O P I N I O N
Death, taxes, and retirement
If done correctly, an owner’s retirement and its benefits can be just as certain as death and taxes.
I t is common knowledge amongst AEC firm owners that, with proper guidance from an attorney and a tax advisor, the impact of death and taxes on a business’s operations can be minimized with careful planning. However, most AEC firm owners fail to realize that retirement itself can be just as detrimentally impactful on their firm’s ability to continue normal operations as death or taxes if it is not properly planned for well in advance.
This holds especially true for business owners who are responsible for the day-to-day operations of their firm. As most firm owners already know, overseeing the firm’s operations, employees, and projects leaves very little time to think about what life will look like after reaching that “golden age” of retirement. Most importantly, there is also little time to determine the answers to some vital questions: How will new owners be selected? How will business decisions be made? Will you continue to work for the firm at reduced capacity? How will you, the retiring owner, be paid for your respective percentage of ownership once you do retire? The simple answer is to be proactive in your ownership succession planning and to document your firm’s decisions within its respective governing documents. This process should begin
with a comprehensive review of your firm’s governing documents and internal relationships to determine the necessary actions required to implement a strong succession plan that minimizes the risks associated with an owner’s retirement. With proper planning, you can get out, get paid, and ensure that the firm is capable of continuing normal operations while being managed by the right people. In regard to entities organized as a limited liability company (“LLC”) or as a professional limited liability company, the firm’s operating agreement, in particular, should be carefully drafted to reflect the owners’ desires in a manner that provides comprehensive guidance to both current
See JUSTIN RAMIREZ, page 4
THE ZWEIG LETTER JUNE 22, 2020, ISSUE 1350
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