If you are a business owner of a family company who is making an estate plan, additionally crafting a business succession plan is important for the future of that business. This process is similar to estate planning, but focuses exclusively on what will happen when the next generation takes over the company.
Business succession planning is generally something that you should do with the person who will be taking over the business. This can promote more effective communication, especially if you’re thinking of leaving the business to multiple heirs. You can talk with them about what roles they want, what skills they have, if they see themselves being part of the company at all, and other potentially consequential issues. Making this effort can also result in the following additional benefits.
It can help to prevent disputes
Making this effort lowers the odds that one’s heirs will get into a dispute later. They can talk with you about any issues in advance. You can create a plan that fits their lifestyles and expectations. This can help the actual transfer of the business go much more smoothly.
It can inspire focused training
In the best-case scenario, you likely want to bring your successors into the business and train them on the job. Some business owners will do this for years before the transfer takes place. This can help to ensure that they are actually prepared, rather than just suddenly stepping into their roles when you pass away.
Planning for the unexpected
Finally, making a business plan succession plan means that, if something unexpected happens, your family and your business will be more ready for the aftermath, even if you had planned to leave the business to the next generation much later in time. Most people think that they have many years or even decades before that plan will be needed. But if there’s an unexpected illness or injury, you’ll have the peace of mind of knowing that the plan is already in place.
If you do not yet have a business succession plan in place, you can see how beneficial it may be. It’s important for you to carefully consider all of the legal steps you need to take as you move forward, so seeking legal guidance proactively is likely going to be to your advantage. Seek out an estate planning attorney who has experience in helping business owners develop and implement a business succession plan.