AVOID THESE 7 COMMON TRANSITION PITFALLS 1. Suboptimal Business Structure Structure the business and its assets efficiently — this is of key importance in maximizing wealth transfer, as well as stabilizing the business through any transition. Though your immediate focus may be on day-to-day operations, your business grows increasingly complex as you add dealerships, real estate corporations, reinsurance corporations and, perhaps, a management or holding company. Save time and expense in accomplishing your estate goals by getting guidance from a trust and estate planning attorney early in the lifecycle of your business. A well-designed business structure not only provides significant tax benefits but also lays a solid foundation for effective, ongoing management and governance of all the entities that make up your business. If the business is intended to pass generationally, you can also minimize or even eliminate any estate tax burden that may be placed on the business and, therefore, better secure the continued success in the next generation. 2. Untimely Tax Planning It’s impossible to overemphasize the importance of conducting early estate planning long before you exit the business — it’s the most important tactic for achieving tax-efficient wealth transfer. If the business’ valuation is significant, then planning for adequate liquidity when the estate passes is a primary concern. Starting a transition without a plan in place means fewer opportunities to minimize your tax exposure, including: • Leveraging the estate tax exemption. • Putting valuation discounts in place. • Considering trust structures to meet your estate planning goals. • Passing wealth, through gifting, to lower the taxable estate value. It’s important to proactively work with your Truist dealer relationship manager and wealth advisor on plans related to trusts. In addition, experienced estate attorneys and financial advisors can help you capitalize on every occasion to reduce the tax burden as you transfer ownership. 3. Last-Minute Gifting Another tax-saving strategy is to gift while you’re still operating the business. Waiting until the last minute may reduce the likelihood of achieving the best transfer outcomes for you and your family. To create a plan that fits your age, where you are in the business lifecycle and the level of involvement you want going forward, ask: • What are your motivations and goals around transition? • What income do you need to maintain your desired lifestyle? • What other assets and income streams do you have? vada.com 15
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