In the everchanging landscape of modern-day organizations, ensuring stability and seamless transitions in leadership has become a paramount concern. After putting years of work into planning and growing your business, you can protect your investment by creating a succession plan. With a thoughtful and well-structured succession plan in place, you can feel confident that your business will remain viable even in the event of a retirement, or any other inevitable type of leadership change. Using estate planning strategies to inform your succession plan can increase the chance of your business’s survival and bolster its overall resiliency and longevity.
What is a succession plan?
A succession plan is a document that clarifies the next steps for a business when a founder can no longer fill their role in the business. It is never too early to establish a succession plan and ideally part of the initial setup of a company, or at least well prior to the anticipated execution of the succession plan. Because a succession plan is often executed unexpectedly due to unforeseen circumstances, you want to have your succession plan established while you are in control of and well equipped to still run your business. When a business owner creates their estate plan, including their expectations for their company can help the executor, beneficiaries, and any partners involved in the business to carry on their legacy. Typically, a succession plan aims to transfer ownership and management control as seamlessly as possible but can also help lay the foundation for uninterrupted operations, continuity, growth, and stability of the organization.
What will happen to my business without a succession plan?
If there is no succession plan in place when an owner steps away from a business, the business becomes a liability and a collection of debts and assets. The executor becomes responsible for these debts and assets and may try to keep the company viable, but the business may suffer without proper leadership. For example, a lack of succession planning may lead to the following:
- Power struggles between the partners and heirs of the deceased.
- Loss of the founder’s vision and knowledge, resulting in a business that can no longer make efficient plans for the future or complete the jobs and services it was meant to complete.
- Lack of leadership.
Avoid this frustration by talking with your legal advisor and including a succession plan in your estate planning conversations.
How to communicate a succession plan.
Keep your succession plan accessible to anyone you want to have involved in your estate distribution and your business. Talking to your executor and ensuring they understand your business expectations can avoid confusion and make their job in estate divisions easier.
Creating your estate plan with the help of an experienced attorney skilled in handling both business concerns and estate planning can give you extra peace of mind.
We Can Help.
Are you a business owner without a succession plan? We can help. Chenoweth Law Group has successfully assisted organizations throughout the Northwest develop effective, well-structured succession plans. Call us at 503-446-6261 or contact us online, anytime!
