The Entrepreneur’s Corner

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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New GRASP scholarships to aide winners with college debt and costs


Fifteen Henrico County Public Schools students recently received a “2+2” scholarship from the non-profit organization GRASP (GReat Aspirations Scholarship Program, Inc.). In total, the newly created scholarships will help 71 students receive their baccalaureate degrees from a Virginia college or university with lower costs and less student debt.

The scholarship awards each winner $1,000 for his or her first year at a community college to cover the costs not covered by financial aid, such as books and computers. > Read more.

Long & Foster’s Innsbrook, Short Pump offices participate in community service day event


Thousands of real estate agents and employees with Long & Foster Real Estate, including those at the Innsbrook and Short Pump offices in Glen Allen, Virginia, took part in the company’s 20th annual Community Service Day June 7.

The Innsbrook and Short Pump offices chose to volunteer with Housing Families First on June 7. The organization’s mission provides families experiencing homelessness with what they need to move to a stable housing situation. > Read more.

Network of Enterprising Women to award scholarships to local HS grads

Three recent Henrico County high school graduates are among the 10 local students who will receive scholarships from the Network of Enterprising Women during the organization's monthly luncheon July 6. > Read more.

Crime Stoppers’ Crime of the Week – June 26, 2017


Richmond detectives need the public’s help to identify the vehicle and suspects in the shooting incident of a 7-year-old boy and an adult male. Can you help Crime Stoppers solve this latest shooting?

The shooting occurred in the 1500 block of North 22nd Street in the Fairmount neighborhood of the city. Officers arrived and found the two victims near a bus stop. > Read more.

Richmond Montessori School earns VAIS reaccreditation


Richmond Montessori School, an independent Montessori school for children ages 2 to 14, recently earned reaccreditation from the Virginia Association of Independent Schools. The VAIS accreditation program is one of only a few recognized at the national level through the National Association of Independent School's Commission on Accreditation and is also recognized and approved by the Virginia Board of Education through the Virginia Council for Private Education. > Read more.

Henrico Business Bulletin Board

June 2017
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Lewis Ginter Botanical Garden will present Flowers After 5 on Thursday evenings through September. Stroll through the gardens and enjoy live music from Ban Caribe, as well as family activities, wine and beer, dining and shopping. Lawn chairs and blankets are welcome. The Garden partners with the Richmond SPCA on the second and fourth Thursdays of the month for Fidos After 5 where leashed pets are allowed. Admission is $8 to $13 or free for members. For details, visit http://www.lewisginter.org. Full text

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