Business Succession and Ownership

What is Business Succession Planning?

Continuity for your company. Harmony for your family. Built for real life in New Jersey.

It’s the playbook for who runs the business, who owns it, and how you fund and document the transition—during life (retirement, disability, sale) and at death. Done right, it avoids fire‑drills, keeps customers and lenders calm, and treats all stakeholders fairly.

Whether you’re a first‑generation founder, a partner in a closely held firm, or the steward of a multi‑gen family enterprise, we design practical, legally sound plans that work on a hard day—not just on paper.

Who this is for...

Founders & partners in closely held companies (LLC, S‑corp, C‑corp, FLP).
Family enterprises balancing active and non‑active heirs.
Key executives with purchase rights or earn‑in paths.
HNW owners seeking tax‑savvy transfers and liquidity.

What we solve (in plain English)

“If I’m out tomorrow, who can sign and who’s in charge?”
“How do we set a price that’s fair—and fund it without crippling cash flow?”
“How do we treat active and non‑active children fairly?”
“Can a trust own S‑corp stock without blowing the election?”
“How do we keep banks, landlords, and key customers confident?”

The Ownership Transition Playbook

Design staged, tax‑aware transfers that fit your timeline.

Lifetime gifts or sales: Move interests to the next generation or a management buyer using gifts, sales, or hybrids.
GRAT/IDGT strategies: GRAT (Grantor Retained Annuity Trust) and IDGT (Intentionally Defective Grantor Trust) shift appreciation efficiently while you retain control where needed.
GST‑aware family trusts: Use generation‑skipping‑tax allocations to build durable, protective trusts for heirs.
Staged transfers: Map multi‑year steps tied to performance, financing milestones, or your retirement date.

Result: Predictable hand‑off, fewer surprises, and a structure lenders and advisors can underwrite.

Buy‑Sell Architecture (Your Deal Before the Deal)

Your buy‑sell agreement is the rulebook for ownership changes. We tailor:

Form: Cross‑purchase vs. entity redemption (or a hybrid) based on tax and cash‑flow goals.
Valuation: Formula (e.g., EBITDA multiple) vs. appraisal; update cadence to stay current.
Funding: Life and disability insurance, sinking funds, or third‑party financing.
Rights & protections: Put/call rights, ROFR (right of first refusal), drag/tag‑along to keep minority/majority owners aligned.
Dispute mechanics: Mediation/arbitration, choice of law, deadlock breakers.

Result: A written path everyone signs now—so there’s no fight later.

Management vs. Ownership (Two Different Ladders)

Separate control of the company from who gets the economics. We help you:

Recapitalize: Voting vs. non‑voting interests so successors can run the company while others share in profits.
Govern: Independent board or board of advisors; reserved powers for major decisions.
Successor employment: Role descriptions, compensation, vesting/earn‑in, non‑compete and non‑solicit standards.

Result: The right people make decisions; everyone understands how they benefit.

Trusts & S‑Corps (QSST/ESBT Made Simple)

Trusts can own S‑corp stock—if you use the right kind of trust.

QSST/ESBT compliance: We draft QSST (Qualified Subchapter S Trust) or ESBT (Electing Small Business Trust) provisions so shares remain S‑eligible.
Trustee powers that fit the business: Authority to vote, retain or sell, sign consents, and handle K‑1s.
Distribution standards: Practical cash‑flow rules (e.g., dividends vs. compensation) that won’t paralyze operations.

Result: Estate planning and S‑corp status play nicely together.

Liquidity & Tax (Keep the Lights On and the IRS Calm)

Plan cash before you need it.

ILIT for liquidity: An ILIT (Irrevocable Life Insurance Trust) can deliver tax‑efficient cash to fund a buy‑out or estate tax.
§6166 deferral: For qualifying closely held businesses, Section 6166 may defer federal estate tax tied to the business.
Covenants & compliance: Align with bank covenants, landlord consents, and state tax issues before signing day.

Result: Money shows up when needed; covenants and taxes don’t derail the plan.

Contingency Planning (If Something Happens Tomorrow)

Write the playbook for the worst day—so the team can execute.

Disability buyout terms and key‑person coverage.
Emergency SOPs: Who signs, who communicates, what gets prioritized.
Stakeholder communications: Customers, vendors, lenders, and employees get clear, timely messages.
Signature‑authority maps: Bank, payroll, contracts, and digital access (with backups).

Result: No vacuum at the top; operations continue.

Documents to Refresh (and Keep in Sync)

Operating/Shareholder Agreements with current valuation and funding terms.
Buy‑Sell Agreement reflecting today’s cap table and insurance.
Succession Letters to lenders, landlords, and key partners.
Estate plan alignment: Coordinate with your RLT (Revocable Living Trust) and any irrevocable trusts (IDGT/ILIT/SLAT) so ownership and beneficiaries match the strategy.

Our Process (Fast, Coordinated, Confidential)

Discovery: People, cap table, covenants, and goals.
Design: Options in plain English; side‑by‑side tradeoffs.
Draft: Agreements and trust terms that fit operations and tax.
Fund: Insurance, bank consents, titling, and signature authority.
Maintain: Annual/quarterly tune‑ups via AMP/CCP with your CPA and advisor.

Expect clear timelines and a single point of contact. We quarterback advisors so nothing falls through the cracks.

New Jersey notes (Why 'local' Matters)

S‑corp elections and trusts: NJ conformity considerations.
LLC/LLP nuances: Registered agent, annual report, and publication/recording where relevant.
Deeds & titles: If real estate sits in the entity, we coordinate NJ deed issues and lender approvals.
County recording & UCCs: Practical lead times and filing tips.

FAQs

Do I need a buy‑sell if I’m the only owner?
Yes—your estate, a key employee, or an outside buyer needs a path. We’ll define who can buy and how they’ll fund it.

Can a trust own my S‑corp?
Yes, if the trust is drafted as a QSST or ESBT and elections are filed on time.

How do I treat active vs. non‑active children fairly?
Use voting/non‑voting recapitalizations and lifetime trusts so operators run the company and others share economics.

What funds the buy‑out?
Often insurance (life/disability) plus cash or bank financing tied to a clear valuation method.

Service Areas (New Jersey)

We regularly serve clients throughout Central and North New Jersey, including the Jersey Shore, Somerset, Morris, Hunterdon, Mercer, Warren, Bergen, and Monmouth counties.

Selected communities we often work with: Basking Ridge, Bernardsville, Bedminster, Bridgewater, Somerville, Morristown, Madison, Chatham, Mendham, Chester, Flemington, Clinton, Lambertville, Princeton, Pennington, Hopewell, Allentown (Mercer area), Hackettstown, Long Valley, Warren Township, Watchung, Ridgewood, Franklin Lakes, Tenafly, Rumson, Fair Haven, Little Silver, Colts Neck, Holmdel, Spring Lake, Sea Girt, Manasquan, Point Pleasant.

Don’t see your town? If you live in or own property in New Jersey, we can help—onsite or by secure Zoom!

Quick Glossary

GRAT: Grantor Retained Annuity Trust (shifts growth efficiently).
IDGT: Intentionally Defective Grantor Trust (sale to trust strategy).
GST: Generation‑Skipping Transfer tax (for grandchild‑level planning).
QSST/ESBT: Trust types that can hold S‑corp shares.
ILIT: Irrevocable Life Insurance Trust (estate‑tax/ liquidity tool).
§6166: Federal estate tax deferral for certain closely held businesses.
ROFR/Drag/Tag: Rights that govern minority/majority exits.
AMP/CCP: Ongoing maintenance programs (annual or quarterly).

Related Legal Services

Services we offer in connection with Estate Planning

Real estate transactions (purchase/sale, deed work, LLC transfers), business & succession planning (buy‑sell agreements, family LLC/FLP), civil litigation (probate disputes, fiduciary claims), and elder law/long‑term care planning.

For Owners and Family Enterprises

Business Succession Planning

Protect your life’s work with a plan that keeps the company running, preserves family relationships, and minimizes taxes and chaos.