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The Difference Between Estate Planning and Succession Planning

Estate planning for such an estate is often primarily focused on the question of how to transfer the business to the owner’s heirs at the lowest transfer tax (i.e., estate or gift) cost. In most cases without addressing specifically how the transfer will potentially impact the business, the business owner and his or her family. 

Succession planning, on the other hand, is intended to be a more expansive planning approach addressing not only the question of how to reduce or avoid transfer taxes but also questions of how, when, and to whom the business interest should be transferred. In addition, depending on the exit strategy – the question of retirement from active participation in the business is also a part of succession planning. 

One of the first issues to address in any succession plan is to establish the goals of the business owner in terms to whom, when, and how the business is to be transferred. This is true whether the transfer is to take place by lifetime gift or testamentary transfer to a family member or by sale to an outside third party.  The estate planning attorneys with their backgrounds as tax and transactional attorneys are uniquely qualified to assist the business owner in developing and implementing a sound succession plan.



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