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Wealth Transfer and Business Succession Planning
By: Mark V. Kenny, CPA, CFP

Wealth transfer planning and business succession planning are most effective when combined in your overall estate plan. The cost to a family-owned business owner for failing to integrate these essential plans can be enormous. It can create unnecessary losses through higher income and estate taxes, it can derail your plans to keep your business in your family and it can take personal toll on your family members.

Planning the transfer of your family’s wealth to future generations, especially when a family business is involved, takes special care, family participation and cooperation. Approximately 80% of family-owned business owners want their businesses to stay in the family.  Without proper planning, only 30% of these businesses will survive into the second generation and only 12% into the third generation.       

The starting point in the wealth transfer and business succession planning process begins with a thorough review of all your assets and liabilities, including your business interests, investment assets and retirement assets.  Second, an estimate of estate taxes should be made based on your current situation. Third, a discussion regarding your personal, family, business and retirement goals should take place. Next steps include the development, review and refinement of your plan and recommendation of strategies to be incorporated into your plan. This will involve valuation of the family business, real estate, and the use of various estate freeze and discounting techniques to shift future growth to the next generation while minimizing estate and transfer taxes. Liquidity needs should also be evaluated. There are a number of alternative strategies that can be used for controlling and protecting family assets, timing gifts and distributions and accommodating charitable planning and other goals.  Finally, and most important, is the implementation of your comprehensive wealth plan.

To learn more about wealth transfer and business succession planning that is tailored to your specific needs, contact Mark V. Kenny, Vice President and Manager of Financial Planning for Citizens Business Bank’s Financial Advisory Services Group, at (909) 945-2903.

Source: Small Business Administration 2003 statistics and the National Federation of Independent Businesses.








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