Estate Planning and Business Planning Go Hand-in-Hand

By Trip Holmes


I’ve literally spent a career advising family business owners in the middle market on a broad range of questions and challenges, from ways to grow their companies, build a bench of future leaders, and prepare for their exits at retirement through selling the business to family members, employees, or to a buyer not previously known.

Family businesses come in all shapes and sizes. You see a lot of businesses where husbands and wives run the show together—as with my recent clients at Asphalt Enterprises. A particularly high-profile business in North Carolina is one of its original craft breweries dating back to the 1990s, Highland Brewery of Asheville. Highland has been run for a long time by a great father/daughter combo.

Some businesses fail to survive after the death, incapacity, or retirement of the controlling family members. Family business founders must balance the challenges of running any business with those related to family dynamics. Many of these challenges may be addressed by a cohesive approach to transition planning and estate planning, culminating in an exit strategy.

Transition planning is fundamental to planning succession of power and/or ownership of a family business. Estate planning is fundamental to protecting your loved ones, which may be done through taking specific actions and appointing certain successors, custodians, and beneficiaries to protect your legacy and their well-being.

Your business planning and estate planning must go hand-in-hand. Your business attorney, corporate accountant, and business banker should be aligned in both planning and plan execution with your estate attorney, personal accountant, personal banker, and wealth manager/financial advisor.

There are a host of effective estate planning strategies to consider in helping your heirs move the business forward in the event of your passing or retirement. For example, you may want to make your children beneficiaries of a life insurance policy to help them fund a purchase of the company from your estate.  Your estate attorney can help you determine the best strategies for transitioning your business (and its assets) via a will, trust or held within companies (as with an LLC) and minimizing tax risk, as well as risks associated with divorce among your heirs.

It’s also important that you embrace the concept of estate planning equity, as opposed to equality. The point of good planning isn’t to give your heirs equal shares of the estate, but to be fair to them. If a child isn’t suited to running the business, don’t make them a part of the team just to make their estate share equal. Find something more meaningful for that child and keep them out of the way of the business.

Just as more affluent clients and those with special needs consider multiple trust options with their estate attorneys, you’ll want to explore trust structures that offer the best combination of tax benefits, asset protection, and liability protection. Many family business owners opt to create family trusts, which are designed to avoid probate, limit or delay taxation, and protect inherited assets.

Contact Us to Get Started

At Sabre Capital, we value the process of planning for the retirement, incapacity, or death of our business owner clients. We can quarterback your team, ensuring great coordination among your attorneys, bankers, accountants, and financial advisors, ensuring that your business planning and estate planning priorities stay in complete alignment. As your team leader, we will see that your exit transaction meets your goals for retirement, protects your legacy, and positions the new owner—whether family members or not—to keep building your business through taking great care of your employees and customers. Call Sabre Capital today at 919-847-0099 to get started.