Does Your Estate Plan Include Your Business Succession Plan?

For business owners, a comprehensive estate plan must include a roadmap for succession planning.

While estate planning and business succession planning may seem like two separate processes, they often overlap. For example, a business owner’s estate plan should address whether the business will pass to family members and continue to operate, or whether the business will be sold. We collaborate with your corporate attorney to coordinate your corporate documents and your estate planning documents.

Whether you are looking to transfer ownership of your business to a trusted colleague, partner, or family member, below are key considerations for a smooth transition of your business.


What Makes a Strong Business Succession Plan?

The factors in a strong and effective succession plan vary between different business owners depending on business size, industry, and goals for the independent growth or the eventual sale of the business. Commonly, a good succession plan outlines the following:

  • Who are the individual(s) who will take over business ownership after the owner retires or passes away?
  • Who will serve in the various roles to continue business operations or sell the business?
  • What is the process to resolve disputes related to the transfer of the business ownership?


Business owners should discuss these guidelines with their legal representatives to help determine the steps to take to resolve these matters.


How to Accomplish a Seamless Succession

Business owners planning for the future of their organization must be prepared to take a holistic view of their business to determine what will be lost after they pass. As part of this evaluation, business owners should recognize potential leadership opportunities among current staff members as well as potential gaps in talent and skill that may arise from a restructuring.

Succession planning may take a long view of your business’s specific industry, for instance, 10, 15, or 20 years down the road. Consult with your staff and industry analysts and determine what burgeoning technologies and talent profiles may help your business continue to succeed in the coming decades if that is your goal.


The Importance of a Sustainable Vision for the Future

When determining the successor to their organization, business owners should be able to clearly see the vision that their successor has for the future. As an example, owners of small businesses may want to keep the organization in the family after they pass. However, the next generation may not share the vision that a previous owner has for the business, or even share the interest in continuing the operation altogether.

To plan for succession, business owners should focus on successors who share compatible goals and strategies for the organization. Business owners should also ensure that any potential successors will be fully prepared and trained to take on their new roles. This process can often involve a trial period wherein the successor takes over as a de-facto owner for a set period to become fully adjusted to their forthcoming responsibilities.


Where Succession Planning and Estate Planning Meet

Depending on your vision for your business after you pass, an experienced planning attorney can help you reach your specific goals. For some business owners, succession is less about asking, “How will my business survive after I pass?” and more about asking, “How can my beneficiaries fully inherit the business to sell as a major asset after I pass?”

With the guidance of an estate planning attorney, a corporate attorney, a financial advisor, and a business advisor, business owners can discover the true value of their business and help determine whether to continue the business in new hands or to help their beneficiaries prepare for a potential sale.

Without a clear direction for succession plans, shareholders may enter heated, and potentially litigious disagreements over the direction of the organization. For smaller, family-owned businesses, inadequate succession planning can result in the permanent fracturing of family relationships.

Please contact our office today if you would like to schedule an appointment to discuss your estate planning business succession.

At Sessa & Dorsey, we consider the bigger picture at hand and advise our clients on the best estates and trusts for their specific needs and desires. If you have questions, please contact us at (443) 589-5600.


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