Page 34 - ATR 3 2012 web 2

best if someone other than a family
member is in charge.
“we’Ve seeN a lot of busiNesses go uNder wheN “We’ve seen a lot of businesses go
the busiNess was left to the Next geNeratioN under when the business was left to
the next generation because the next
because the Next geNeratioN did Not haVe the generation did not have the same work
same work ethic, the same type of character ethic, the same type of character as the
as the pareNt or pareNts, aNd they just parent or parents, and they just weren’t

wereN’t capable.” capable,” Terry Resnick said.
Another checklist item is for
businesses to plan on techniques to
—terry resNick reduce or eliminate estate taxes. The
co-owNer Tax Relief Unemployment Insurance
resNick associates Reauthorization and Job Creation Act
of 2010 provides business owners an
unprecedented and perhaps short-lived
opportunity to do that by allowing
ciation events, said successfully navigat- In fact, avoiding family strife is a $5.12 million per individual, or $10.24
ing the transfer of ownership requires major reason that succession planning million per couple, to be transferred
adequate planning. They pointed out is so important. The Resnicks advised this year tax free. In fact, the entire
that an owner who has spent 80,000 to separating the business from the family $10.24 million can be transferred even
90,000 hours building a business can and then communicating with fam- if one member of the couple has died.
establish a succession plan that protects ily members about the business’s suc- The tax rate of 35 percent for taxable
his or her family’s wealth in 10 to 20 cession plan through periodic family assets is lower than it has been in the
hours, plus ongoing maintenance and retreats. Even inactive children who past.
reviews. aren’t involved in the business need However, the opportunity to do
The Resnicks presented a case study to understand conceptually why the that goes away at the end of this year
where one husband and wife trucking plan is being formulated to reduce the unless Congress extends it, and it’s not
partnership died leaving three children chance for disagreement about what certain that it will do that. Legislation
– two sons who were active in the busi- Mom and Dad would have wanted. has already been introduced that would
ness and a daughter who was not. Their “When we talk about succession cause tax rates to revert back to earlier
wills simply stated that their assets planning, it’s not so simple as to just provisions that would tax assets beyond
would be distributed to their three say, ‘When I die, the kids will figure it the first $1 million at much higher rates
children, although they wanted their out,’” Terry Resnick said.” You can’t put than currently exist.
two sons to take over the business. The them in that position because no good “We don’t want anyone in this
daughter – at her husband’s urging – comes from that.” room to say, ‘We can get to it whenever
requested more participation than just “You want to utilize the same focus we get to it’ because this window could
her simple minority interest that would in preserving and transitioning your close literally in a matter of months,”
pay off if the company was sold. The company’s and your wealth as you’ve Terry Resnick said.
sons refused. Then one of the sons died, done in creating it,” Terry Resnick said. Another technique for reducing
leaving his part of the business to his The Resnicks outlined a business taxable assets is through annual gifting
wife, who had never participated and succession planning checklist that provisions in the tax code that allow the
who no one else in the family had liked. includes five items, starting with defin- transfer of up to $13,000 per year to as
Now the one son who had worked in ing the goals and vision for the transfer many people as the owners want.
the business and who understood how it of ownership and then deciding who The fourth checklist item is mak-
worked was a minority owner while the the successor or successors will be. ing sure the company has enough liquid
daughter and daughter-in-law became Usually it’s best if that’s a family mem- assets to pay estate taxes, which are due
allies and gained control. ber, but a business can run into trouble nine months after the owner’s death.
With proper planning, all three if it loses trusted experienced execu- Otherwise, the company might have
children could have received a larger tives during the changeover. A good to be sold in a forced sale. Even high
inheritance, control of the company plan often will reward those executives net worth families, such as the Wrigley
would have remained in the proper so they’ll stay with the company while family that owned the Chicago Cubs
hands, and the family would not have keeping ownership completely within
endured such dissension. the family. However, occasionally it’s 

34 aRkansas TRucking RePoRT | issue 3 2012