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Private Wealth

Business Transition Planning

When is the right time to step down? And what's the best way to do it? Start drafting a blueprint now for sustaining your business beyond your time there. We're here to help.

Business owner researching business transition planning and succession planning options.

Make a Plan to Transfer Business Ownership

There are alternatives to simply selling your business. Ensure the continuity of your business with the smallest possible tax consequences. Discover the many options you have for transferring your business ownership with minimum financial loss.

  • Transferring portions of your business as gifts will allow you to transfer a significant portion of your business free from gift tax. However, the disadvantage of relying solely on this transfer method is the amount of time necessary to gift the entire estate. Most tax years, you can only gift about $15,000 without taxation.

  • This binding legal contract prearranges the price and sale terms of your business interest between you and a willing buyer. You keep control of your interest until the occurrence of a specified event, such as your retirement, disability, death or divorce. When the triggering event occurs, the buyer is obligated to buy your interest from you or your estate at full market value.

  • A private annuity is a complete business transfer in exchange for payments to you until your death. You sell the business to the buyer and they make an unsecured promise to make periodic payments to you for the rest of your life (a single life annuity) or for your life and the life of a second person (a joint and survivor annuity). This is a sale and not a gift, allowing you to remove assets from your estate without gift tax or estate tax.

  • This tool transfers the business to the buyer in exchange for a promissory note. The buyer must make a series of payments to you under that note. At your death, the remaining payments will be canceled. Similar to private annuities, SCINs provide a lifetime income stream and avoidance of gift tax and estate tax. Unlike private annuities, SCINs give you a security interest in the transferred business.

  • In the event you're passing your business to a family member, you can first establish a partnership with both general and limited partnership interests, then transfer the business to this partnership. You retain the general partnership interest for yourself, keeping control over day-to-day operations. Over time, you gift the limited partnership interest to family members. The gifts may be eligible for valuation discounts as a minority interest and for lack of marketability. If so, you may successfully transfer much of your business to your heirs at significant transfer tax savings.

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