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Business succession as part of your estate plan

| May 28, 2021 | Estate Planning

As a business owner, it’s clear that your most valuable asset is that business. When doing your estate planning, you may start thinking of ways to leave the business to your children.

 

On the whole, this process is known as business succession planning, and it’s incredibly important. You don’t just want to hand the keys over to your heir in a will. You need a complex plan that makes it possible for the business to succeed moving forward. Here are a few key things to keep in mind.

 

You should start as soon as you can

 

The ideal way to begin business succession planning is to bring your heir into the company years before you hand it over to them. Talk to them about the long-term goal of transferring ownership and then begin showing them the ropes in person. The more experience they can get at your side, the smoother that transition is going to go.

 

If you have multiple heirs, have conversations with all of them

 

You do not have to leave your business to all of your heirs. However, if you’re planning to leave some of them out, it helps to talk about it first so that they know that was your intent and they don’t dispute it later. If you’re planning to include them all, these conversations are still helpful so you can figure out what roles they will all take.

 

Consider the business’s needs, as well

 

Don’t just think about what is best for your heirs, but also consider what’s best for the company. Do not create a plan that makes it difficult for the company to thrive just because it’s what your heirs wanted. For instance, if picking one heir to run the business is better than splitting ownership among multiple people, don’t be afraid to do it. The business matters, your employees matter, and you need to consider the ramifications for everyone.

 

Creating your plan

 

Setting up an ideal business succession plan is crucial for your company, your family and everyone else involved. Make sure you know what legal steps to take.

 

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