Survey shows lack of succession planning

Almost two-thirds of business owners have not made succession plans for transferring their business when they die, according to a Merrill Lynch survey on Americans' attitudes about estate planning.

Conducted by International Communications Research, the Merrill Lynch Estate-Planning Survey found many business owners have taken no action to ensure a smooth transfer of business interests, according to a press release from Merrill Lynch.

Of those who have taken action, only:

?39 percent have established or updated the valuation of their businesses;

?33 percent have provided for the availability of funds to continue their business;

?30 percent have designated management succession;

?42 percent have consulted a professional for planning assistance.

"Research shows half of all family-owned businesses fail to survive the first generation of ownership due to inadequate estate planning," said John Qua, senior vice president and director of Merrill Lynch business financial services.

For the first time, Merrill Lynch surveyed estate-planning professionals, including 102 attorneys and 50 accountants to see if their perceptions meshed with those of business owners. Thirty-seven percent of professionals said identifying ownership and management succession for business owners are the most important areas to consider in estate planning. Only 12 percent cited minimizing taxes and only 11 percent cited having liquidity to keep businesses going as most important, the release stated.

The actions that business owners considered most important were providing funds to continue the business (70 percent) arranging for the sale of the business (66 percent), preparing a buy-sell agreement (62 percent) and arranging for the transfer of ownership (57 percent).

Professionals stated that they believe the most common estate-planning mistakes made by business owners include no succession or transition plan (38 percent), failure to plan (24 percent), failure to minimize taxes or lack of knowledge about tax laws (16 percent), and insufficient cash flow (14 percent).

To receive a free copy of the Merrill Lynch Estate-Planning Survey, call 800-MERRILL, ext. 3491.

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