How can I pass down my business to the next generation?
Your business likely represents your life’s work. It is crucial that you protect your business through business succession planning. Without a succession plan in place, the unexpected death of a business owner could jeopardize the ongoing success of the business. Our experienced estate planning attorneys offer an overview of business succession planning options so that you can rest assured your business will continue on to the next generation.
What is a Business Succession Plan?
Business succession planning is the process by which a business owner creates a plan for the future of their business in the event of their retirement, disability, or death. Without a business succession plan in place, your ownership in the business may transfer to heirs whom you would not have selected or could be absorbed by shareholders upon your death. Through business succession planning, you can set out your desires for the future of your business when you can no longer be a part of it.
Selecting Your Successor
One of your options when it comes to building a business succession plan is to pick a successor. Your role as the business owner is a complex one, so chose your successor with care. Most family business owners will elect to pass their ownership share down to a trusted family member. Business owners could also consider a loyal employee to take over their place.
Selling Your Business
Alternatively, business owners who do not want to choose successor could elect to have the business sold upon their death to a business partner, employee, or third party. You will want to ensure that a fair price is paid for the business. You can either agree to a value in advance with the intended purchaser of the business or specify a means of determining a valuation at the time of your death.
You have many options when it comes to business succession planning. For some owners, a business succession plan will focus on the successful transfer of the business to your heirs, while for others it will involve exit strategies to avoid tax issues and maximize returns. Contact an estate planning attorney for assistance with crafting your individualized plan for the future of your business.