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COVID-19 NOTICE:

After careful review of the COVID-19 environment, the law firm of Chayet & Danzo, LLC, will be conducting in-person appointments in our offices on a limited basis and with strict social distancing protocols.

During this time, our team will continue to diligently work remotely on all client matters and will maintain communication through email, telephone, and video conferencing. Our main office number, (303) 355-8500 will continue to be answered during our normal business hours of 8:00 a.m. to 5 p.m. Monday – Thursday and 8:00 a.m. to 4:00 p.m. on Fridays.

This decision to have limited appointments in-office while following strict social distancing protocols is in the best interest and health of our team, clients and community.

We will continue accepting new clients during this period as well as fully servicing our existing clients.

We wish you and your family continued health during these unique and challenging times.

Compassion, talent and dedication:
guiding colorado families and Their Trusted Advisors During Times of Need

Business succession considerations for Colorado business owners

| Apr 13, 2018 | Estate Administration & Probate |

At our law firm, we provide estate planning and asset protection advice to clients in a wide variety of personal and business circumstances. When a client is a business owner, establishing a carefully thought out business succession plan is a key part of the process. Creating such a plan earlier, rather than later, can be a bonus, but at any stage of a business, succession planning can begin.

A young entrepreneur can be so immersed in running a new business that he or she may not yet consider what would happen to the business if he or she suddenly became unexpectedly seriously ill, disabled or even deceased. A family business owner may not have considered how to protect his or her spouse and children financially if presented with any of these scenarios.

As a business owner approaches the golden years, what about retirement? How will his or her retirement be financed and what will happen to the business? 

Solid succession planning will prevent stress and anxiety in an emergency as well as put the business and its owners and employees in a secure place for transition. 

Relevant factors 

Some of the factors that can influence exit strategy and succession choices: 

  • Owner wishes such as whether to have an option to leave the business any time or to retire, to run the business until disability or death, to transfer ownership to a family member or trusted person, to close down the business, to sell to the highest bidder or to do something else

  • The structure of the business such as, for example, sole proprietorship, partnership, limited liability company, corporation or another

  • The nature of the business; for example, a medical or dental practice is different than a family farm, an industrial or manufacturing business, a service provider, a consulting firm, a restaurant or a retail store

  • Willingness to allow transfer, sale or management of a family business to or by people outside of the family

  • Availability and willingness of a suitable family member, trusted executive or employee to take over

  • Number, nature and preferences of co-owners, partners, shareholders or members

  • Wishes and needs of other family members

  • Financial needs of family members

  • Retirement or other financial needs of owner

  • Tax ramifications

  • Financial health of the business

  • Role of the owner’s particular skill or personal characteristics in business success

  • And others 

Legal options 

Approaches to business succession or exit strategy may include: 

  • Wind down the business by ceasing to do business and selling off assets

  • Create a trust that holds business assets providing income to the owner and eventual ownership or income to beneficiaries

  • Negotiate a buy-sell agreement that predetermines the sale of the business to a particular person or entity upon certain events; for example, other partners, co-owners, a relative or the business entity itself may agree to buy the owner’s interest upon disability, retirement, divorce or death

  • Sell the business with terms beneficial to the owner, business and family

  • Sell for an annuity or other financial arrangement that will provide ongoing payments to the selling owner

  • Merge with another commercial entity

  • Make contractual arrangements with successors, partners and other necessary parties

  • Arrange charitable giving to lessen tax liability

  • Leave business interests or sales proceeds to beneficiaries in a will or trust

  • And others 

Every business owner has his or her own goals, finances, family situation and business concerns. A lawyer with business succession and estate planning experience will be able to assess what legal options are available to a business owner under his or her unique circumstances.

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