Selling your business can be one of the most significant financial events in your life. While the sale price and deal terms often take center stage, it's the pre-sale planning—done months or even years in advance—that can have the greatest long-term impact on your financial future. Before finalizing a sale, it's important to assess your overall wealth strategy and how this liquidity event fits into your broader personal and family goals.
Below are key wealth planning considerations every business owner should evaluate before selling a business.
Estate & legacy planning: Secure your family's future
A business sale often results in a sudden influx of capital—making this an ideal time to revisit your estate plan.
- Lifetime gifting strategies: Consider whether to gift assets now—especially if you anticipate future appreciation of the business—to reduce future estate taxes.
- Family succession: If a child or relative is taking over the practice, is the transition structured in a way that's financially and legally sound? Options might include partial sales, buy-sell agreements, or intra-family loans.
- Trust structures: Evaluate whether irrevocable trusts, including spousal lifetime access trusts (SLATs) or dynasty trusts, make sense to shield wealth from estate taxes and support long-term legacy planning.
Tax planning: Can you defer or reduce capital gains?
The sale of a business typically triggers capital gains taxes, especially if the business has appreciated significantly. Several strategies may be available to reduce or defer this tax liability, possibly until end of life when heirs could receive a step-up in cost basis. Early planning may help improve outcomes and avoid costly surprises.
Risk management: Preparing for the costly unknowns
Risks are always present—and often carry financial consequences. While selling your business may eliminate certain professional risks, new personal financial risks emerge—especially in retirement. These may include longevity, long-term care costs, market volatility, interest rate changes, and reinvestment challenges. Proactive planning helps mitigate these risks and build a more resilient financial future.
Retirement readiness: Stress-testing your financial future
You've spent your career building wealth with the goal of securing your retirement and leaving a meaningful legacy. But how can you be sure your assets are enough? Financial modeling can help provide that clarity. By reviewing your current portfolio, income sources, and future spending goals, your advisor can run detailed retirement simulations using realistic assumptions for taxes, returns, and inflation. This process can help identify the right mix of investments and insurance to support your lifestyle and protect your long-term plan.
Start planning before the deal is done
A successful sale is about more than maximizing value at closing—it's also about building a lasting financial foundation for the next chapter. The most effective wealth planning begins well before a deal is on the table. By thinking ahead and working with experienced advisors, you can make informed decisions that support your family, protect your assets, and help you achieve your long-term goals.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
