As we continue to count down the Top 5 Contractor Strategies for 2022, not all of them are as top-of-mind as income taxes and cash flow. Strategy #4 is one of the more overlooked topics for most construction contractor executives – not because it is not important, but because most times, it is not immediate.
Strategy #4: Don’t Neglect Your Succession and Estate Planning
On the succession side, having a plan in place to identify, engage and create success for the next executive is imperative. In an industry where there is a skilled labor shortage, not to mention the Great Resignation, a formalized and practiced succession plan acts as a differentiator for future-facing contractors.
In terms of wealth preservation, owners of construction companies still have the opportunity to transfer highly valuable assets out of their estates – gift tax free. By utilizing the lifetime gift tax exemption, which is $12,060,000 per individual for 2022, an owner can move the ownership of the company to the next generation while controlling the tax implications. Like current income tax rates, this was subject to potential change in 2021 and is scheduled to sunset in 2025. To the extent the owner of a construction company has not done this type of planning yet, 2022 is the time to get strategic on this point.
This article is the fourth in the series, Top 5 Contractor Strategies for 2022, from Grassi’s Construction team. Also read about our first three strategies to help your construction company navigate the year ahead:
Strategy #1: Get Ready for Your Paycheck Protection Program (PPP) Audit
Strategy #2: Live Your Cash Flow Forecast and Budgets
Strategy #3: Evaluate Your Income Tax Strategies