ESOPs – Where Tax Planning, Retirement Planning, and Estate Planning Meet

On Behalf of | May 4, 2022 | business planning, estate and tax planning, Estate Planning

 

 

You’re hardly ready to retire, but, over the next ten or so years, you envision being less involved on a daily basis. While there’s been some turnover in staff, each of your three key people have been with the company for a decade or more. It’s time to think ahead, you realize…

Over the past two decades, as we’ve helped Geyer Law clients form new Indiana businesses, helping others plan their transition to retirement, we’ve come to realize the many ways in which business and personal planning are inextricably related.

Even as a business is being launched, and as we are working on creating secure partnership and corporate agreements, it is not too early to envision a “someday” succession plan.

  • Will there be children who will be working in (or partners in) the business?
  • Are there other children who will not be involved?
  • Who would carry on the business were you to become disabled – or after you’ve died?
  • How will ownership of this business affect your tax planning?

Fast-forward….Many clients referred to our office have owned and run their businesses for many, many years. After having successfully overcome a myriad of business and personal challenges, they are only now ready to consider their next planning stages, including a sale of their business. Yes, they have had basic estate planning documents in place for years, but now, precisely because they have achieved success in business, they realize there’s a lot more at stake…..

An employee stock ownership plan (ESOP) is a tax-deferred retirement plan like a 401K, except that the underlying investments are shares of the employer stock. ESOPs are used by companies of all sizes, including a number of large publicly traded corporations, Investopedia explains. Typically, the ESOP is part of a compensation package, where shares will vest over a period of time. ESOPs can benefit business owners in several ways:

  • minimizing corporate taxes
  • serving as an incentive for employees, lowering turnover
  • enabling an owner to exit the business without the disruption of a takeover or merger
  • building wealth for both the owner and the eventual successors:

For business owners, ESOPS can be where tax planning, retirement planning, and estate planning meet!

– by Cara M. Chittenden, Associate Attorney with Rebecca W. Geyer & Associates

 

 

You’re hardly ready to retire, but, over the next ten or so years, you envision being less involved on a daily basis. While there’s been some turnover in staff, each of your three key people have been with the company for a decade or more. It’s time to think ahead, you realize…

Over the past two decades, as we’ve helped Geyer Law clients form new Indiana businesses, helping others plan their transition to retirement, we’ve come to realize the many ways in which business and personal planning are inextricably related.
https://www.rgeyerlaw.com/business-planning/

Even as a business is being launched, and as we are working on creating secure partnership and corporate agreements, it is not too early to envision a “someday” succession plan.

Will there be children who will be working in (or partners in) the business?
Are there other children who will not be involved?
Who would carry on the business were you to become disabled – or after you’ve died?
How will ownership of this business affect your tax planning?

Fast-forward….Many clients referred to our office have owned and run their businesses for many, many years. After having successfully overcome a myriad of business and personal challenges, they are only now ready to consider their next planning stages, including a sale of their business. Yes, they have had basic estate planning documents in place for years, but now, precisely because they have achieved success in business, they realize there’s a lot more at stake…..
https://www.rgeyerlaw.com/estate-planning/

An employee stock ownership plan (ESOP) is a tax-deferred retirement plan like a 401K, except that the underlying investments are shares of the employer stock. ESOPs are used by companies of all sizes, including a number of large publicly traded corporations, Investopedia explains. Typically, the ESOP is part of a compensation package, where shares will vest over a period of time. ESOPs can benefit business owners in several ways:

* minimizing corporate taxes
* serving as an incentive for employees, lowering turnover
* enabling an owner to exit the business without the disruption of a takeover or merger
* building wealth for both the owner and the eventual successors:
https://www.irs.gov/retirement-plans/employee-stock-ownership-plans-esops#:~:text=An%20employee%20stock%20ownership%20plan,stock%20bonus%2Fmoney%20purchase%20plan.
https://www.investopedia.com/terms/e/esop.asp

For business owners, ESOPS can be where tax planning, retirement planning, and estate planning meet!

– by Cara M. Chittenden, Associate Attorney with Rebecca W. Geyer & Associates