If you own a business in the Garden State and you want to pass it on to your family members as part of your estate plan, you need to consider some key steps and concepts. New Jersey business succession planning is the process of preparing for the transfer of ownership and management of your business when you retire, die or become incapacitated.
Identify your goals and objectives
What do you want to achieve with your business succession plan? Do you want to keep the business in the family, sell it to a third party or liquidate it? Who do you want to inherit your business interests and how much control do you want them to have? How do you want to minimize taxes and maximize the value of your business? Before beginning your succession planning, you need to identify your goals and objectives.
Evaluate your business structure and value
How is your business organized? Is it a sole proprietorship, partnership, corporation or a limited liability company? How will your business structure affect the transfer of ownership and management? How much is your business worth and how can you determine its fair market value? If you cannot answer these questions yourself, you may need help from your estate planning attorney or your accountant/CPA.
Selecting your successors
Choose your successors and train them. Who will take over your role as the owner and manager of your business? Do you have family members who are interested and qualified to run the business? How will you prepare them for their new responsibilities and ensure a smooth transition? How will you communicate your succession plan to your employees, customers, suppliers and other stakeholders? Work this out now, and make sure the people you want to take over want to take over and know how to take over.
Make it legal
Draft and execute your legal documents. What legal documents do you need to implement your business succession plan? Depending on your business structure and goals, you may need a buy-sell agreement, will, trust, power of attorney, living will and other documents. You should consult with an experienced attorney who can help you draft and execute these documents according to New Jersey law.
Review and update your plan regularly. Your business succession plan is not a one-time event. You should review and update it periodically to reflect any changes in your personal or business circumstances, such as marriage, divorce, birth, death, disability, retirement, growth, decline or tax law changes. Business succession planning is a complex and important process that requires careful planning and professional guidance.