Passing the business to the kids is a common practice for small business owners. This process can be more complicated and challenging than the sale of the company to a stranger.
Fortunately, this is a foreseeable event that can be planned for long in advance. Many financial and emotional factors need to be considered and addressed for a succession plan to be successful.
Finding the balance between the new generation and the old requires many honest evaluations and candid discussions. Additionally, it requires firm and clear mechanisms to ensure the proper and timely transfer of the business.
Large family businesses have relied upon the large consulting firms to guide them through the succession planning process. Thornwood Financial works with small businesses to facilitate a smooth transition. It’s never too soon to start the succession planning process to ensure you get the most benefit out of your strategy. Starting before the kids work in the business is not unheard of. Any plan established for the transfer of the business to the kids can be modified to benefit the owner should the kids not wish to take over.
IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax concepts, therefore you should consult your legal or tax professional regarding the specifics of your particular situation.
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