and concerns to
think about include:
Will your business be transferred or sold? When you die, there
are two options for your business – sale or transfer. Do not just
assume that your children want the business. Sit down and talk to
them to make sure they are interested in running the business. If no
one is interested, selling your business is the best option, and plans
should be made accordingly.

6. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 6
Who will be your successor?Be realistic when answering this
question. First, you must choose a child, grandchild, or other
successor. This may be easy if only one person is interested or may
be heart wrenching if more than one wants the business. Ask
yourself, who has the ability, experience, skill, and commitment
necessary to take your place.
What business entity is best for the future of your
business?If you plan to pass the business down, it may be best to
restructure your business to allow the intended successor to play a
more active role in the company now, thereby increasing the odds of
a successful transition in the future.
What is your business worth?You probably have a good idea of
what your business is worth, but having a professional valuation done
is recommended. Things like “good will”, are often hard for a small
business owner to value, yet an accurate value is needed to create a
successful business succession plan.
What will your death cost?While you may not want to think about
this, you need to determine what your death will cost both in terms
of out of pocket expenses (funeral, taxes etc.) and indirect costs (loss
of revenue etc.).

7. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 7
COMMON BUSINESS SUCCESSION OPTIONS
Only an experienced estate planning attorney can evaluate your specific
needs and wishes,
and help you
create a custom-made
succession
plan. However,
there are some
common options
and strategies that
are worth
considering:
Family Limited Partnership – this allows various members of the
family, to own an interest in the business now, while you are alive
and well. Along with providing a legal mechanism for the transfer of
ownership to future generations, there are also tax advantages to
creating a FLP. You are able to maintain majority control and day to
day management of the company for as long as you wish.However,
your successor can also begin to learn the business and profit from
its success now, instead of waiting until your death or incapacity.
Buy-Sell Agreement –if you have a partner in the business, a buy-sell
agreement allows you to determine ahead of time what will
happen to your interest in the business, should you die. Your partner
agrees to purchase your share for a set price, or by calculating the
value at the time of death using an agreed upon method, thereby
assuring that your beneficiaries will receive a fair price for your
interest in the business.

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Life Insurance –life insurance is often an integral part of any
business succession plan. It may be used to cover debts of the
business and costs related to your death or may be used to finance a
buy-sell agreement.
Your business succession plan will be as unique as your business. Only an
experienced Oregon estate planning attorney can help you develop a
succession plan and incorporate the plan into your overall estate plan. The
important thing is to understand the need for a business succession plan,
and to begin working on one with your estate planning attorney
immediately.
Forbes, 5 Steps to Create a Viable Succession Plan for Your Family Business
Fidelity, Succession Planning for a Business
Investopedia, How to Create a Business Succession Plan
WealthCounsel, Business Success Planning Checklist
Kent State University, An Owner’s Guide to Business Succession Planning

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About the Author
Richard B. Schneider
Before devoting his professional efforts primarily to estate
planning, Mr. Schneider spent over fifteen years working on
Wall Street for major law firms and investment banks. After
graduating from law school, he practiced general civil law
in New York City for five years, specializing in business
transactions, financings and corporate matters. He also
represented major investment banking firms in mortgage
trading and real estate-related matters. Among his clients
were international shipping companies, commercial and
investment banks and institutional lenders, including
General Electric Capital Corporation, Salomon Brothers and
Merrill Lynch.
For the next ten years Mr. Schneider served as Senior Vice President at the investment
banking firm of Kidder, Peabody, where he managed outside legal counsel for a variety
of large financial transactions between major institutions. He played a central role in the
creation of Kidder, Peabody’s mortgage trading subsidiary and advised and executed
transactions with insurance companies, pension funds and government agencies,
including the Resolution Trust Company.
In 1996 Mr. Schneider established a residence in Portland, Oregon and began his law
practice there in 1997. He has made a long-term commitment to providing first-class
estate planning legal services to families and individuals within the Portland
metropolitan area and the surrounding SW Washington region. His motivations for
moving to the Northwest were several: the natural scenic beauty of the Northwest
landscape, the clean air and streets, the healthy, diversified economy and the overall
high quality of life. Mr. Schneider is very grateful for the warm reception he has received
from Portland/Vancouver and is pleased to have become a respected member of the
Portland/Vancouver legal and business community.
Mr. Schneider is a member of the American Academy of Estate Planning Attorneys, the
National Academy of Elder Law Attorneys, the Estate Planning Council of Portland and is
on the board of directors of the the Rental Housing Association of Greater Portland. He
is admitted to practice in Oregon, Washington and New York.
Law Offices of Richard B Schneider, LLC
www.rbsllc.com
2455 NW Marshall St, Suite 11
Portland, OR 97210
Phone: (503) 241-1215