Business PlanningServices
Succession Planning
Succeeding at Business Succession
Family businesses generate a significant share of private-sector GDP, yet many lack a formal succession plan. While day-to-day operations demand constant attention, failing to prepare for succession can put both the business and heirs at risk.
Two key reasons to plan early are tax management and business continuity. Without a strategy, estate taxes and other costs may force difficult decisions or reduce control over the business’s future. In addition, the absence of a succession plan can lead to a decline in business value following an owner’s death or disability.
A critical first step in succession planning is obtaining an accurate business valuation. Because succession planning involves complex legal and tax considerations, working with qualified professionals is strongly recommended.
This material is for general informational purposes only and is not intended as legal or tax advice. Consult legal and tax professionals regarding your specidic situation. Succession Wealth Planning does not provide qualified business valuations. For a qualified or certified business valuation, consult a properly credentialed appraiser.
Effective business succession typically involves three steps:
Identify your goals – Clarify your financial needs, desired level of involvement, legacy objectives, and values.
Determine the strategy – Tools may include buy-sell agreements, gifting, trusts, or employee ownership structures.
Implement and review – Put the plan in place and revisit it regularly as personal or business circumstances change.
Buy/Sell Funding
Insuring Your Business with a Buy-Sell Agreement
Life insurance often protects families from financial hardship after the loss of a wage earner—but a similar risk exists for small businesses.
A buy-sell agreement helps safeguard a business if a key owner or employee dies or becomes disabled. This legally binding agreement outlines how ownership interests will be transferred, helping maintain continuity, protect revenue, and cover the costs of replacing critical personnel.
Types of Buy-Sell Agreements
Both agreements establish a fair market value for ownership interests.
Cross-Purchase Agreement
In a cross-purchase agreement, key employees or owners agree to buy the ownership interest of a deceased or disabled partner. Each participant owns life insurance policies on the others. This approach is commonly used in smaller businesses with fewer owners.
Stock-Redemption Agreement
With a stock-redemption agreement, the business itself agrees to purchase the ownership interest of a deceased key employee or owner. The remaining owners retain their shares while the company buys back the stock, typically using cash or insurance proceeds.
Buy-sell agreements can be funded in several ways:
Setting aside cash, though funds must remain accessible and maintained over time
Borrowing funds, which may be difficult after the loss of a key employee
Life or disability insurance, which provides liquidity when needed and spreads costs through premium payments
Funding a Buy-Sell Agreement
Insurance costs and availability depend on factors such as age, health, and coverage amount. Policies may include fees, surrender charges, and potential tax implications. Guarantees are subject to the insurer’s financial strength. Insurability should be evaluated before implementing an insurance-based strategy.
This information is for general educational purposes and is not intended as legal or tax advice. Consult qualified professionals regarding your specific situation.
Executive Benefits
Go Beyond Traditional Employee Benefits
Executive benefits are specialized compensation and benefit strategies designed to attract, retain, and reward key leaders. These plans go beyond traditional employee benefits, offering customized solutions that address the unique financial and planning needs of executives and highly compensated employees.
Common executive benefit strategies may include nonqualified deferred compensation plans, supplemental retirement plans, executive life and disability insurance, and performance-based incentives. These arrangements can help executives manage income, plan for retirement, and protect their financial security while aligning their interests with the company’s long-term goals.
For employers, executive benefits can enhance retention, support succession planning, and provide flexible compensation tools without altering broad-based benefit plans. For executives, they offer greater personalization, tax planning opportunities, and long-term financial confidence.
Because executive benefits often involve complex tax, legal, and regulatory considerations, careful plan design and ongoing oversight are essential. Working with experienced advisors can help ensure these strategies remain compliant, effective, and aligned with both corporate objectives and executive goals.
Corporate Retirement Plans
Long-term Business Support
Corporate retirement plans help businesses support their employees’ long-term financial well-being while strengthening recruitment and retention efforts. These plans offer employees a structured way to save for retirement, often with tax advantages for both the employer and participants.
Common corporate retirement plans include 401(k) plans, SIMPLE IRAs, and profit-sharing plans. Each option varies in terms of contribution limits, employer responsibilities, and flexibility, allowing businesses to choose a plan that aligns with their size, goals, and budget.
Beyond compliance, an effective retirement plan strategy focuses on plan design, cost management, employee education, and ongoing administration. When thoughtfully implemented, corporate retirement plans can help improve employee engagement, encourage consistent saving, and support a more financially confident workforce.
Because retirement plans are subject to regulatory and fiduciary requirements, working with experienced professionals can help ensure plans remain compliant, competitive, and aligned with both business objectives and employee needs.
Key Person Plans
Protecting Your Business from the Loss of a Key Person
The loss of a key employee is more than a personal tragedy—it can create serious financial strain for a small business. While no one can prevent the unexpected, businesses can help manage the financial impact through key person insurance.
A key person is any individual whose death or disability would cause a significant financial setback, such as a top revenue producer or someone critical to operations or financing. Key person insurance is typically owned and paid for by the business, with benefits paid to the company if the insured individual dies or becomes disabled. (Death and disability coverage are issued as separate policies.)
When determining coverage, business owners should first estimate the financial impact of losing the key person, then balance the cost of insurance with the company’s budget. Proceeds can be used at the business’s discretion—to cover operating expenses, repay debt, or recruit and train a replacement.
Businesses routinely insure physical assets, yet their most valuable asset is often their people. Key person insurance helps protect the business’s financial stability when it matters most.
Insurance costs and availability depend on factors such as age, health, and coverage amount. Policies may include fees, surrender charges, and potential tax implications. Guarantees depend on the financial strength of the issuing insurer.
This material is for general informational purposes only and is not intended as legal or tax advice. Please consult qualified professionals regarding your specific situation.