There’s no shortage of business advice articles aimed at starting a business, growing a business, or even selling a business. But there’s one area of business advice that is often neglected: succession planning. It’s a darker area of business planning that not many people want to dwell on for too long, but as a business owner, it’s important to have an up-to-date will in place should the unexpected happen.
Succession planning is the official documentation that sets out what you would like to happen to your business if you are no longer able to run it, either because of retirement, or even injury and death. You might think “I’ll be dead, what does it matter to me?” This is a potentially problematic approach. If you want your business to flourish without you, then succession planning is essential. The legal networks around business succession planning isn’t quite as logical as one might think. The best person to keep running your business might not be the person the courts decide should take over.
If you’re married or have children, succession planning is also essential to ensure everyone receives their fair cut. If you’re not yet convinced, consider these four reasons you should get your business will in order…
Advocate For Your Business When You Aren’t Around
Succession planning isn’t only about what happens to your business if you pass away, it also covers any time where you are incapacitated and unable to make decisions. If you were to get in a car accident and be unable to work or make decisions for 6 months, this could cripple your business and leave you with nothing when you are back to work. Succession planning allows you to decide who will take the helm if you aren’t around, and this could help to save your business in a pinch. If you employ people, you will also be ensuring that you are protecting their jobs.
Ease The Tax Burden On Your Family
If you pass away without a succession plan in place, then your partner will inherit your whole business. If they decide to sell, rather than run the business, then this money will become part of their estate and subject to inheritance tax when it is passed on to your children. However, if you decide that the business should be placed in a trust after you pass away, your family will continue to benefit from the business without being subject to extra tax burdens.
Avoid Unnecessary Family Disputes
Imagine the following scenario. One of your children works in the family business while your other children have pursued other careers. After you pass away without a business will, the courts decide the business should be split equally between your children. This leaves the child running the business with a difficult position: they will either have to buy out their siblings, or sell the business. With a succession plan in place, you could place one child in charge of the business and give the other children a greater share of your other assets. Succession planning helps to avoid getting dispute resolution solicitors involved at a time that you family should be supporting each other, rather than fighting over the spoils.
Succession Planning Is Easy To Do
Many people avoid writing a will because they worry that it is too difficult, but all it takes is a quick call to a wills solicitor in order to put a plan in place. If you’re scared of complex legal language, a good solicitor will help to cut through the jargon and express your wishes in the simplest way.
- Last Will and Testament: AFSB