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30 Ways to Transfer Ownership to a Successor

November 10, 2016

Succession planning is serious business but many owners fail to prepare, either through inaction, disinterest, not knowing how to start or what to do, or other priorities. What they do is their concern even though lack of a plan combined with a sudden death or disability can cause much disarray for stakeholders or dissipated value for the owner’s family.

For those that want to know somewhat how the process works, here are 30 ways ownership can be transferred to a successor. The following was abstracted from a speech I regularly present with this blog’s title.

  1. Sell the stock
  2. Gift the stock
  3. Stock given as additional compensation
  4. Stock and cash given as additional compensation
  5. Nonqualified stock options
  6. Incentive stock options
  7. Restricted stock issuance
  8. Stock options or restricted stock issued in tandem with cash
  9. Golden parachutes
  10. Phantom stock
  11. Shareholders’, members’ or partners’ agreements
  12. Clauses in compensation agreements
  13. Setting up a new business
  14. Clauses in a will
  15. Living trust combined with an option
  16. Stock redemption
  17. Installment sale
  18. Self-canceling installment note
  19. Installment sale to a “defective” grantor trust
  20. Charity remainder trust
  21. Grantor retained interest trust
  22. Employee stock ownership plan
  23. Sale-Leaseback
  24. Preferred stock recapitalization
  25. S election
  26. A B stock recapitalization
  27. Private annuity
  28. Stock Split Up
  29. Family Limited Partnership
  30. Leveraged buy-out

Many of the above methods are usually used in combinations. Additionally, many can be done pre or post death – it just needs the proper contractual agreements. This list runs the gamut of simple to complex but there is always a way to get it done for a willing client.

A word of caution is that many of these methods are highly technical and provisions of the Internal Revenue Code and Regulations must be strictly adhered to. Additionally, in some cases it might be desirable to secure an IRS ruling.

The above should give you an understanding that these things do occur. It just needs the owner to initiate the process.

One Comment leave one →
  1. 6hawthorne permalink
    November 10, 2016 7:41 am

    Hi Ed This is a great list I will keep it Thanks Bob Nagler

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