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Is Business Succession Planning a Question of Fairness?

It’s very likely that a business could turn out to be the largest asset held within a family. But fairness of how to deal with this in terms of succession planning can arise as an issue if all family members are not involved in the conversation in one way or another. Especially in the event that the business is sold, non-members could be unhappy if they feel as though their distribution is smaller. There are also challenges if full and equal distribution is made because this can place a burden on members active within the business.shutterstock_312773633

One way to handle this situation and to even the playing field is to use life insurance allowing for a gradual buy out of non-members. And this also eliminates concerns associated with managing equal distributions. One of the most important ways to handle this challenge is to sit down with all family members and discuss the potential future of the business.

A business owner could be under the impression that one or more of his children or other relatives are interested in continuing on with the business. But a conversation brings this issue front and center and gives clarity to any concerns. In addition to hosting the initial conversation about how to handle business succession planning, it’s also important for the business to be valued accurately before any distributions are made considering depreciating factors like the lack of marketability.   Contact us today to learn more about business succession planning.

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What Role Does the Executor Play?

When a last will and testament is created, an executor begins to play an important role in carrying them out. During and after probate, an executor provides critical functions. This is why you should carefully consider who you will select as your executor.shutterstock_257815480

An executor is bound by fiduciary duty, meaning that he or she is required to adhere to high standards when administering the estate. During the administration phase, an executor will gather information, pay debts, and deal with expenses and taxes associated with closing the estate. Since the executor manages important responsibilities like filing tax returns and handling distributions from the estate.

Some of the factors that might preclude an individual from serving as an executor include history of felony convictions, being a non-resident, being found unsuitable by the judge at his or her discretion, or the naming of a corporation not authorized to serve as a fiduciary.

Be sure to speak with your estate planning specialist about how to narrow down your search for an executor. Understanding the role this person plays in managing your estate is essential for success in the long term.