.png?width=1080&height=1080&name=LinkedIn%20with%20Light%20Blue%20Background%20(1).png)
.png?width=1080&height=1080&name=Facebook%20with%20Light%20Blue%20Background%20(1).png)
.png?width=1080&height=1080&name=Instagram%20(1).png)
How to Manage Taxes When Expanding Your Business
Discover strategies to manage taxes as your business grows—from choosing the right entity structure for your business to planning for multi-state...
Learn how to create a business succession plan that supports long-term goals, minimizes disruption, and reflects the legacy you’ve worked to build.
Building Passive Income Streams for Retirement
For high-net-worth business owners, succession planning is a pivotal step in shaping what comes next for your business, your family, and the wealth you’ve built. Whether you intend to keep the company in the family, transition to a trusted executive team, or prepare for a strategic sale, planning ahead can help create continuity and preserve the values you’ve embedded in the organization.
A well-structured succession plan may also help prepare your successors, address tax considerations, and potentially reduce the risk of disruption during unexpected transitions.
Some key steps in building a succession plan:
- Define long-term ownership and leadership goals
- Identify and prepare successors
- Structure the business for continuity and transfer
- Assess business valuation and liquidity needs
- Evaluate estate and tax implications
- Establish family governance structures
- Communicate the plan with key stakeholders
- Review and update the plan regularly
Define the Legacy You Want to Preserve
Succession planning starts with clarity around your long-term goals. For some, this may include keeping the business in the family or mentoring the next generation of leadership. Others may be focused on preparing the company for sale or building a structure that allows for a phased transition over time.
Consider questions such as:
- Do you want the business to remain family-owned, or transition to outside leadership?
- Are there values, charitable commitments, or community relationships you want to maintain?
- How does the business fit into your broader retirement and estate planning strategy?
These early conversations can shape the path you take—and help identify the right structures to support that vision.
Identifying and Preparing the Right Successor
Choosing a successor is both a practical and emotional decision. You may be evaluating family members, internal executives, or external buyers. Regardless of the path, readiness is key.
Factors to assess:
- Leadership capability and alignment with your vision
- Willingness and readiness to take on the role
- Experience with the financial, legal, and operational aspects of the business
- Support systems needed to help them succeed
If your intended successor is a family member, consider how you’ll introduce them to the team and transition responsibilities. If they’re external, succession may involve a more formal vetting and onboarding process.
Structuring the Business for Continuity
A succession plan often involves preparing the company structurally for future change. This can include updating legal documents, simplifying ownership, and formalizing internal systems.
Common elements to review:
- Buy-sell agreements, especially if ownership is shared
- Bylaws and operating agreements that outline voting rights or transfer provisions
- Establishing a board of directors or advisory board, if not already in place
- Documenting operational workflows and knowledge transfer plans
These steps can help make the business more transferable and easier to manage during and after the transition.
Addressing Tax and Estate Planning Considerations
Transferring a business can have significant tax implications—especially for those with substantial ownership stakes. Succession planning is often coordinated with estate and gift strategies to help manage potential tax exposure.
Tools that may be considered:
- Gifting shares over time using the annual exclusion or lifetime exemption
- Grantor Retained Annuity Trusts (GRATs) or Spousal Lifetime Access Trusts (SLATs)
- Use of family limited partnerships or LLCs to manage ownership and control
- Reviewing how the business is titled within your estate plan
Work with professionals to align your business transition with your broader estate goals and to evaluate how any transfer may be treated for tax purposes.
Valuation and Liquidity Planning
Establishing an accurate valuation is central to succession planning, whether you’re transferring shares, structuring a buyout, or preparing for sale.
Considerations include:
- Engaging a qualified business appraiser to assess fair market value
- Understanding the impact of discounts (e.g., lack of marketability or control)
- Planning for liquidity needs to fund estate taxes or equalize gifts among heirs
- Using life insurance or installment sale structures to create liquidity if needed
Valuation also affects your ability to gift shares, structure compensation, and prepare successors financially.
Family Governance and Communication
For family-owned businesses, succession planning benefits from strong governance. Even when the plan is clear, managing expectations and communication can help support smoother transitions and reduce conflict.
Consider formalizing:
- A family mission statement or constitution
- Roles and responsibilities for family members in and outside the business
- Regular family meetings or councils to discuss business updates and shared goals
- Rules for joining, leaving, or selling interests in the business
These structures provide transparency and may help foster a collaborative decision-making environment—especially across generations.
Planning for the Unexpected
While succession is ideally planned well in advance, unexpected events can accelerate the timeline. Illness, incapacity, or sudden death can place a strain on the business and family.
Prepare by:
- Naming interim successors or establishing emergency leadership roles
- Reviewing life and disability insurance policies for income or liquidity support
- Keeping critical contacts and operational instructions accessible
- Creating a continuity file or digital vault with legal, financial, and business documents
Building these contingencies into your plan adds resilience—even if you're not ready to fully step away yet.
Communicating the Plan
A well-crafted succession plan still needs to be communicated clearly to those it affects. This may include family members, key employees, business partners, or external advisors.
Suggestions for rollout:
- Share the plan in phases and document key decisions
- Use one-on-one conversations to build alignment before public announcements
- Update the plan regularly and communicate changes transparently
Open dialogue should be intended to help preserve trust, retain top talent, and set clear expectations for the future.
How EP Wealth Supports Business Owners in Succession Planning
Succession planning involves more than drafting a will or transferring shares—it’s about shaping the next chapter of your life and your business. At EP Wealth, we work with business owners to integrate succession planning into a broader financial picture. This includes:
- Coordinating with business and estate attorneys, tax professionals, and valuation experts
- Evaluating gifting, liquidity, and transition strategies
- Addressing ownership structures, trust planning, and legacy objectives
- Supporting clients through exit strategies, business sales, or family transitions
Whether you’re early in the planning process or approaching a milestone decision, our business planning services are here to support you. Contact an advisor at EP Wealth to get started.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
- Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
- Please consult with a CPA, tax professional, and/or attorney regarding your specific situation before implementing any of the strategies referenced directly or indirectly herein.
