TRUCK FLEET owners who wish to successfully pass their company on to their heirs not only should have a well thought-out plan in place, they should review and update plans periodically, said Terry Resnick of Resnick and Associates at the National Tank Truck Carriers annual conference May 7-9 in San Antonio TX.
“These issues may be more important than running a company on a daily basis,” Resnick said.
Inefficient succession/estate planning has led to two out of three family businesses failing to be passed down to the second generation, he said.
To avoid tax and other inheritance pitfalls, he recommended owners begin to pass authority and responsibility to adult heirs who expect to eventually own the business.
Another important part of an inheritance plan involves accurately determining the value of the company and understanding its liquidity should family members face estate taxes and other expenses in which alternative resources are unavailable.
Common goals of an estate plan also should include distribution certainty, reduction or elimination of estate taxes, guarantees that all children are treated fairly, and assurance that disabled family members will receive proper care.
Carriers should ask themselves:
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Are you working most of your life to build your trucking company only to see it eventually lost?
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Are you aware that approximately 50% of the hours you'll work in a lifetime may go towards the payment of taxes?
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Are you putting your family in the eventual position of no longer being on speaking terms?
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Will your family maintain a healthy revenue flow when you are gone?
Owners should consider what is fair and equal in a family business. “Fair does not necessarily mean equal in family business planning,” he said. “You ultimately will decide what happens with your company, estate, and family. You can choose to protect your years of hard work with proper planning or risk losing significant business and non-business assets.”
He recommended separating the family structure from the business structure by delegating titles and responsibilities based on ability, not age, and a governing board should be established to ensure leadership roles can be assumed once earned.
Resnick said that owners typically make common mistakes, such as failure to use IRS gift regulations to their benefit, leaving everything to a spouse, improper planning for use of jointly held property, and making will errors.
He also reminded company owners to be aware of the total property in an estate and the specific inheritance planning required for it. He listed cash, real estate, personal property, retirement plans, business interests, investments, tangible assets, revocable trusts, annuities, and life insurance.