Proactive Strategies for Business Success: Preparing your business for the long term

If retirement is on the horizon, the sooner you can start thinking about succession planning, the better. Whether your plan is to transition your business to the next generation or a non-family successor, you should be speaking to a consultant or advisor on how to make it a smooth transition.

When to get started

Ideally, you’ll want to begin succession planning 5-10 years before retirement. This gives you plenty of time to transfer assets and gives your successor(s) time to learn valuable management skills, either on their own, or through programs like GenerationNext  from Farm Credit East.

Estate tax considerations

When beginning the transfer process, there are a number of legal and tax considerations that need managed to ensure the interests of both generations are protected. This includes estate tax considerations. At the state level, each state has its own threshold, which you can discuss with your business or tax consultant.

As spring 2025, the federal estate tax threshold of $13.99 million per individual is set to sunset at the end of 2025. If it does, the threshold will drop to half, or $7 million per individual. Anything above these thresholds will be taxed more heavily. With a new administration, however, it is possible this will change. That being said, if you’re looking to make equity transfers, start now. If the threshold does decrease, you’ll want legal documents finalized by the beginning of 2026.

Review beneficiary designations

Be sure to review and keep up to date beneficiary designations on policies like life insurance, brokerage accounts or retirement accounts.

Establish a team of advisors

A lot of decisions need to be made when succession planning – and many of these changes can have tax implications. Ensure you have a team of trusted advisors to consult on each decision and keep them all in the loop. Speak to your consultant about what is best for the future of your business. Attorneys or consultants may suggest a restructuring of your business, setting up a trust, or getting your last will and testament in order, just in case.

Farm Credit East provides a team of knowledgeable consultants and tax advisors who work with customers on the long-term plan for their businesses. If you’re interested in learning more, call your local Farm Credit East office or contact us online.

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