Planning Briefs

How To Pick A Successor To Run Your Company

Published Wednesday, June 15, 2011 at: 7:00 AM EDT

Sooner or later, it will be time to hand over the reins of your company to someone else. It might be your child or another relative who has worked for the business, a trusted long-time executive, or a complete outsider.

How to choose? Though your decision may not be easy, these suggestions could help.

Spell out your intentions to the rest of the family and give them a chance to weigh in. Don’t spring your retirement on them without any warning.
Don’t make any hasty decisions. Draw up a list of your candidates’ attributes and also consider their drawbacks. Try to avoid preconceptions and concentrate on actual performance.
Develop a comprehensive job description. This is especially helpful if a clear-cut successor doesn’t emerge right away, or if multiple family members seem qualified. Then look again at individual strengths and weaknesses for filling that position.
Don’t wed yourself to the idea of an in-house solution. Selling to an outsider could maximize your profit, and the company might benefit from a brand-new perspective.
Get away from the office. It will be easier to sort through your choices without the usual distractions.

Finally, seek guidance from your business advisors. We can provide assistance on choosing your successor and can also coordinate other aspects of your succession plan.

This article was written by a professional financial journalist for Preferred NY Financial Group,LLC and is not intended as legal or investment advice.

An individual retirement account (IRA) allows individuals to direct pretax incom, up to specific annual limits, toward retirements that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Tranditional IRA. Contributions to the Tranditional IRA may be tax-deductible depending on the taxpayer's income, tax-filling status and other factors. Taxed must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59%, distributions may be taken for certain reasons without incurring a 10 percent penalty on earnings. None of the information in this document should be considered tax or legal advice. Please consult with your legal or tax advisor for more information concerning your individual situation.

Contributions to a Roth IRA are not tax deductible and these is no mandatory distribution age. All earnings and principal are tax free if rules and regulations are followed. Eligibility for a Roth account depends on income. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).