You might be feeling a sense of relief after completing your will, powers of attorney, advanced life directives and other instruments of estate planning. However, if you are the owner of a company or small business, you will be remiss in your duties without first establishing a comprehensive business succession plan.
Your intent might be that your business closes its doors upon your demise. But even then, there will be nuts and bolts tasks that someone will need to complete. Without a structured blueprint that allocates those responsibilities, you run the risk of putting grieving family members in the position of having to make prudent decisions at a time when they are most ill-prepared to make the best choices. Below is some valuable information to consider.
Allow for business continuity
If you are married, your spouse may depend on the income from your business even more once you have passed. Shuttering the business might be the worst option you have. Consider a plan where key employees are well-placed to step into leadership rules to steer your company out of the crisis of losing its founder so the revenue stream remains uninterrupted.
Understand the tax implications for your estate
You don’t want a big chunk of your business profits to get handed to the government, so work closely with your tax adviser to make sure you take full advantage of all tax breaks for your business succession plan. This will help you pass the most you can to your heirs.
Begin to transition your business now
You may hope to pass your company down to one or more family members. If that’s the case, you can begin implementing your plan years before you leave this earth. Pay attention to the capabilities, strengths and any weaknesses of your proposed successor(s). Your estate planning attorney can discuss various ways to transfer company ownership incrementally over time, while still keeping you at the helm of your business during your lifetime.