Achieving Your Succession & Estate Planning Goals Via Recapitalization

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28 Dec Achieving Your Succession & Estate Planning Goals Via Recapitalization

Like many business owners, you probably have much of your wealth tied up in your company. And this fact may be creating a conflict between the desire to transfer ownership to the next generation and the desire to stay in control. One potential solution: recapitalize your business into voting and nonvoting shares.

From an estate planning perspective, the sooner you transfer ownership of your business to the next generation, the better. That way, future appreciation and income are removed from your estate and avoid gift and estate taxes.

Recapitalization can allow you to reap the tax benefits of gifting ownership interests without your having to cede control of the business to your children.

For example, you might retain 10 percent of the company in the form of a voting interest and allocate the remaining 90 percent among your children in the form of nonvoting shares. You continue to manage the business while removing a large portion of its value from your taxable estate.

To discuss this strategy further, please give us a call. We can help you explore recapitalization as well as other ways to refine your succession plan and estate plan.

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