Often small business owners don’t have a plan in place to protect the business or your obligations if the owner dies unexpectedly – particularly at a young age. Older business owners are more likely to have an estate or succession plan in place to take care of their personal and business responsibilities and to distribute your assets.
Surveys taken by banks and insurance companies in recent years found that most owners haven’t created what’s known as a succession plan that provides for who will own and run a business after the owner’s death. But even those who have plans may not have written them or communicated them to anyone — including their chosen successors.
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What Is A Business Succession Plan?
If anything unexpected happens to you, a succession plan will help your business run smoothly, save money, and reduce stress. Business succession planning requires making and documenting financial and management decisions about your business if you retire, die or become disabled.
When launching a start-up, most entrepreneurs aren’t thinking about planning their exit strategy. A business succession plan requires forming an exit strategy, drafting complex legal instruments, ensuring the business is in order, and who will work on the owner’s and heirs to make certain their wishes are put into effect in a legally binding manner.
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What Is In A Business Succession Plan?
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What Is In A Business Succession Plan?
An estate planning or business inheritance attorney can provide advice about tax and estate issues in your state, and issues faced by small businesses or family-owned businesses in transition. Key employees, business relationships and your heirs should know there is a succession plan in place, and who can access it.
A succession plan should be reviewed and updated annually, or whenever there is a major change to the business.
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