Business Succession Planning
A business succession plan is a necessary part of your overall global estate plan if you are in business.
This may take the form of a life policy taken out by the key person in the business, whether the business is conducted as s sole trader, partnership, trust or company. The proceeds of the life policy is often incorporated in a succession agreement to fund the buy out of the key person’s interest used in the business by that person’s successor or partners in the business.
Commonly used business succession tools include:
- buy and sell agreements between partners;
- shareholder agreements incorporating put and call options;
- using capital gains tax (CGT) small business concessions to restructure the business as a pre retirement plan for the key employee and as a means of providing the new owners with a structure consistent with their goals for the business.
