Exit Planning

Our firm was founded to help successful business owners and professionals deal with the mature “harvest” phase of their lives.

For a successful professional, that connotes retirement. For a business owner, it means the transition of control and ownership of their prized enterprise.

There’s no more complicated life phase than stepping away from your work or business. Worse, there are often serious income tax consequences associated with the severance event.

For the employed professional, deferred compensation becomes taxable in a compressed period, often in the year of retirement. Consequential, irrevocable pension and other employee benefit decisions can add unwanted financial stress.

For business owners, the tax consequences from the sale of an enterprise can be profound. Seller financing offers some enticing tax benefits; in exchange, however, for taking credit risk as the lender until the business obligation is paid in full. That arrangement is fraught with risk, especially if the buyer’s debt obligation is unsecured.

And, the sale of a farm or business assets and real estate can pose a special tax problem in the form of deprecation recapture taxes.

The good news is there are a number of practical planning strategies to deal with the issues associated with exit events including:

• Installment Sales
• Deferred Sales Trusts
• Energy Partnership Investments
• 1031 Like-Kind Exchanges
• Qualified Opportunity Zone Investments
• Charitable Trusts
• UPREIT Partnerships
• Grantor Trusts

Of course, some exit strategies will work better than others and it becomes an eminently customized planning exercise.

The art of successful exit planning is striking a balance between income tax reduction benefits with financial flexibility and acceptable complexity. If you'd like to learn more about managing your most significant exit well, let's schedule a conversation.