Did you know that business succession planning is a part of estate planning? A business succession plan can be looked at like a retirement plan for entrepreneurs. You don’t want to work until the day you die, but you also don’t want your business to cease to exist simply because you no longer run it. This is where the business succession plan comes into play. It’s a plan that determines who takes over the business and on what terms. This requires proper care, consideration and preparation, and should be planned for in the earlier stages of business rather than later.
Business succession plans have a number of benefits, including, but not limited to the following:
- Business owners agree upon a price for the value of their shares of the company, so it eliminates the need for performing a valuation of the company upon death since a fixed price was previously determined;
- It aids in the timely administration of the estate;
- Policy benefits are available immediately upon death so that the price for the deceased owner’s share is covered, thereby preventing liquidation of remaining business assets to satisfy the cost of deceased owner’s interest; and,
- It gives the owner control over the outcome of the business, without which, laws, government and attorneys will inevitably make the determination.
Entrepreneurs should consult an attorney in assisting them with making a smooth and equitable transition of their business interests.
I keep trying to tell ya’ll, estate planning is for everybody – rich, poor, single, divorced, parents, pet owners, entrepreneurs, you name it.
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