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Allegis Advisors Group. Pinnacle Sales Conference. Park City, UT, September 27, 2010. Douglas I. Friedman, Esq. Friedman & Downey, P.C. 205-879-3033 doug@fdlawfirm.com. Douglas I. Friedman, JD., CLU Friedman & Downey, P.C. Counselors-at-Law Birmingham, AL 205-879-3033.
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Allegis Advisors Group Pinnacle Sales Conference Park City, UT, September 27, 2010 Douglas I. Friedman, Esq. Friedman & Downey, P.C. 205-879-3033 doug@fdlawfirm.com
Douglas I. Friedman, JD., CLUFriedman & Downey, P.C.Counselors-at-LawBirmingham, AL 205-879-3033
You Can't Succeed Yourself: How to Cut Back, Kick Up and Get Out
. . . of the runner in the New York City Marathon I am reminded of the story . . .
. . . is directly related to the import of the decision. The amount of planning . . .
Why Succession Planning? • For you • Your family • Your employees
Practical Issues • Keep spouses out of business • Change in health • Estate liquidity
Current Estate Tax Law • Exemptions increase to $3.5 Million (2009) • No estate tax in 2010 • Sunset provision
What is your plan?(a/k/a “exit strategy”) No right answer
Three Questions • What is it worth? • Who will buy? • On what terms?
Importance of Valuation • For you, your family, IRS • Be careful with formulas • An art … not a science
Who is Buyer? • The business (stock redemption) • Another owner (cross purchase) • An outsider (cross purchase)
Terms of Agreement • Triggering event (e.g., death, disability, retirement) • Time of Payment (Lump sum, installments, both) • Source of funds
Why Life/Disability Insurance? • Provides money when needed • Reduce or eliminate installment risk • Is what it is - - insurance
Concerns: Majority Shareholder • Control • Flexibility • Over everything
Solutions: Not Bilateral • I can buy you out • You can’t buy me out • You have no choice
Solutions: Not all transfers • I can transfer to my child • I can transfer to third party • You can’t
Business Succession Planning is like . . . . . . a Marathon
What to do? • Keep running (move thoughts ahead) • Lose your shorts? (focus on big picture) • Concentrate on finish line (what do I want?)
And always remember: You are in control
When Dad Died • We knew nothing • Liquidated business • Sold buildings
Did Dad Have a Plan???? Don’t do what my father did!