Uniquely Qualified Estate Planning And Probate Attorneys

How can you create an effective succession plan?

On Behalf of | Jan 10, 2023 | Estate planning |

Your business’s succession plan protects your legacy. Most business owners create a succession plan to free them up to retire or to have a plan in place in case something happens to them.

While all succession plans look different, there are some basics to creating a valid plan.

Document your business’s value

Before you create a succession plan, you need to find the actual value of your business. Whether you retire or leave the company due to an accident or death, you need to know the price of your business. To find the business’s value, you can use a CPA or agree on the value amongst the other partners.

Seek out a successor

Part of your succession plan should include the successor. In business partnerships, it may be easy to hand the business to one of the partners simply. However, you need to consider your successor options if you do not have a partner. A successor can be an officer within your company who you can trust to take your place or it can be a family member interested in taking over the family business.

Consider an entity-purchase agreement

An entity-purchase agreement protects your business partner or successor if you die. Your company purchases a policy that states if one partner dies, then the policy buys the decedent’s share. Entity-purchase agreements make it less likely for the company to have cash flow issues after your death.

A succession plan can help maintain the value of your business. Businesses that can run without the owner have a higher value.