Business Succession Planning
For owners of private, closely-held businesses, estate planning involves developing a solid business succession plan. Pedersen lawyers have considerable experience developing and executing sophisticated business succession plans that will move their companies into the future with the most favorable tax consequences.
Helping entrepreneurs and business owners prepare succession plans is a truly collaborative process among our cross-disciplinary team of lawyers, our clients, and their professional financial advisors. We draw up customized, strategic plans based on our knowledge and insights about a client's business and succession objectives. We have experience using intra family wealth transfer techniques, ESOPs, corporate structuring, installment and other techniques to provide for the transition of business ownership to non-family management.
When a business will stay in the family, we draft highly sophisticated plans, such as family limited partnerships and limited liability companies, and intentionally defective grantor trusts that help preserve wealth and minimize tax exposure.
Asset protection is a critical component of a successful plan, particularly for professional clients who are at risk for malpractice lawsuits or creditor exposure. We formulate and implement asset protection trusts, family limited partnerships, charitable split interest arrangements, and other planning strategies to safeguard client assets for the future.
- Represented the CEO of a Chicago area company in gifting and selling stock options to an intentionally defective grantor trust. By recommending the amendment of the company's option agreement, our client was able to enter into the transaction, which transferred several millions of dollars of wealth to his children when the company was subsequently sold.
- Represented the major shareholders of a $90 million Chicago area company in the recapitalization of its stock into voting and non-voting stock, which allowed senior generation shareholders to gift or devise voting shares to dynasty trusts and sell nonvoting shares to intentionally defective grantor trusts. These transactions locked in valuation discounts, froze the senior generation shareholder's interests, maintained voting parity between family groups on death, and provided for flexible ownership succession.
- Represented the majority shareholder and chief executive officer of a technology company in the reorganization of the company's equity interests and then freezing the value of a portion of his shares by use of an installment sale to an intentionally defective grantee trust. Subsequently, represented party in the sale of his and trust-owned shares to an ESOP for in excess of $150 million. The client was able to shift over $30 million of wealth to a trust for descendents for an approximately $900,000 gift to the trust.
- September 2019