What should I know about Succession Planning, Corporate Risk Management Practices?

There are a variety of rules and regulations to understand about Succession Planning and Corporate Risk Management.  Generally, you want to work with a team of bankers, lawyers, accountants, insurance and investment advisors.  For example, it may make sense for the Business to take out a life or disability insurance policy for key employees.  This will help you use the funds to acquire an interim or turnaround employee to assist during the key employee’s absence.

It may make sense for you to create a trust and transfer your stock or equity interest to the trust and retain a life time interest in the business or income stream from the business.  It may make sense to avoid signing a personal guarantee on a commercial loan to avoid ruining a corporate risk management strategy.  It may make sense for you to cash out and sell your business four to five years before your planned retirement date to try to get a higher multiple on the sale price or EBITA with a lower tax liability.

You may be able to create an IRA or an ERISA covered plan that helps protect your assets from judgment creditors.  You may be able to take advantage of the Homestead exemption for your state to avoid a lien or judgment that has been entered against you or your business.  It may make sense for you to separate different businesses or assets in multiple corporations or LLCs to reduce the risks associated with a high risk or high liability business or venture.  However, you really need a good advisor at the helm that can keep the overall strategy in mind to make sure that the plans and strategies created by different advisors are working together to protect you and your assets.

If you have any concerns or questions about succession planning and corporate risk management practices, then please feel free to contact us.

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