You may not want to think about a time when you will no longer be a part of your business operations. However, you must give yourself ample time to ensure that your shares of the business land in the right hands. This is when a business succession plan coinciding with your estate plan may come in handy. Follow along to find out what information to include in your business succession plan and how a proficient Broward County estate lawyer at The Probate Lawyers can lead this process.
Who should I select as the successor of my business?
You may have several existing business partners, employees, family members, and other loved ones whom you trust. This may make it difficult for you to appoint just one as the inheritor of your shares of the business. Rest assured, below are some methods to help you select the right successor for your business:
- Consider evaluating the qualities that you wish your successor to possess (i.e., personality, knowledge, experience, leadership skills, etc).
- Consider conducting interviews for the individuals who have expressed interest in being your successor.
- Consider assigning tasks and challenges to the individuals who have expressed interest in being your successor.
- Consider reviewing the performance evaluations of existing business partners and employees who have expressed interest in being your successor.
Importantly, you must communicate your plans to appoint a certain successor to your business. This is so you can confirm that this individual is able and willing to take on this responsibility when the time comes. And in the meantime, you can help prepare them by training and mentoring them.
What contents should I include in my business succession plan?
Formally, you must designate a business successor via a business succession plan within your estate plan. Essentially, a business succession plan is a legally enforceable document that outlines who is to take ownership of your business shares should you incapacitated or, sadly, pass on. Within this plan should be the following contents:
- Succession timeline: this outlines when a succession should take place (i.e., on your retirement date or whenever you become incapacitated or pass on).
- Prospective successors: or, you can disclose a single successor should an oral agreement have already taken place.
- Formalized standard operating procedures: FSOP outlines relevant business information (i.e., training guides, employee handbooks, business models, etc).
- Business valuation: this outlines the financial value of the business, along with how you measured this and when this was mostly recently calculated.
- Succession funding: this outlines how the successor’s purchase of your business shares is to be funded (i.e., life insurance policy, seller’s note, etc).
You must tackle your business succession plan as soon as possible. So call a talented Broward County estate lawyer from The Probate Lawyers today.
