Creating your business took time, energy and strategy. You watched it grow and flourish and become the successful company you envisioned.
To ensure your legacy continues, it’s imperative that you create a succession plan as part of your overall estate planning.
What is a succession plan?
A succession plan is a strategic process that helps ensure your family business can continue to run smoothly after you retire. It can be broken down into three key components:
- Identifying potential successors within your family. Depending on your company’s size and structure, it could be one person or multiple people.
- After identifying potential successors, you will need to train them and help them develop the skills they need to take over the business.
- Once you feel they are ready, you need to create a plan or timeline for when you retire and transfer duties.
It’s also essential to decide how and when the changes will be communicated to employees, customers and vendors.
Since estate planning relates to all of your assets, including your business, it makes sense that your succession plan should be included. The transition of your business to the next generation will impact your personal estate and likely have tax implications. A well-crafted business succession plan can help minimize these taxes, ensuring that your heirs won’t have to sell the business to pay them.
Family businesses can also sometimes involve complex relationships and conflicts. Your estate and succession plan can help address how these conflicts will be resolved to ensure minimal disruption to the business.
Succession planning and estate planning are essential to preserving your legacy. With a clear strategy, you can ensure the continuity of your business and prevent family conflicts. However, with all the complexities involved, it’s crucial that you work with someone who can help you create a legally sound plan.