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Why business succession planning is often a key aspect of estate planning

On Behalf of | Feb 22, 2024 | Probate & Estate Planning |

Estate planning gives people the opportunity to take care of their loved ones and address resources that have either financial or personal value in advance of their incapacitation or death. The decision to leave certain assets to family members, for example, can help families continue valuable traditions and can provide an emotional touchstone for those who have recently lost a loved one.

People in unusual circumstances may have different estate planning needs when compared with the general public. When the person planning their estate or updating their estate planning documents is a business owner, they may also need to consider succession planning. Doing so can eventually have a major impact on the business that they own and operate.

What is a succession plan?

A succession plan is essentially a means of preparing to have another party take over someone’s role at a company. Some companies require that those in key positions create succession plans. Other times, the person who owns or runs a business has to make that decision on their own behalf.

Succession plans sometimes include short lists of candidates who could take over someone’s position or important criteria that their replacement should meet. Succession plans may also include information about a position not made available to people elsewhere and can provide resources for training the professional who may take over someone’s role at a company.

Why succession planning matters

The business that someone operates could very well be the most meaningful resource because it may outlast them. It can establish a long-term legacy by continuing to serve the community and employ certain professionals.

However, organizations may flounder and end up failing when an owner or executive suddenly dies or becomes incapacitated. A succession plan helps ensure that the company can weather unexpected challenges involving organizational leadership.

A succession plan helps preserve a company and ensure that the workers who rely on a business for employment can continue working there for the indefinite future. Simply addressing ownership in a will or other testamentary documents is not sufficient. Those in leadership roles need to ensure that their company can continue operating if they can no longer do their jobs. Creating a succession plan helps to ensure that a business can survive a sudden disruption in leadership.