Family Business Succession for Your Farm or Small Business
A family business is not handed down as easily as a home or an heirloom. The fact is, a successful family business transfer takes careful planning. Without a sound family business succession plan, your family-owned business may struggle to survive beyond your generation.
Estate taxes, capital gains taxes, income taxes, gift taxes – they can all take a big toll on your business assets, creating cash-flow issues for your heirs.
Farm Bureau can help you develop a strategy that helps preserve business assets. Find a local agent to get started today.
How can you help ensure your farm or small business remains in the family? An effective family business succession plan offers you a great opportunity to maximize the value of your business assets, minimize taxes, and continue the privileges of and potential for family business ownership.
Family Business Succession Advantages for Parents
- Ensures the business will remain in the family
- Preserves goodwill among the children, since heirs will be treated fairly
- Can increase the likelihood of a more profitable business and more dependable retirement income for you
Family Business Succession Advantages for Business Heir (Active Child)
- Can own and operate the family business without interference from inactive or non-business heirs
- If the business owner has a buyout in mind, the business heir can explore funding options during the planning process. Such options include: a bank loan, installment contract, sinking fund or life insurance
- Succession plan can be structured to give business heir the opportunity to purchase shares of the business from siblings not involved in the business
- Investments and improvements made to the business will belong to the business heir in the future, eliminating the need to "buy them a second time"
Advantages for Non-business Heirs (Non-active Children)
- Their inheritance will not be dependent on the business heir's success with the business
- Because non-business heirs get a step-up in basis on inherited business assets, they'll receive buyout proceeds income tax-free from the business heir
- Can help maintain a positive relationship among all children
Talk with a Farm Bureau agent and your advisers about establishing a family business succession plan for your family-owned business or farm operation today.
