Business succession planning isn’t something that you want to put off. It’s often best to start as early as possible. In many cases, this means taking more than a year to make a business succession plan. It may be better to start the process 3 to 5 years before the business changes hands.
It’s important to consider this when making an estate plan. Perhaps you’re considering leaving your business to one of your adult children so that they can run it after you pass away. Doing so is certainly possible, but you don’t want to just surprise them with the business as an asset that has been allocated to them in your will. Rather, you want to start working with them years beforehand so that they’re ready.
Why is this beneficial?
One of the major benefits here is that starting early means you can give them on-the-job training. They’re probably going to have a lot of questions about how to run the business. It can be valuable if they just spend a year watching you do it, without even contributing to major decisions. This way, they can learn from you and your experience, rather than having to figure everything out on the fly after they take over.
Additionally, consider that business succession planning can sometimes lead to conflicts. Say that you have two adult children, but you only want one to take over the business. It’s often easier to have these conversations in advance, so you can explain your reasoning and talk to all beneficiaries about their involvement. If you don’t, then beneficiaries could get into conflicts or even estate litigation after the fact.
If you’re ready to start working on your business succession plan this year, it’s time to begin looking into all of the necessary legal steps.
