You worked hard to build a successful business, so it is only natural for you to want to have the business continue to succeed after you no longer want to take an active role. Even if you are years away from retiring, unexpected illness and injuries do occur, so it is a good idea to take steps now, while you are able to do so, to build a business succession plan that increases the chances of a successful transition, minimizes problems and tax liability, and prepares your business for future success.
Missouri laws are complicated; everyone’s business situation is different; and there are many considerations when planning succession. To make sure everything is done correctly and you prevent costly mistakes, it can help to work with an experienced business succession lawyer who knows Missouri and federal laws and tax requirements.
From startup companies to established businesses, the Birk Law Firm can assist with all aspects of business law, including business succession. As a businessman, Certified Public Accountant and attorney, Kelvin Birk has the background and experience that makes him understand the needs of business owners. Our firm offers a free consultation to discuss your individual business succession needs and show you what we can do to help. Call us to get started.
Why Choose Birk Law for Business Succession Planning
There are many lawyers out there, and it is important to choose one who has the experience, knowledge and resources you need to succeed. Here are some reasons why we believe Birk Law is your best choice:
- We are experienced. Attorney Kelvin Birk is a Certified Public Accountant, with more than 30 years of experience in accounting and tax and business consulting and more than 20 years of experience in the law. This combined expertise allows our law firm to be equipped with handling a wide range of business issues.
- We are local. Kelvin was raised on a local farm and has lived in Cape Girardeau County almost all of his life. He knows Missouri laws and how to work with them to benefit you.
- We provide personalized attention and go the extra mile to satisfy our clients. Birk Law Firm is a small firm by choice that is big on client services, and you can read our testimonials to see how we have helped others.
- We provide free, confidential, no-obligation consultations to evaluate your individual business situation.
- We are happy to give advice to help you in any way we can and will be there for you throughout the entire business succession process, answering your questions and keeping you informed.
How Our Business Succession Planning Attorneys Work to Help You
When we sign on as your law firm, we start working for you immediately. We will:
- Meet with you to discuss your unique business and family situation to determine what succession plan would be best for you
- Identify your business goals, such as whether you have family members or employees you trust who want to run the business, or whether you would like to sell the business or terminate its operations completely
- Anticipate life events that could change the succession plan, such as unanticipated death, divorce, and disputes
- If appropriate, create a succession team you can work with and train to maintain continuity during the transition process
- Plan for changes in management from one generation to the next
- Coordinate your business succession plans with your estate plans, tax situation, and financial interests
- Help you transfer asset ownership from one generation to another generation to complete the succession process.
Our clients benefit from Kelvin Birk’s legal and CPA background and experience. We provide well-rounded advice to solve both legal and financial issues and to come up with creative solutions.
What Does a Succession Plan Include?
When setting up a succession plan, consider including the following actions:
Get the Business Evaluated. The value of your business will probably be an important part of your retirement plan and affect your future. A formal appraisal can provide a value from which you can proceed, unless values can be agreed upon by you and the parties who will succeed you.
Develop a Business Management Team. The founder and retiring member must start to include the future generation in management decisions to make the transition successful. This typically involves:
- Developing a team approach to making decisions rather than having the older generation continue to make all decisions without any input from the younger generation
- Fostering management skills in the incoming generations
- Training the younger generation in all skills necessary for management of the business
- Put in place an accountable system of communication
- Perform evaluations of all members of management, young and old, so that all of them can address weaknesses and build on strengths.
Handle Control Issues. Controlling decision making and passing that control to a future generation is at the core of succession planning. Additionally, for the success of the business and the success of the succession planning process, quality decisions arrived at by a joint consensus process are preferred over an authoritarian process.
Determine Compensation for all Generations Involved. The younger generation will need protections and adequate compensation while they are not the full owner of the operation. The outgoing generation will need various protections as well so they will not be forced out prematurely; they should be adequately compensated for their labor and receive rental income from land and machinery. Your attorney should help draft documents to facilitate the transfer in your specific situation, such as a first option to purchase, a buy-sell agreement, and a compensation agreement.
Encourage Phased Retirement. Often, it works better for the founder to phase into retirement instead of going from full-time work to complete retirement all at once. This way, future generations can transition into management of the business instead of getting all of this responsibility at once.
Consider a Trust. A well-drafted Trust written by an attorney that is an expert in business succession planning can help allow for situations such as a death or divorce. Your business succession planning attorney can help set up a trust if this is appropriate.
Anticipate Problems. A good business succession plan will anticipate that problems will arise. Maybe someone dies much sooner than anticipated. Maybe someone divorces. Maybe disputes arise among the parties that create division. A well-developed succession plan should anticipate these scenarios.
Have a business attorney evaluate your plan to make sure everything is done properly, according to the law.
Business Succession Lawyer Discusses Options
There are many ways to handle business succession. The following are some options that you can consider:
Sell the business to family or employees. If you have close family members or trusted employees who want to take over the business, you can transfer the business by sale or a gift. You may offer family or employees first right of refusal to buy the business and transfer ownership through stock transfer or direct sale.
Sell your business to an outside party. An outside sale requires having your business properly valued and negotiating for terms that protect your interests as well as that of the purchaser.
Set up a trust. A grantor retained annuity trust (GRAT) is a trust that lets you keep some or all of the business income and a degree of control while you are alive and then leave the business to your beneficiaries after you pass or after an agreed upon period of time.
Set up a business buy-sell agreement (BSA). A BSA is a lifetime contract that transfers ownership of a business when a triggering event occurs, such as the retirement, disability or death of the business owner. The BSA can help establish a value for the business that is used by the IRS for federal estate tax purposes under Internal Revenue Code § 2703.
Business Succession Attorney Answers FAQS
When setting up a business succession plan, you are bound to have questions and concerns. These can be best addressed at your free consultation, but to get started, here ae some answers to questions our clients often ask:
What Happens to a Contract When Business Ownership Changes?
If a business changes in ownership, contracts can be assigned to the new owner as part of the terms of the transfer. It is also possible to write what happens to the contract into the contract when it is made.
Why Do I Need to Coordinate Business Succession and Estate Plans?
Coordinating estate and business succession plans ensures there is enough cash for all your objectives and debts, including both estate and business taxes and debts. You may wish to utilize wills, trusts, life insurance, and retirement plans to meet future goals for you and your family.
What Happens to Family Members Who Will Not Participate in the Business After Succession?
What happens to family members depends on your individual situation and whether you have a spouse or children who wish to and are capable of participating in the business. You may wish to make arrangements for an alternate inheritance or other method of ensuring the rest of your family will be financially independent.
Do I Need an Attorney for Business Succession?
While you may set up a business succession plan on your own, making mistakes can be costly, especially when dealing with sensitive and emotional issues affecting family and transferring or dissolving a business you have built. The help of an attorney who knows both business and tax laws can be invaluable and wind up saving you money.
When you have Birk Law working for you, we will always be available to answer your questions as they arise.
Get Help from Our Business Succession Planning Attorney in Cape Girardeau, MO
When dealing with any business issues, Birk Law Firm is available to help. We are a small, personalized firm, and our clients benefit from the intertwining of Kelvin Birk’s legal and CPA background and experience. We provide well-rounded advice to solve both legal and financial issues and to come up with creative solutions. We use modern technology to deliver legal services in a more efficient and client-focused manner than was previously possible.
We provide personalized and compassionate service. We believe that each client’s matter is the most important matter in the world to them, and we strive to treat it that way. We offer a free consultation to discuss your individual business situation needs and show you what we can do to help. Call us today at 573-332-8585 to get started.
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Why Choose Birk Law?
Birk Law Firm is a small firm by choice that is big on client services. Attorney Kelvin Birk and his team are responsive to their clients’ needs. When we sign on as your law firm, you can count on us for strong legal counsel, from negotiations to settlement to trial.
Our clients benefit from the intertwining of Kelvin Birk’s legal and CPA background and experience. We provide well-rounded advice to solve both legal and financial issues and to come up with creative solutions. We use modern technology to deliver legal services in a more efficient and client-focused manner than was previously possible.
We provide personalized and compassionate service. We believe that each client’s matter is the most important matter in the world to them, and we strive to treat it that way.