A Minneapolis Estate Planning Attorney Explains the Value of Drafting a Business Succession Plan for Small Business Owners
Business succession planning is a practice or set of estate planning practices used by business owners to ensure that a small business can run successfully in the event of their death or in the unfortunate circumstance where they are unable to manage or operate the business. I receive a lot of inquiries on this topic. People want to know if they need a business succession plan or if they are somehow covered by wills and living trusts. I usually walk people through a basic set of questions such as:
- If you die or become incapacitated, can a trusted person run your business successfully without your guidance and support?
- Would your family be able to hire an appropriate person to run the business without your assistance?
- Are there partners involved in this business?
- Do you want this business to “stay in the family” or do you want it to be sold to support your family? More importantly, does your family want the business?
While I ask these questions and more, I have to be honest and say that I already know what the answer should be. Yes, you need a Business Succession Plan because as “they” say: an ounce of prevention is worth a pound of cure. Even if you believe your family is well-equipped to handle things if/when you are gone, you really don’t (and won’t) know until that time comes. Having a well-thought out Business Succession Plan at least eliminates a great many of the questions that your family would have to ask someone (at a high hourly rate) should something happen to you.
There is also often a miscommunication between generations on whether the named successors even want the business. Perhaps your son or daughter does want it. But, maybe not! Please discuss this with them to be sure you are leaving it to someone who will care and nurture it as you have.
Just recently one of my clients became incapacitated and the Business Succession Plan he and I created “kicked in”. His partner is now able to operate the business and keep it running until he is back on his feet again because we successfully planned for it. Had we not prepared so thoroughly it is possible that the salon would have closed within a month. Think about it, who would pay the utilities? The rent? Salaries?
Protect that which you worked so hard to build. Call a qualified estate planning attorney today.