Business Succession Planning in Houston, TX
Experienced Lawyers Dedicated to Houston Business Owners & Their Family
Family businesses are the backbone of the American economy. From agriculture to services, technology and manufacturing, family businesses generate an estimated one-half of the U.S. Gross National Product and pay half of all wages earned in this country. But family businesses tend not to outlive their founders. At any given moment, 40 percent of family businesses are in the process of transferring their ownership. Unfortunately, two-thirds of all initial transfers fail. Of the one-third that survives an initial transfer, only one-half will survive a second transfer. It is estimated that by 2040 about $10.4 trillion in family business owner net worth will be transferred. Don’t be part of those statistics. The attorneys at Galligan & Manning can help you preserve the value of your business for your family after death, disability or retirement through business succession planning.
Many family business owners avoid succession planning because it’s difficult to face hard questions like:
- How to choose a successor out of multiple children, employees, or both?
- How to deal with sibling rivalry?
- Are there family members who are competent to carry on the business?
- What if no family member wants to carry on the business?
Failure to do succession planning can lead to unfortunate results. Long time customers may take their business elsewhere if the owner has died, retired, or is incapacitated. Key nonfamily employees could start their own competing business or join a competitor. If a business needs to be liquidated because there is no succession plan, competitors will be able to purchase assets of the business at “fire sale” prices because there is no “good will” or “going concern” value associated with the business. The lost value in the business you worked so hard to create could adversely affect your family after you’re gone. Be proactive and above the research curve that shows that only 25% of private business owners have a business succession plan.
Estate Tax Uncertainty
The only certainty about the federal estate tax is its uncertainty with each change in Congress and the White House. Additionally, some states now impose their own estate taxes, independent of any federal estate taxes.
Accordingly, careful monitoring of the economic, political and legal climate is required. Why? Without proper estate-liquidity planning, your family may have to sell the business just to meet an estate tax cash call.
Coordinating Financial and Estate Plans
If your financial and estate plans are not carefully coordinated, there may not be enough cash to fund your objectives. An appropriately-funded estate plan can meet all of your people-planning objectives and provide liquidity for estate taxes (and business debts). Life insurance, owned in the proper amount, type and manner, may be effectively used to fund such money matters.
If you are a business owner, you need to face the fact that at some time you are going to have to leave your business, either voluntarily or involuntarily as a result of death or incapacity. If the continuity of your business is a priority, our lawyers can help you plan for that eventuality. Call (713) 522-9220 to schedule a complimentary consultation today!