Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
“Interestingly, one of the unforeseen side-effects of the 2008 recession was the re-emergence of small family owned busine...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 2 
Family owne...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 3 
If you own ...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 4 
WHY YOU NEE...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 5 
Family disp...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 6 
Who will be...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 7 
COMMON BUSI...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 8 
Life Insura...
Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 9 
About the A...
Upcoming SlideShare
Loading in …5
×

9

Share

Download to read offline

Estate Planning in Oregon - Incorporating a Business Succession Plan for Your Family Business

Download to read offline

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.

Related Audiobooks

Free with a 30 day trial from Scribd

See all

Estate Planning in Oregon - Incorporating a Business Succession Plan for Your Family Business

  1. 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. 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. 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. 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. 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. 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. 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.
  8. 8. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 8 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
  9. 9. Estate Planning in Oregon –Incorporating a Business Succession Plan for Your Family Business www.rbsllc.com 9 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
  • TalRappleyea

    Mar. 3, 2021
  • theirslawyerexpert

    Jun. 14, 2017
  • fbarlawyer

    Jun. 7, 2017
  • theftcdefenselaw

    May. 22, 2017
  • DavidHarrisToronto

    Sep. 3, 2015
  • JanVajda1

    Aug. 15, 2015
  • EpochLawGroup

    Apr. 20, 2015
  • joshuastubbins

    Jan. 8, 2015
  • schneiderlawor

    Dec. 1, 2014

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.

Views

Total views

3,652

On Slideshare

0

From embeds

0

Number of embeds

15

Actions

Downloads

23

Shares

0

Comments

0

Likes

9

×