BC Business
BCBusiness + Alexander Holburn Beaudin + Lang LLP | Ingrid M. Tsui, partner at Alexander Holburn Beaudin + Lang LLP, outlines what companies should keep in mind when planning for the future
Seeking professional consultation early on in the process is one of the crucial steps a company needs to take when it comes to succession planning
Preparing for succession or transition is always a pressing issue for many successful business leaders: they fully realize the importance, but they often decide it can be dealt with further down the road.
The trouble is, transition doesn’t just concern a change of hands when the boss retires: it also encompasses mergers and buyouts—which as everyone knows can come swiftly, out of nowhere.
The bottom line is that in today’s tumultuous business environment, something as important as structuring one’s company so that it’s ready for change cannot be delayed. “I’ve seen too many instances where instead of being proactive, companies are forced into being reactive, which is not a good position to be in,” says Ingrid M. Tsui, partner at Alexander Holburn Beaudin + Lang LLP, the respected Vancouver law firm that provides a wide range of business law, dispute resolution and business services to clients throughout Canada and abroad.
Tsui is part of a team under Alexander Holburn’s Corporate/Commercial Practice who is well versed in the intricacies of succession and transition planning as they relate to matters such as corporate structure, tax planning and regulatory requirements. Tsui and her colleagues also assist in personal estate planning and estate administration, which she points out is often inextricably linked to corporate transition.
Drawing on her extensive experience advising both small and big businesses, leaders thinking of retiring and passing the business onto family members or companies looking to sell to the competition, Tsui cites five important points pertaining to transition planning:
The first concerns preparing for retirement or sale of the business. “Clients have lots of options in personal and/or corporate trust planning, with opportunities to plan around our tax laws,” says Tsui. “The key is to start planning with a professional well in advance, preferably at least two years before the sale of one’s business.”
The second point is for older clientele. “Our tax laws provide excellent options for people over 65,” says Tsui. “This is the magic age when the tax rules are relaxed with regards to using certain types of trusts in estate and business planning.”
Third, business people should take into consideration planning for mental incapacity. “This is becoming a huge issue as lifespans grow,” says Tsui. “It’s vital to delegate personal and professional matters through power of attorney instruments.”
Seeking transition-planning advice from professionals is the fourth key consideration for transition planning. This step is especially important for B.C.’s corporate leaders, because B.C. has a higher tax jurisdiction compared to other provinces, and the experts know how to mitigate the impact of diverse taxation.
Finally, Tsui urges baby boomers with small businesses to tell the experts in detail what their needs are. “They may not be as well versed as big corporations in plotting their future, which is why Alexander Holburn is committed to establishing meaningful relationships with their clients. By doing so, we can determine what clients require for retirement and the exact course they want to see their company take in the future.”