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Part 3: Making updates as business or family needs change

A business is not static. A merger with another company or increase in value as business booms or land prices skyrocket should be a time to review a succession plan.

While a child who is a part of the company may have been at the table, other siblings may not understand what is happening. With valuation increases it may be important to analyze whether you might owe estate and gift tax.

As the last part of our series on business succession planning, this blog discusses the importance of updates to an estate plan. This goes to the point we made in the first part of this series: succession planning is an ongoing process rather than a one-time exercise.

Adjust as situations change

It’s not just your business that changes over the years; the tax code goes through revisions (the current $5.45 million individual exemption could be lowered) or your family dynamics might change. An out-of-date business succession plan may no longer accomplish your goals. One child may be saddled with the family enterprise even though he or she had other dreams. A surprise tax burden could close a farm or ranch if assets have to be liquidated to pay the bill.

Once you have worked with an estate planning attorney on the initial business succession strategy, a subsequent call and update usually takes less time. Luckily, it is not necessary to reinvent the wheel each time that changes are needed.

Having a conversation about how a business move might affect the transition of the company might also factor into your ultimate decision. Meetings between family members and any advisory team members can be used to ease a transition and make revisions when necessary.

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