How to do good succession planning in your PMI

Succession planning aims to anticipate risks

Ensure legal certainty, continuity in business management and generate tax savings. These are some of the many benefits of succession planning for companies that can be the difference between keeping the business or closing it, after the absence of a manager.

However, the most important thing, and what makes estate planning essential for the health of companies, is the possibility of planning in life, generating actions that will facilitate the succession process and avoid future legal disputes.

Succession planning aims to anticipate the risks that may arise in the event of the incapacity or death of managers. Based on a thorough and specialized analysis, a plan will be developed to respond to each of these risks.

Specifically, in the case of corporate succession planning, two paths follow one another in parallel. The first is related to the cause of death, which concerns inheritance and tax matters, the second concerns management issues, or how the corporate powers will remain in the event of death. This planning primarily avoids subsequent litigation and litigation.

It is important to start the discussion early

Bringing the discussion to a time when the manager can still mediate decisions, declare his will and, above all, work out a plan for his absence together with all those involved, guarantees business continuity in any adverse situation.

Both in matters of business management and in matters of succession of assets and rights, this action brings legal certainty and can be decisive between maintaining the business or closing it.

In our legal experience, we have seen situations where a lack of estate planning has resulted in company accounts being frozen until a court decision is reached, which can take days or even weeks. During this period it is possible to lose big deals or even be swallowed up by competitors. Risk that is exhausted when there is succession planning.

Another benefit is the possible tax savings, which are notable when there is forward planning. There are tax aspects in which the lack of planning ends up causing higher costs, such as the ITCD (Tax on Transmission Causa Mortis and Donation of Goods or Rights). On the basis of the analysis of the assets of the manager and of the company, it is possible to anticipate donations or even create a family holding with already defined shares, which, not infrequently, brings benefits.

Expert analysis

The choice of the procedure to follow will depend on an analysis specialized in company succession planning and may be different, varying from case to case. These actions generate savings in transfer taxes after death, and in some cases, new installments may not even be required. The main advantage is that these actions avoid the immediate unavailability of assets in the event of death.

Furthermore, it is important to underline that estate planning, with the creation of holding companies for example, can lead to significant savings in time and money with the succession process, since settlements can be anticipated with the heirs, without, however, revoking all The current owner of the assets has management and decision-making powers over the assets themselves.

In this sense, business succession planning prevents future bureaucracy and prevents a large company from ending up due to lack of preventive action.

Diego Weis Júnior is a partner of Moreira Garcia Advogados, accountant with an MBA in Tax Management; Tulio Alencar is a lawyer and legal manager at Moreira Garcia Advogados, a specialist in civil law.🇧🇷

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Source: Terra

Camila

Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.