A Case Study in Succession Planning
- Tuesday, 19 August 2014 18:06
- Aronson LLC
- 284 Views
SHOULD THE SONS START A NEW BUSINESS ENTITY?
Succession planning for a closely-held business has many potential pitfalls, including:
- Reluctance of the founder to relinquish control
- Absence of family members ready to run the business
- Squabbles over control of the business
- Concerns about how to value the business and equalize distributions of the founder’s estate.
- Income and gift tax liability
- Consider the following hypothetical case.
Dad, the family patriarch, has a wholly-owned corporation (“POP, Inc.”) that has operated a family business for 40 years. Recently, however, regulatory authorities have been particularly critical of certain aspects of the “old school” way the business is being conducted, asserting regulatory infractions
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