The thought of someone else handling your business may be difficult to comprehend. You’ve worked long and hard, and know exactly what it takes to run it. However, one day you won’t be around, and it is important to designate who will best carry on your business when you are no longer able.
A business succession plan is not just a type of will for your business. A complete plan includes shareholder buy-sell agreements, management plans, and any other documentation vital to the success of the business. Beyond delineating who will take over your business, a succession plan’s main goal is to keep your business running just as smoothly as when you were behind the controls.
If you fail to create a business succession plan, any family member or executor that attempts to take over your business without proper authority could be held personally liable for business debts and any decline in the business’ value. Your heirs will still be entitled to receive all profits from the business.
With a succession plan, you can outline who will have the authority to continue your business, or whether it should be sold or liquidated. You can also identify potential buyers and whether they would have the means to purchase the business in a timely manner.
All involved parties should be aware of and sign the succession plan while you are alive and involved in the business. Your spouse should also be informed of these decisions, and your employees should be aware that you have made arrangements to safeguard their welfare in the event of your death. This document should be filed with the proper authorities, and can be created with an estate planning team, which should consist of your attorney, accountant, and qualified financial professional. With proper planning your business will still be running smoothly long after you are gone.
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