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Horizon Elder Law & Estate Planning Blog

Tuesday, December 11, 2018

Business Owners - Do You Have a Business Succession Plan?

Developing a business succession plan is an important step in the estate planning process. Business owners should have a comprehensive business succession plan that covers a variety of scenarios, including retirement, injury, illness, inheritance, and selling the business. A California asset protection attorney can help develop a plan for your business and guide you through the steps of an effective implementation of your business succession plan.

What is a Business Succession Plan?

A business succession plan is a process of determining how you will transfer your business upon your exit from the company. Your exit could be your retirement, but it could also be an unexpected event. With a business succession plan, you cover possible eventualities so that whenever the time comes for you to exit the business, you have an effective plan that provides maximum financial benefit for you and your family members.

What Steps Are Involved in Developing a Business Succession Plan?

Each business venture is unique because each business owner’s goals and objectives are unique.  Therefore, one of the first steps in developing a succession plan for your business is to identify your specific objectives and goals. Do you want to transfer the business to a family member or employee? Should you sell the business? If you sell the business, how will the proceeds be distributed? What happens if you become disabled and cannot operate the business.

There are many different scenarios that you and your California estate-planning attorney will discuss as you develop a succession plan for your business. Business succession planning should be closely tied to your estate plan. Retirement income, tax planning, and other financial considerations impact both your estate plan and your business succession plan.

Some important components of a business succession plan include:

  • How involved will family members be in the business? Does anyone in your family have the skills to operate the business or the desire to operate the business? What are ways you can provide for family members who are not involved in the business?

  • Provide a guide for training your successor, including how you intend to transfer responsibility and ownership to your successor. Develop a timeline for delegating authority to the successor.

  • If you want to sell your business when you are ready to exit the business, or you become disabled, what ways can you maximize the value received for the business? How can you take advantage of certain tax benefits to lower the tax liability for the sale of the business? Will you sell to a third party or an employee?

  • What is your management succession plan? Who are the key members of your management team and how can you keep them on board when you exit the business? What ways can you maximize the retention of key employees?

  • How can you structure the transfer of the business to limit taxes from the transfer of the business, including estate and gift taxes?

    Do You Have Questions – A California Estate-Planning Attorney Has The Answers


    The above list of things you need to address in a business succession plan is not an exhaustive list. Your succession plan is customized and tailored to fit your business, your goals, and your needs. Contact our asset protection lawyers today for a consult. Working with an experienced California estate planning attorney can help ensure you address all issues to ensure your business succession plan accomplishes your goals and desires.

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