For individuals who own a company, passing the business to another individual may not be at the forefront of their mind; but it should be. Succession planning involves creating a plan for another individual to either own or run the business after the person retires, becomes disabled, or dies. This process simply passes control of the business—or a share of the business—to another person through their estate plan. While passing a business to a loved one or employee may seem like an easy endeavor, it can often be more complicated than one would assume; for this reason, there are some detailed explanations to common Houston business succession questions below.
How Do I Pick a Successor for My Business?
Each business owner will look for different qualities when choosing a successor. For some, they know of a loved one that is excited to continue the success of the business. For others, individuals will select their successors from a pool of existing employees who have a hard work ethic and loyalty to lead the company. Business owners should carefully consult with potential successors to determine who they believe will manage the business best, once they have passed away. They should then name the successor in their estate plan as the new owner of the company.
Where Do I Include the Business Succession Plan?
Most individuals will create a business succession plan as a part of their estate plan. This eases the process once a person has passed away and ensure a quick transition to the next owner. However, it is also critical to inform the successor of their role and train them. This gives the successor the time to learn the skills, gather necessary information, and be prepared to take control of the business when the time comes.
Why Should I Have a Business Succession Plan?
There are multiple benefits to owners by creating a well thought out succession plan. The most important benefit, however, is ensuring the stable transition of ownership from one person to another. Without a succession plan, there may be legal challenges about who owns the business, which often has a detrimental effect on the business.
There are also benefits to a succession plan, even if the business has multiple owners or partners. First, it ensures an agreeable price for a partner’s share of the business, thus eliminating the need to evaluate their share before their death—because they agreed to the price beforehand. Additionally, a succession plan can help establish a quick and timely settlement of the deceased individual’s estate. While these benefits may seem minuscule, they actually can make a big difference for the deceased’s family and the business owners, too.
Because business succession planning is a careful and difficult endeavor, business owners thinking of creating a succession plan should seek out an estate planning attorney to ensure a smooth transition.
Contact a Houston Estate Planning Attorney
If you or a loved one needs help creating a Houston business succession plan, contact the estate planning attorneys at McCulloch & Miller, PLLC. We handle all estate planning related matters, including crafting a small business succession plan. Because a business is often very personal and sentimental to an individual–especially if they started the business themselves. We take the time to carefully explain the succession process and answer any questions you may have. To speak with one of our experienced attorneys today, call us at 713-333-8900.