Operations | Succession Planning
HOW TO CREATE A SUCCESSION PLAN FOR YOUR C-STORE Formulating a succession roadmap is a key element of estate planning, but c-store retailers have various strategies they can use as they prepare to transition the business. Mark Battersby • Contributing Editor
Estate planning involves all of the assets in an individual’s estate including an ownership interest in a convenience store business. Thus, succession planning should be part of an estate plan — or undertaken before that estate plan. Even more importantly, a succession plan for the business can help ensure that a closely held or family business, however big or small, will continue to operate successfully when the owner or owners exit, retire, pass away or are suddenly incapacitated. As with estate planning, succession planning should start with a review of current transfer taxes — otherwise known as federal or state inheritance, gift or generation-skipping transfer taxes. The federal estate tax applies to a decedent’s gross estate, which usually includes the person’s financial and real assets. 128
CSTORE DECISIONS •
November 2022
The amount of an estate that can be excluded in 2022 is $12.06 million or $24.12 million for a married couple. The gift tax applies to transfers of money or property made while someone is living. The federal gift tax ranges between 18-40% and applies to the giver, not the recipient, for amounts above $16,000 in 2022. TRANSITION STRATEGIES
Keeping in mind the estate and gift taxes, planning for succession is not a one-size-fits-all or one-time event. Generally, there are a number of transition strategies including: The ESOP Option: An Employee Stock Ownership Plan or ESOP is an employee benefit plan that gives workers ownership interest in the convenience store business, in the form of shares of stock. ESOPs give the business — the selling shareholder — and participants a number of tax benefits, making them qualified plans in the eyes of the Internal Revenue Service (IRS).
cstoredecisions.com
