What is a succession plan?

| Mar 25, 2021 | Estate Planning

When you die in California, your properties, assets and business interests don’t just disappear. You’ll have to write an estate plan that dictates what happens to your business after your death. This plan could also help you prepare for other scenarios, like reaching retirement age or becoming incapacitated after an accident or illness.

How can you plan ahead for your business?

When you start the estate planning process, you could write a succession plan that prepares for three possibilities: death, incapacitation or retirement. If you don’t want anyone else to run your business when you’re gone, you might opt to simply shut it down when you retire or pass away. If that’s the case, your estate planning attorney may help you figure out what to do with your assets.

You could also nominate someone to take over your business when you’re gone. This could be a family member or an employee who works for your business. If you decide to take this route, make sure you tell them about your decision so that they can prepare for it. You might want to take the time to teach them how to run the business while you’re still in charge. Your succession plan could also include instructions on running the business and training your successor for the job.

If you have a business partner, you could sell them your shares in the business. This gives them full ownership and lets you enjoy the proceeds. You could also sell the business to someone who’s shown interest in buying it after you’re gone. In any case, to make the best succession plan, you’ll have to write instructions for all possible scenarios. You don’t know what’s going to happen in the future, so it’s best to plan for your business ahead of time.

When should you write your succession plan?

Even if you don’t plan on retiring soon, an attorney may help you write a succession plan. If you don’t have one, you’ll have little control over what happens to your business if you die or become incapacitated. While you’re writing your succession plan, you could also focus on other aspects of estate planning, like distribution of non-business assets.