Succession planning in the time of COVID

After all was said and done, Cynthia would be paying millions of dollars more to the government than if she had taken care of things a few years earlier.

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Succession planning failure failing to take action during COVID

This takes place in the spring of 2026.

Cynthia was completely overwhelmed by the decisions she suddenly had to make. Her husband, Robert, passed away from cancer last year and she was still sorting through the estate planning documents.

While in his 20s, Robert started a construction company that grew to be a successful business and was still going strong with their two sons now running it. The operational and management transition from Robert to his sons had gone smoothly, but now transitioning the ownership to them was becoming a big headache.

While Robert and Cynthia had begun the ownership transition process years earlier, they put the planning on hold when COVID-19 hit in 2020 due to the uncertainty in the economy. Their tax advisor encouraged them to continue moving forward because of the favorable tax laws and lower valuation prices, but that didn’t change their mind. Since the economy remained sluggish for the next two years, they initially felt good about their decision to not invest the time and money into completing the process.

Cynthia was now beginning to second guess that decision with construction booming and the family business doing great – worth four times what it was at the bottom of the recession and worth much more than what she needed to meet her lifestyle. Normally Cynthia would think the exponential growth was great, except that she now unexpectedly must pay taxes on that growth, coupled with higher tax rates. And now that gift exemptions had gone down, she would also have to pay taxes on what she was gifting to her sons in excess of the exemptions.

Cynthia was faced with paying millions of dollars more to the government than if she had taken care of things a few years earlier. On top of that, she was dealing with it all by herself. If only she could go back to 2020 and work with Robert to maximize the opportunity and complete this important aspect of their business and life.

Don’t be like Cynthia and miss your one shot...