Your Business, Your Legacy: Planning for the Future

For business owners, estate planning and succession planning are inextricably linked. After all, building a business, like raising a family, is a labor of love.

Written by Carrie Kirby, for First Horizon Bank

Whether we are thinking about the next generation or the next leaders of our company, planning is really about continuing the love that we poured into the people and endeavors most important to us during our lifetimes.

That’s why Jennifer Schuchart, First Horizon Bank Market President; Paul Lankau, a Financial Advisor at First Horizon Advisors, Inc.; and Wendy Martin, a Senior Trust Officer at First Horizon Bank, often work together to help entrepreneurs map their transition into retirement and beyond.

Here’s an excerpt of a recent conversation with Jennifer, Paul, and Wendy about how they help business owners plan their legacy on both a personal and business level.

How does succession planning overlap with estate planning?

Jennifer: When people build a business, for the most part, that’s the way they build their personal wealth. The business is the legacy they hope to leave to the next generation in one form or another.

Wendy: Both involve wealth transfer, with business succession planning occurring during life, and estate planning occurring during life and also afterwards. The overlap occurs often, especially if there are multiple heirs, or some heirs who do not work in the business.

What other aspects of financial planning overlap with business succession planning?

Jennifer: Retirement. Business owners may understand that they need to plan for death or disability, but they may not think about the fact that most of them are also counting on their business to fund their retirement. Transitioning out of the business is really not an if, but a when.

What if your future heirs aren't involved in the business? Will lack of succession planning affect them?

Jennifer: Definitely. Think about this situation: You may think you’re leaving your kids a business worth $10 million, but what if it turns out that without you, the business is worth a lot less? If there’s not a successor who’s capable of keeping it going, the business could be significantly devalued.

What if the person you picture running the business next isn't the person you want to leave your estate to?

Wendy: Sometimes the person you identify as the ideal next person to own the business is a key employee or partner. That doesn’t mean you have to give the company to them. We can help you plan for that transition and take care of your family as well. What you could do in this case is craft a plan for the employee or partner to buy the business when you are ready to step away, or if you die early or become disabled.

Usually we think of the relationship with our banker as limited to things such as loans or deposits. How are you helping business owners with such wide-reaching issues?

Paul: Our financial planners will take time to ask questions to kick off the process. Once business owners decide to make or update a business succession plan or an estate plan, we can pull in attorneys, CPAs, and other experts to get everything in place.

How do you put clients at ease when the stakes are so high? And, second, what's the consistent approach you've taken when you work together to make sure your guidance is tailor-made for each client?

Jennifer: We start with a question like, “Where do you see the future of your business when you’re no longer involved?” That usually starts us off in a conversation both about succession planning and estate planning, because they’re going to have both professional and personal goals.

Wendy: From there, we enlist the help of experts, like financial planners, accountants, attorneys, and trust officers to forge an action plan. Then we help implement that plan. Finally, we conduct periodic reviews to make sure the plan is accomplishing what we set out to do.

One way First Horizon brings value to that relationship is the teamwork we practice. We arrange for the client to sit down with experts within our bank and in our network, to help them eliminate uncertainty about the future and plan that eventual transition.

Read More about Estate and Succession Planning.

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