by Adriane B. Miller
Small, closely-held companies must confront this thorny issue.
John R. Beever doesn’t know how his business would function if he fell out of an airplane today–but he’s prodding his family and key managers to discuss it.
Mr. Beever, 59, runs family-owned John Dittmar & Sons, Inc., a Baltimore custom woodwork manufacturer that his great-grandfather started in 1876.
But discussing the future raises difficult questions. Mr. Beever’s two sons, Geoffrey and John C. are in their 30s and vice presidents of the firm. Both are enthusiastic about the business, both are bright. Both want to succeed their father. More…
Succession Planning: Surviving the Second Generation
by Nancy F. Blumberg, CPA
Simon Master & Sidlow, P.A.
As founder and CEO of a prosperous small business you undoubtedly have a keen interest in ensuring its continued viability upon your retirement, disability or death.However, more the 50% of family businesses do not survive beyond the second generation.Consequently, it is important for you to formulate a succession plan that will keep the business going and ensure the security of your heirs.Even if your withdrawal from active involvement in the business is not in the immediate future, formulating a tentative succession plan now is smart business.
If you have younger family members who have both a desire and the necessary expertise to operate the business in your absence, there are several options open to you.The tax law encourages you to begin giving (“gifting”) common stock in the business to family members as soon as possible.The annual exclusion can result in all estate and gift tax liability being eliminated on transfers of up to $10,000 worth of stock each year to each donee ($20,000 per donee if you are married and gift-splitting is elected).If your business is not already incorporated, you can incorporate it tax-free in order to implement the gift program. More…