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This section provides you with commonly asked
questions and answers. To quickly find the information you are looking
for, simply click on a question below, and you will be directed
to the answer.
Q) When should I begin formulating
a succession plan?
Q)
How do I ensure the continuance of my family’s business?
Q)
Who should I choose as my businesses’ successor, a relative
or an outsider?
Q)
What will happen to my business if I don’t engage in succession
planning?
Q)
If I sell my business, do I still need a succession plan?
Q)
How often should I revise my succession plan?
Q)
How can I incorporate my philanthropic goals into my succession
plan?
Q)
How do I encourage my descendants to give to charities in the future?
Q) What are the most effective methods of
providing financial support to a cause or charity that I care about?
Q) How can I use life insurance to advance my philanthropic
goals?
Q) What should I expect when working with
The Succession Group?
Q) When
planning for the future of my valuable art collection, how can I
address the need for liquidity and taxation?
Q) How can I determine
whether I want my family to retain control of my valuable art collection?
Q) When should I begin formulating a succession plan?
A)
There is no such thing as planning too far ahead when charting a
course for your family or business. Similarly, the consequences
attached to procrastination can often be avoided when you employ
a sensible strategy early on. Therefore, now is the time to start!
Q) How do I ensure the continuance of my
family’s business?
A)
While no one can guarantee the continuance of a family business,
careful and timely succession planning provides the greatest assurance
that your family’s business will continue through the generations.
Your business succession plan will be as unique as your family;
however, certain elements must be included, such as: identification
of a successor, a management transfer plan, and addressing liquidity
needs, often with the use of life insurance.
Q) Who should I choose as my businesses’
successor, a relative or an outsider?
A) Most family businesses – about
85% – choose family members as successors. However, of those
family businesses that have hired people outside the family, more
than 70% rate the experience as “extremely successful”
or “very successful.” [1]
Q) What will happen to my business if I
don’t engage in succession planning?
A) Failure to embrace a succession plan
can have a number of consequences. For instance, the need to pay
vendors or taxes may require selling the family business, its holdings,
or personal property to meet cash requirements. In addition, the
absence of careful wealth and business succession planning can trigger
the eruption of a power struggle or dissent that can tear families
apart. Failure to plan ahead can also cause your own values to be
violated or dismissed. Only a carefully planned and implemented
succession program can preserve your priorities.
Q) If I sell my business, do I still need
a succession plan?
A) Yes. The sale of a business raises new
issues that need to be addressed by succession planning, including
disposition of assets, impact of estate taxes, and meeting philanthropic
or charitable goals.
Q) How often should I revise my succession
plan?
A) Probably more than you think! Because
much of a family business’ succession plan is based on the
value of the company, it is important to periodically – at
least every five years – review your family’s succession
plan, especially in the context of changes in its valuation. In
addition, succession plans should be reviewed whenever major events
occur within a family or business, such as the marriage or divorce
of a principal; death of a principal or successor; or rapid growth
or downsizing of the business.
Q) How can I incorporate my philanthropic
goals into my succession plan?
A) First, identify the importance of philanthropy
and charitable giving to you and your family. Next, communicate
your priorities with your family and those in your business who
may be affected by your succession plan. Then, to address your philanthropic
goals, speak to your professional succession planning advisors and
explore the most effective tools available, such as life insurance
(see above).
Q) How do I encourage my descendants to
give to charities in the future?
A) Many families and individuals establish
charitable family foundations that advance their long-term philanthropic
goals. In addition, creating a charitable culture at your home and
business – through giving and open communication about philanthropy
– will help imbue your values to succeeding generations, as
well as to your business associates.
Q) What are the most effective methods
of providing financial support to a cause or charity that I care
about?
A) One of the most effective ways to support
a charitable organization is through planned giving, often utilizing
a charitable remainder trust or life insurance contract that names
the charitable organization as the beneficiary.
Q) How can I use life insurance to advance my
philanthropic goals?
A) Life insurance can be used in a number
of ways to help families direct assets to those causes they care
about most. For example, a life insurance contract can name a charitable
organization as the owner and beneficiary. With this approach, the
charitable organization typically receives a much larger gift than
the cost of the life insurance contract.
Q) What should I expect when working with
The Succession Group?
A) Expect us
to listen. By asking questions and listening, we will identify the
unique and complex situation you face. Then, often in concert with
other professionals, we will formulate a cost effective, comprehensive
plan to meet your needs – in most cases, utilizing insurance
strategies as a principal component of our planning. In addition,
expect the utmost of professionalism, sophistication, and the privacy
and discretion commensurate with an advisor to an elite, affluent
clientele.
Q) When planning
for the future of my valuable art collection, how can I address
the need for liquidity and taxation?
A)
One of the most complex components of succession planning for valuable
art is how to address taxation associated with the maintenance and
transfer or sale of a collection. Perhaps more than in any other
area, an effective team of professional advisors can develop and
implement a plan to deal with these issues. An experienced team
of professional advisors may recommend gifting art, using life insurance,
or creating trusts or family foundations in its plan.
Q)
How can I determine whether I want my family to retain control of
my valuable art collection?
A)
Controlling a collection is different from owning
a collection.
An effective team of professional advisors can recommend a number
of succession planning solutions that specifically address the subtle,
but important differences between a collectors intentions to pass
ownership of their art along to their children rather than have
the families maintain control of the collections. For example, using
trusts and family foundations may allow a collector and his or her
family to maintain control of a collection without owning the artwork.
[1]
“American Family Business Survey.” The George and Robin
Raymond Family Business Institute. 2003.
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