Many people begin their own business because they want to provide a good standard of living for their families. That motivation is why responsible adults also create an estate plan to ensure the smooth transition of their assets in the event that they become incapacitated or die.
All too often, business owners planning their estates overlook succession planning for their business as part of their comprehensive estate plan. Succession planning involves creating a legal framework for someone to take over your role and an explanation of the duties that they must fulfill.
If your business helped support you and your loved ones, you might imagine it continuing to support the people you care about after you die. Without a thorough succession plan, that dream may never become a reality.
Businesses can flounder during the probate process
Especially if you do not currently share ownership or managerial responsibilities with anyone else, your business is vulnerable in the event that something happens to you. From projects not getting finished to unpaid rent and workers not having anyone to delegate tasks to them, many issues can arise.
You should consider creating documents that authorize someone to take control of the company and access its bank accounts. From paying vendors to stepping in to take control of daily operations, there will be a lot of work for someone to do. However, they need the legal authority to do so. Just because they know what you would do doesn't mean that they can follow through.
If you don't create transfer orders or similar documents, the assets for the business may wind up frozen during the probate process. That could mean an inability to pay your staff or even basic bills like rent, leaving your business vulnerable to unnecessary failure. You need to authorize someone to take over in the event of your death or your incapacitation and inability to continue running the business.
You need to outline your role at the company carefully
A succession plan involves more than just giving someone access to your financial records and business accounts. It also involves detailing all of your obligations at the company. Just having access to an account won't do much if someone doesn't understand what bills to pay or when.
You should create a guide of your daily tasks at the company. You should also outline obligations you must fulfill weekly, monthly, quarterly and annually. The more detailed you are, the easier it will become for another person to step into your role when the time comes. Think of it as a cheat sheet for someone taking over your job.
Careful succession planning protects your business and can give you peace of mind about the future. An experienced estate and business law attorney can help you address business succession issues for your company.