Business owners approaching retirement have more questions to consider and plans to make than most retirees. What happens to the business? Who takes it over, and what taxes are involved? Should you sell it?
Here are a few tips to keep in mind when considering a retirement plan for your small business.
Set goals for the future of your business
Many business owners hope their children will one day take over the family business. Another option is transferring your business to a spouse or common law partner to avoid capital gains tax. If you or your business partner(s) die prematurely, you can pass the business on to the next generation without leaving them large tax or estate settlement costs.
Establish an estate plan
Work with a Co-operators Financial Advisor to prioritize your goals and set up an estate plan, which you can review and update regularly over the years. Start by:
- Reviewing wills, powers of attorney, and personal health care needs
- Estimating estate taxes and planning for future tax liability to protect the family business
- Discussing options for transferring ownership to your children
- Finding ways to minimize the potential of financial disputes to avoid having your heirs sell the business
How life insurance can help
Life insurance can be a valuable tool in ensuring the continuation or succession of your business and can provide:
- Insurance for key persons, business owners and partners
- Debt and collateral coverage
- Buy/sell agreement funding
- Business estate planning
- Business succession planning
Why choose a buy-sell agreement?
A buy-sell agreement provides funds to cover the financial needs of a business owner’s heirs, employees, creditors, surviving partners and shareholders.
For expert advice on planning a successful financial future for your business or farm, talk to your local Financial Advisor.