You may have spent decades building up your business and creating a financial empire – but all of that could come to an end when you die because you didn’t plan ahead.
Business succession planning is a critical part of estate planning for small (and larger) business owners if they hope their companies will survive far into the future.
Why succession planning matters
Succession planning is essential for a company’s continuity and stability. Good succession planning can keep all the operations of a business running smoothly even after the death of its founder (you). That drastically reduces the uncertainties and disruptions that can come from sudden leadership changes.
What are some key steps to take? Consider these:
- Start early: You really need time to identify the company’s needs, make a plan, look for the right solutions and start providing necessary training to your chosen successor. You also need time to decide who will inherit what roles from you, and that means looking carefully at all potential candidates.
- Consider what needs to be done to minimize taxes and keep the business out of probate. There are numerous strategic approaches to the issue that will allow you to pass your business to your children and chosen beneficiaries without putting the company through the probate process or exposing the business to unnecessary taxation. These include the creation of family limited partnership, family LLCs, grantor retained annuity trusts (GRATs) and grantor retained unitrusts (GRUTs), among other things.
Business succession planning is all about maintaining your legacy – as well as the company’s vision, culture or values. It’s also the only way to protect the financial interests of the other stakeholders. Discussing your legal concerns about succession planning in depth may help you better understand your options.