Are you looking for alternative strategies for selling your Ohio business? For many Ohio entrepreneurs, their business is the manifestation of years of hard work; a financial asset, a source of pride, and a family legacy. However, when estate planning considerations arise, the characteristics that make your business valuable can introduce uncertainties. Should you sell your business to streamline your estate, create a succession plan, or maintain joint ownership with an adult child? These decisions have far-reaching implications for your financial future and your family’s legacy. It helps to explore other possibilities before making a decision that might have unintended consequences. Read on as we discuss estate planning for business owners in Ohio. We look at alternative strategies for selling your business, all designed to achieve a more secure estate for you and your loved ones.

Why Estate Planning for Business Owners Is Crucial

Contrary to popular belief, estate planning is not just about determining who inherits your assets after you pass away. It’s about securing your retirement, achieving your life goals, and ensuring your business thrives according to your wishes. For entrepreneurs, this means addressing potential estate tax, protecting business interests, and providing for their families.

A well-structured estate plan can minimize taxes and other expenses to preserve more of their hard-earned wealth for future generations. It also prevents conflicts among heirs and gives clear instructions for business management or sales.

Estate Planning Issues to Consider Before Selling Your Business

Before selling your business, bear in mind the following estate planning matters that could impact the transaction and your financial future:

• Assess your business’s value. In this case, a professional business valuation is necessary as it provides a realistic assessment of your company’s worth. Valuations can be complex, involving various methods like income-based, market-based, and asset-based approaches. Work with a professional appraiser to determine the business’s sale price, potential tax implications, and distribution of assets among heirs.
• Consider the structure of the sale. Different structures can have different tax consequences. For example, an asset sale may result in higher taxes than a stock sale. Consult with a financial advisor or estate planning attorney to understand the implications of each option.
• Think about the timing of the sale. Selling your business during a peak market period can maximize the sale price. However, reflect on personal factors such as your health and retirement plans. An estate planning attorney can help you handle these issues and ensure your sale aligns with your overall estate plan.

A Spectrum of Estate Planning Options

Selling your business can unlock substantial financial resources. However, it also severs emotional and professional ties. Fortunately, other estate planning strategies can simplify your estate without requiring a complete exit:

Succession Planning

Instead of a clean break, how about nurturing a successor to take over the reins? It could be a family member with a passion for the business or a trusted employee with the skills and experience to lead. Succession planning allows for a gradual transition of ownership and management responsibilities to ensure the business’s legacy continues under your chosen successor’s guidance.

In some cases, passing the company to the next generation may not be feasible. Your heirs may lack interest or capability in managing the business, or there may be no suitable successor. In such scenarios, selling the company outright might be the best option.

It can provide liquidity that lets you diversify your investments and secure your financial future. Selling also eliminates the risk and responsibility associated with ongoing business operations. Brenden Kelley Law, a leading Ohio estate planning firm, can guide you through the legalities of creating a succession plan that benefits you and your chosen successor.

Joint Ownership

Another option is to bring in a co-owner, perhaps a child or another family member. This approach allows you to share the responsibilities of running the business while introducing a fresh perspective that can help it thrive.

However, joint ownership requires legal structuring to ensure clear lines of authority and avert future conflicts. A seasoned estate planning attorney at Brenden Kelley Law can draft a co-ownership agreement that protects your interests and sets the stage for a smooth transition.

Establish a Grantor Retained Annuity Trust (GRAT)

A GRAT is an estate planning tool where you, the grantor, transfer your assets into a trust to retain the right to receive annual annuities for a specified term. A GRAT can be beneficial because it enables you to transfer business interests to heirs while retaining an income stream for a set period. Doing so may reduce the taxable gift amount transferred to your beneficiaries and possibly lower your overall estate tax liability.

Set Up a Family Limited Partnership (FLP)

You can simplify your estate and possibly reduce tax burdens by establishing a Family Limited Partnership (FLP). An FLP lets you transfer business interests to family members while retaining control over the business operations.

The structure can provide tax benefits and help ensure the continued success of the business. Because FLPs can be complicated to set up and maintain, consult with an estate lawyer to determine if it’s an option that aligns with your circumstances.

Get Professional Guidance at Brenden Kelley Law 

Selling your business may seem like the straightforward solution to simplifying your estate, yet it doesn’t have to be the only option. The alternative strategies discussed here can help preserve your business’s legacy and ensure your loved ones are taken care of. However, you need expert assistance.

Estate planning attorneys at Brenden Kelley Law can provide the guidance you need to make informed decisions. We will:

• Work toward understanding your goals to develop a customized estate plan that simplifies your business’s role within your estate.
• Be mindful of potential tax implications associated with your chosen estate planning for business owners’ strategy, and connect you with a tax advisor for further guidance.
• Enable a seamless transition. Whether you sell, transfer ownership, or maintain co-ownership, our legal expertise ensures a smooth and legally sound transition for your business and beneficiaries.

Call us at (216) 644-3359 or complete our Online Contact Form to schedule a consultation and discuss various estate planning options that will refine your business’s role in your legacy.