As a business owner, your estate planning needs will be more varied and intricate than those of other individuals. Since much of what you have to protect – and then to distribute after your death – is the wealth you will have accumulated through business ownership, you must ensure your estate plan includes protection for your business assets in addition to your personal property. This is what makes sound business succession planning so important. However, developing a succession plan is more involved than providing for the division of your personal assets among your beneficiaries under your will or through your revocable living trust. Your business assets will survive and retain their value after your death only if someone is in place and is equipped to carry on the business or knows how to preside over an orderly dissolution and distribution of the most valuable of the business assets. The Law Offices of S. David Worhatch are ready to address the wide variety of questions that inevitably arise when a business owner puts pen to paper in this area. Here are some of the most frequent inquiries entrepreneurs have about succession planning.
4 Common Questions Concerning Business Succession Planning
What Is the Purpose of Succession Planning?
A business succession plan will help preserve your operations and the value of the business assets by allowing for a smooth transfer of ownership in the event you can no longer run the company due to death, disability, or any other hardship. Sometimes, this can be as basic as making sure those who succeed you know how to maximize the value of the business assets left behind. Other times, this will involve allowing for your successor(s) gradually to acquire greater and greater stakes in the business enterprise until they effectively buy you out as you embark on retirement. Still, other plans will provide for a charitable trust to receive the business assets (or some portion of them) for conservation and income generation while the charity itself takes on the task of finding an appropriate successor. Succession planning gives you the opportunity to express your wishes for who should take control of your business and how the process should be conducted to achieve the most orderly transition possible.
What Is the Difference Between Succession Planning & Estate Planning?
Succession planning is part of the overall estate planning process. While an estate plan is designed for you to leave instructions regarding the distribution and administration of all your assets, a succession plan focuses principally on protecting your business interests by addressing the sale and transition of your company. Sound planning involves coordination with your will and/or revocable living trust in conjunction with the tax planning and financial strategies you employ with the help of other trusted professionals.
When Is it Time to Start Succession Planning?
Yesterday! A year ago! It’s vital for every business to have an exit strategy in place. Thus, succession planning isn’t something to put off. Failing to do so can cause a number of problems for your loved ones, successor(s), and employees. Keep in mind that it can take several years to prepare and implement a solid succession plan, and you need to make sure your successor is properly trained and capitalized to take over.
How Often Should a Succession Plan Be Updated?
Once your succession plan has been completed, you don’t want to make the mistake of putting it away and never looking at it again. Over time, a number of things can happen that will make your plan no longer relevant. It’s best to review it at least every two years and update it as often as necessary to ensure it remains in line with your current life and business situations.
Creating a business succession plan is key to ensuring your operations can maintain its profitability in the future. The Law Offices of S. David Worhatch will help you put together a plan that is customized to fit your company’s needs and those of your family and employees. Offering more than 35 years of the sort of experience needed to develop and carry out a solid succession plan, Attorney Worhatch has guided entrepreneurs in and around Summit County, Ohio, through the estate planning process, ensuring they’ve prepared as best as possible for whatever life may bring. Call (330) 656-2300 to schedule a consultation or visit his website to learn more about safeguarding your legacy.