Henrico County VA

The Entrepreneur’s Corner

Solidifying the long-term future of your business
Here’s an important question for busy business owners – what’s next for your company? Not just tomorrow or even in the months ahead, but when the time comes that you or one of your key employees retires or leaves the organization unexpectedly?

At a time when many baby boomers are thinking about retirement, those who own a business need to plan not just for their life after work, but for the future of the firm they’ve committed so much of their lives to. In a small- or mid-sized business, the owner and perhaps other key personnel play such a vital role that special planning is required to prepare for circumstances in which any of these individuals is no longer part of the organization. If your business doesn’t have a succession plan in place, it is an issue that needs prompt attention.

There are a number of questions to consider in helping prepare for the period of transition a company inevitably faces. They include:

• Who is in line to follow the principals of the firm? The most fundamental aspect of a succession plan is to have a replacement (or replacements) in line. In many cases, a family business will move from one generation to the next. In other situations, a trusted employee or group of employees may need to be groomed and prepared to assume control of the company in the future.

• How will control of the business be transferred? Once successors are identified, there are a variety of ways that control of the business can be transferred to them. Among the options are an outright sale to the new owner – either in a one-time transaction or an installment sale – or the use of a trust vehicle, such as a grantor retained annuity trust (GRAT) or a grantor retained unitrust (GRUT). Those are irrevocable trusts to which you transfer appreciating assets while retaining an income payment for a set period of time. At either the end of the payment period or your death, the assets in the trust pass to the other trust beneficiaries (the remainder beneficiaries). The value of the retained income is subtracted from the value of the property transferred to the trust (i.e., a share of the business), so if you live beyond the specified income period, the business may be transferred to the next generation at a reduced value for estate or gift tax purposes.

An important consideration in the decision-making process is potential tax ramifications, particularly for the seller. There are tools available to help reduce the potential impact of capital gains, estate and gift taxes when a sale occurs. Good planning plays a critical role in making sure that both the seller and the buyer achieve the most favorable results.

• What forms of protection are in place in case an unexpected event occurs? The need to implement a succession plan can sometimes strike without notice. Businesses that involve partners or likely successors, for example, may benefit from having a buy-sell agreement in place.

A buy-sell agreement lets you keep control of your interest until the occurrence of an event that the agreement specifies, such as your retirement, disability, or death. Other events, such as divorce, also can be included as triggering events under a buy-sell agreement. When the triggering event occurs, the buyer is obligated to buy your interest from you or your estate at the fair market value. The buyer can be a person, a group (such as co-owners), or the business itself. Price and sale terms are prearranged, which eliminates the need for a fire sale if you become ill or when you die. Remember, however, that you are bound under a buy-sell agreement.

Business succession is a complex matter. It involves close work with a financial advisor, tax specialist and an attorney experienced in these types of matters to structure a solution that is most suitable for your business and potential successors.

Justin R. Martin is an associate financial advisor with Ameriprise Financial Services, Inc. Contact him at (804) 320-3105 or .(JavaScript must be enabled to view this email address).
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Community

Short Pump Rotary volunteers help with rebuild, repair


On June 13, the Short Pump Rotary Club partnered with Schnabel Engineering for a day of volunteer work with Rebuilding Together Richmond. Team members (among them [from left] Chris Rufe, Melissa Abraham, Rick Naschold, and Micky Ogburn) completed a variety of repairs and home improvements ranging from painting and landscaping to cabinet installation and fence building.

“It was a privilege to be involved in this project," said club president Melissa Abraham. "The homeowner kept thanking the volunteers, but I think all of us would agree we are the ones who actually benefited. It was an opportunity to help a community member, fellowship with great people and improve our handyman skills." > Read more.

‘Proof of Heaven’ coming to Glen Allen


Dr. Even Alexander, a New York Times best-selling author who has been featured on Oprah and Dr. Oz, was in town last week to promote his June 27 talk, "Proof of Heaven," at Glen Allen High School.

Alexander (pictured, at right, while Unity of Bon Air church member Harry Simmons interviews him) has written about what he considers to be his journey through the afterlife.

Tickets to this month's event are $25 and will support the new Bon Secours Hospice House being built later this year. > Read more.
Entertainment

A triumphant return

Pixar’s ‘Inside Out’ is a magnificent, emotional ride

Explaining the nuts and bolts of Pixar’s new, exciting, innovative Inside Out – really digging into the film’s shape-and-color explanation of the human mind – would take up the entirety of this review. And probably three or four more (if movies had instruction manuals, Inside Out’s would be the size and general poundage of a cinder block).

It’s a complicated movie. So here’s the gist, in as simply-put terms can be. > Read more.






 

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Calendar

The movie “How to Train Your Dragon 2” (PG) will play at 10 a.m. and 7 p.m. July 10 and at 2 p.m. and 7 p.m. July 11 at Henrico… Full text

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