Business Planning

Serving Many Communities Including Albany and New York City

The Business Owner Planning (Business Succession Planning) Department works to develop a plan with business owners to ensure a smooth transition and continuation of a company upon the death, disability, retirement or sale of a business owner’s company. With a focus on asset protection and business preservation, our key services in Business Owner Planning include:

  1. Selection and Formation of the most Suitable Entity for your Business: If you require assistance in selecting or forming a business entity that best suits your needs, whether that entity be a Corporation, Partnership, or Limited Liability Company, we can advise you and provide the services necessary to form the appropriate entity for your business.

  2. Drafting and Structuring an Operating/Partnership/Shareholders Agreement tailored to your Business: If your business needs an Operating, Partnership or Shareholders Agreement that is tailored to meet the specific needs of your business, then we can work with you to develop, draft, and execute the appropriate agreement to suit the needs of your business.

  3. Drafting and Negotiating Buy-Sell Agreements: If your business needs a buy-sell agreement to set forth the procedures upon the death, disability, or retirement of an owner, in order to provide for a smooth transition of the business in all phases to the remaining or new owner(s), than we can counsel, negotiate, and draft a buy-sell agreement that meets your business’ needs.

  4. Advice and Consultation on your Business’ Existing Structure and Plan: Do you own a business and have already formed an entity, or executed an operating agreement or buy-sell agreement, but you are not sure whether the plan that you put in action is appropriate for your business’ needs? If so, we can review and consult with you regarding your plan, and change the existing plan to meet the needs of your business if necessary. If you are a Business Owner and you have questions regarding your business, call us to schedule an appointment to get the answers you need.

Types of Services

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  • Selection and Formation of Suitable Entity for a Company (Limited Liability Company, Partnership, or Corporation);
  • Drafting or Comprehensive Review, Analysis, and Updating of existing Buy-Sell Agreements;
  • Drafting or Comprehensive Review, Analysis and Updating of existing Operating, Partnership, or Shareholders Agreement;
  • Implementation, Review, and Updating of Business Succession Plans;
  • Drafting and Implementation of Note Sale in the Transfer of a Company;
  • Transfers of ownership interests in a Company to an Intentionally Defective Grantor Trust as part of the Implementation of a Wealth Preservation Plan;
  • Consult and/or Review the funding of a Buy-Sell Agreement, including Analysis of the proper Insurance Coverage (Life, Disability, Key Man or other insurance coverage) for Business Owners;
  • Consult and/or Review Tax and Financial Planning of the Company.

FAQs

  • How can the use of an Intentionally Defective Grantor Trust help in the Transfer of a Family Business and Wealth to my Children?
    • An Intentionally Defective Grantor Trust (“IDGT”) is a Trust that is treated as a Grantor Trust for income tax purposes, but is treated as a completed transfer for gift and estate tax purposes. The Grantor Trust status for income tax purposes means that the Trust will be taxed to the creator of the Trust even though the assets are owned by the IDGT. This removes the appreciation of the asset from your estate and allows for a tax free gift to your children in the amount of the income tax paid on the IDGT each year. The IDGT is growing income tax free while your wealth is decreasing in the amount of the income taxes paid each year, which results in a decrease of your taxable estate for estate and gift tax purposes and allows for increased wealth to be transferred to your children in the amount of the income taxes paid by you each year. This result can be maximized through the use of a note sale of the business interest and a valuation of the business interest transferred to the IDGT.
  • How does a properly drafted Operating or Partnership or Shareholders Agreement improve my Business?
    • This agreement will govern the rights, duties, and ownership interests of the owners. This agreement will allow the owners to determine how the business will be managed, what percentage of a vote will be required for the business to take certain action, and what authority each owner has to take certain action on behalf of the business in their own discretion. This agreement will govern how the business will operate and what will result in the termination of the business. This agreement will also determine the type of activities engaged in by the business.
  • How does proper planning protect the Employees of the Business?
    • Employees of a closely held business are protected by the smooth transition of a business to future owners because it should increase the likelihood that they will keep their jobs, current wages and position in the business. For closely held businesses, the employees often are the key to their success that provided the owners with the ability to create the wealth they have accumulated and has resulted in a close relationship between the owners and their employees. By planning ahead of time and restricting who can purchase the business and the process of purchasing a withdrawing owner’s interest, it is more likely that the remaining or new owners will keep the existing business plan and make few if any changes to the remaining employees of the business. This should result in a feeling of job security for the employees that will benefit the owners through increased productivity.
  • How does proper planning protect the Remaining Owners?
    • The remaining owners are protected with proper planning by preventing unwanted third parties (such as spouses, children …) from becoming owners of the business, avoid transfers that could potentially result in the loss of the entity’s legal status, having a method in place to purchase the withdrawing owner’s interest, avoid disputes among the owners, and provide for a smooth transition of the business to the remaining owners.
  • How does proper planning protect the Selling Owner?
    • Depending on the situation, proper planning can result in the smooth transition of a business to the next generation, the possibility of reducing the value of the interest for transfer tax purposes (income, estate and gift), set the value and provide the funding for the purchase of the ownership interest in closely held businesses, and avoid disputes by having predetermined independent mechanisms to determine the process when there is a withdrawing owner.
  • How does the type of Entity Formed Effect my Business?
    • Selecting and forming the proper entity for your business can reduce the business and the owners income tax liability, provide the owners with asset protection, provide owners with limited liability for actions of the business, provide the business with limited liability for actions of the owners, and allow for flexibility and governance in the operation of the business.
  • Why is it important to do Business Owner Planning (Business Succession Planning)?
    • Having the proper business succession plan in place will protect the selling owner, the remaining owners, their families, and their employees and the employees’ families from the business ceasing to exist or changing upon the occurrence of an uncertain event in the future.