Running a family-owned restaurant is often a labor of love, with each generation imparting their unique flavor to the business. However, to ensure that your legacy – and the impact it can have on loved ones and assets (including your restaurant) – plays out according to your wishes, it is crucial to have a comprehensive estate and succession plan in place.
Estate planning helps you define how your personal affairs and assets should be managed while you are alive and confirms what will happen upon your death. When it comes to your business, an estate plan can foster a smooth transition of leadership and operations by including a succession plan.
What’s more, estate planning helps maximize the value of your assets that go to your beneficiaries, while minimizing tax obligations. As it relates to your restaurant, it can be used to establish buy-sell agreements, significantly reduce tax burdens on heirs, protect it from creditors, and shield it from being used to settle taxes or personal debts.
It’s never too early to put a plan in place, but there is a time when it’s too late. Failing to create, review, and update a plan at least once a year can have a significant impact on the people you want to take care of, the value of your estate, your tax obligations, and the legacy you leave behind. With major changes to Federal laws scheduled to take effect in just over 22 months plus the impact of New York laws, it’s even more important that you make the time to create and update your estate and succession plan now.
The importance of estate and succession planning cannot be overstated. Without a clear successor, especially when there’s a sudden occurrence resulting in disability or death, a restaurant may face significant upheaval and operational challenges. This has the potential to lead to a restaurant’s closure or sale. Family discord may arise due to different visions for the restaurant’s operation. Creditors and vendors may look for payment in full.
There are also tax implications. Without an estate plan, for instance, the restaurant may be subject to hefty estate taxes that could impact the financial health of the business. A well-crafted plan can optimize tax benefits and protect the restaurant’s assets.
Just as you wouldn’t want state law to dictate how to take care of your family and business today, you shouldn’t want it to dictate what happens to your business (and family) upon your disability or death. There’s one way to ensure that doesn’t happen: develop an estate and succession plan today and make sure it’s always up to date by reviewing it annually.
RBT CPAs professionals in our Estate, Trust and Gift Practice can help you create and update an estate and succession plan that gives you peace of mind in knowing you, your loved ones, and your business will be taken care of according to your wishes during your lifetime and after. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.
RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.