Most estate plans do not include business succession plans for the simple reason that most people do not own their own businesses. Even among those who do, they may not add the business into the plan because they fully intend to sell it and retire long before passing their assets on to their heirs. They may also not plan to leave it to their children at all.
For those owners who do want to keep the company in the family, though, a solid succession plan is critical. It helps the business transition smoothly from one generation to the next. This allows the company to remain robust and gives the heirs a valuable resource that can keep making them money.
Business successions can also be complicated. For instance, have you talked to your heirs? Do you know that someone even wants the company? Do you know that they have the skills and abilities to run it? A crucial part of the process is just figuring out who is the right person for the job. Plus, they need to agree. Don’t leave the company to an heir who has no desire to be involved, even if they have the skills to do a good job.
This type of estate planning can get additionally complicated if you’re leaving the business to more than one heir. Maybe you want your three children to al be equal co-owners. What roles will they have? Can they work together? How much will they earn? What powers do they get to make changes to the company? How will they resolve disputes?
These are just a few of the questions you need to ask. Make sure you know exactly what legal steps to take with this and all other estate planning strategies.