Putting Business Succession in Your Estate Plan
If you have a family business, you probably want it to stay in the family. But passing your business on to your children is one thing. Setting your children up to succeed at managing your business can be something else entirely. If more than one of your children have an interest in taking over the reins, or if there is a great disparity between their interest and their business acumen, it becomes very important for you to develop a business succession plan and integrate that into your estate plan.
A plan for business succession does more than simply pass ownership to your heirs. Your succession plan can:
- Allocate ownership shares appropriately
- Separate ownership interests from decision-making authority, so all your children can derive income, but only the most capable runs the business operations
- Appoint a third party to manage the business for the benefit of your family
- Establish a transition timetable so that your children learn the ropes, you ease into retirement, and your customers get used to new management
- Allow you to receive retirement income
Ideally, you would implement your business succession plan over a period of months or even years. But, unfortunately, we don’t always get all the time we want. If you were to die suddenly or become incapacitated, your heirs could abandon your plan, leading to confusion and litigation over their rights in the business. However, by recording your intentions in your testamentary documents, your succession plan becomes a condition of inheritance. Your children would have to abide by your wishes.
If you’re interested in making business succession a part of your estate plan, talk to a knowledgeable attorney at the Charles Law Offices.