Business Succession Planning
For business owners, a key component of estate planning is planning for a smooth transition of your business upon your death. With some advance planning, most businesses can be passed successfully to heirs or business partners.
In the case of family owned or closely held businesses, you will need to select a successor who will be able to carry on running the business or assist with its sale, dissolution or liquidation, if that is the plan.
In a business with two or more partners, most often succession planning is facilitated through the purchase of life insurance policies to provide the funds for each of the remaining partners to buy out the deceased partner’s share of the business. These policies may be purchased by the partners (cross purchase agreements) or by the business (entity-purchase agreements), but either way facilitates the sale of your portion of the business to your partners while your family receives the funds generated by the sale.
An important part of your succession plan is a full review and updating of contracts, agreements, processes and information vital to running your business. If necessary, employee contracts or agreements may be amended to provide stability and identify roles in the new entity. A business valuation, tax review or other steps may be warranted to build a full picture and prepare the best plan for your business. A buy-sell agreement may be drafted to be executed upon sale of your share.
A succession plan for your business greatly facilitates settling your overall estate and allows for your business, employees and customers to continue to benefit from what you have built. We can help you to put together a comprehensive business succession plan that will give you peace of mind that your business succession plan will assure a smooth transition of your business. Call our office or contact us for more information.