How to Prepare to Transition Your Stock Before Retirement

If you want to learn about transitioning your stock upon retirement, this new three-part video series is for you.

If you own and run a company, a time will come when you will need to transition your stock to a new shareholder. Even if you aren’t ready to retire yet, there are several steps you should start taking to prepare right now. We’ll go over a few of the most important steps in our latest series: Strategies for Transitioning Your Stock.

Whether you decide to sell or gift your stock to a friend, colleague, or family member, the first step you must take is to consider your estate plan. For instance, should you own your stock outright, or should “ownership” of your stock fall to your trust?

Owning your stock outright, as opposed to running ownership of your company through a trust, could result in a hefty estate tax when the time comes to sell your stock. Getting your estate plan in order early on is critical.

On that note, don’t split wealth evenly between your children if some of them aren’t working within the business. It may seem like the obvious choice, but giving stock to children who aren’t active in the business can create a lot of conflict later on. Jealousy, animosity, and general negativity can begin to fester, otherwise.

A good alternative is to simply supplement your other children’s inheritance with wealth from other sources. This way, you are still leaving equal assets behind. Getting a life insurance policy that will help create equity among your estate’s recipients is another great option.

If you’d like to learn how the process of transitioning stock to family members actually works, be on the lookout for part two of this series, which will be coming up soon. As always, if you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.