Pit & Quarry, September 2012

a sale that occurs before the sellers death may be subject to capital gains tax Liquidity strategies equal cash So called liquidity strategies permit a business owner to take cash out of the business in exchange for the transfer of assets to another individual While liquidity options are most common with sales of a business to a third party they can also be used when the assets are being transferred to family members or business insiders such as partners A private annuity involves the sale of property in exchange for a promise to make payments for the rest of the sellers life Here ownership of the business is transferred to family members or another party the buyer The buyer in turn makes an unsecured promise to make periodic payments for the rest of the sellers life a single life annuity or for the sellers life and the life of a second person a joint and survivor annuity A joint and survivor annuity provides payments until the death of the last survivor in other words payments continue as long as either the husband or wife is still alive Again because a private annuity is a sale and not a gift assets can be removed from an estate without incurring gift tax or estate tax A self canceling installment note SCIN permits the transfer of the business to a buyer in exchange for a promissory note The buyer must make a series of payments to the seller under that note A provision in the note states that upon the owners death the remaining payments will be canceled SCINs provide for a lifetime income stream as well as the avoidance of gift tax and estate tax in a manner similar to private annuities Unlike private annuities however SCINs give a security interest in the transferred business Starting the process The first step to succession planning involves clearly establishing the quarry sand or gravel plant owner shareholder or partners goals and objectives as well as the aggregates operations current human and financial resources Consider the following How much control of the business do you want to maintain Is there someone capable of running the business once you step down Are there key employees who must be retained Are there sufficient assets to pay the estate tax equalize the estate and keep the business How much money is needed to reach the owners financial goals While clarifying those goals and wishes is important its not enough The aggregates business owner also needs to communicate his or her vision with family business partners and key employees Business Finance Multi ply Your Money use the excavator rock ripping Multi Ripper Multi Ripper Hi Cap Multi Ripper Bucket Multi Ripper Bucket or the 6 to 9 times the force of a standard 5 tooth bucket TM Maximize force one tooth at a time using our patented SHanks on ARC technology Celebrating Our 10th Year Designing Innovative Products Made in USA 4 times faster than a hammer Rips the sides of the trench flat with no depth limitation Leader in Excavator Rock Ripping Attachments to order 866 928 5800 or 508 829 4855 ttachments Inc WWW DIGROCK COM sales@ leattach com eading dge 70 PiT QuaRRY september 2012 www pitandquarry com