ESOPs: A Valuable Tool for the Closely-Held Business

Lorman Education Services

Many closely held businesses have little or no succession plan in place. As a result, the day a founder or primary shareholder leaves the business often results in significant adverse consequences for the company, the employees, and the exiting owner. ESOPs offer transitional flexibility that can facilitate succession planning. An ESOP is a tax- qualified retirement plan authorized and encouraged by federal tax laws. Unlike most retirement plans, ESOPs:

• Are required by law to invest primarily in the shares of stock of the sponsoring employer.
• Are trusts that hold shares of the business for employees, making them beneficial owners of the company that employs them.
• Can provide tax benefits to the company and to the exiting owner(s).

Attendees can learn the basics of this valuable tool for business succession in this course and leave equipped with an introduction to ESOPs which can be useful in advising clients on business succession.

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