What is Succession Planning?

3 minute read
Business Succession Planning

Preparing to pass on crucial leadership roles within your business? Planning to transfer your personal wealth to a loved one? Succession and estate planning is one of the most important and challenging milestones you face.

We look at a few of the common considerations when starting a business succession plan. Developing a well thought out plan provides a seamless transition between you and your successor, ensuring your succession goals are met while preserving the financial well-being of your beneficiaries.

Succession planning is when you create a financial plan that ensures the business continues to be successful and provides you with peace of mind regarding the transfer of your assets to family. Having a plan in place provides control in the priorities, speed, and outcomes of your financial strategy. This sets clear expectations for your family so they understand your financial plan and legacy.

Part of creating a succession plan includes estate planning. Prepare key documents like wills and powers of attorney to ensure your wishes are carried out in the unfortunate event that you are unable. If you have a more complex need, you may need to set up a trust to hold assets that will be managed by a trustee on behalf of your beneficiaries.

Consider having safety nets in life or disability insurance to ensure that the business can continue to operate even if you’re incapacitated.

There are benefits to incorporating as well that may qualify you (or your beneficiaries) to make use of the lifetime capital gains exemption upon the sale of your business. Capital gains is when you sell an asset for value above what you paid for it. The difference is the capital gain and 50% of this is taxable income. While there are a number of conditions to satisfy in order to claim the exemption; the tax savings can be substantial.

Given all of the considerations for your business succession, it is worth establishing a plan with your financial advisor as well as an accountant and lawyer to ensure all your bases are covered. While there is much to consider, you can break your succession plan into four steps:

  1. Initial Discovery – have a high-level discussion of your goals and the timeline you see your business succession happening so that you can retire comfortably in the life you envision;
  2. In-depth Discovery – set up a comprehensive review of your financial situation by identifying what is important and outlines your priorities. This would be the step where you reach out and speak with investment specialists, accountants, or lawyers;
  3. Report – a summary of your current situation and where you set your objectives into action with a strategic plan based on recommendations; and
  4. Regular Reviews and Updates – regular reviews of your financials and goals to ensure you are on track in attaining your goals. This is where business plans can pivot, according to life changes, and provide opportunity to achieve other actions identified in your initial and in-depth reporting stages once your main priorities are underway.

A succession and estate plan are a key step to ensuring your financial security. Whether you are at the beginning of your journey or re-evaluating your plan, we can help you realize your succession goals with an in-depth wealth management program. Speak with a member of our Wealth and Investment team today to Make Peace with Your Money.

Aviso Wealth, Inc.

The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters. Mutual funds are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc). Aviso Wealth Inc. ('Aviso') is a wholly owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and The CUMIS Group Limited. The following entities are subsidiaries of Aviso: Credential Qtrade Securities Inc. (including Credential Securities, Qtrade Direct Investing, Qtrade Guided Portfolios, Qtrade Advisor and Aviso Correspondent Partners), Credential Asset Management Inc., Credential Insurance Services Inc., Credential Financial Strategies Inc., and Northwest & Ethical Investments L.P.

Paul Arsenault

Paul Aresenault, CFP®, PFP®, RIS, CKA® is Director, Wealth and Investments
Branch Compliance Manager, Qtrade Asset Management Inc.

Paul has a wealth of experience helping members achieve their goals as a CERTIFIED FINANCIAL PLANNER® professional. He coaches Kindred’s Financial Planning Team and acts as our compliance manager for Qtrade Asset Management Inc. In addition, Paul is passionate about sharing his knowledge around RDSPs with members and organizations.

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