For most people, a comprehensive estate plan includes far more than simply the creation and execution of a Last Will and Testament. A well thought out estate plan should accomplish a variety of additional goals aside from determining who will receive your estate assets when you die. For example, tax and probate avoidance as well as incapacity planning are components that are commonly included in a comprehensive estate plan. If you own a small business, business succession planning should also be included in your overall estate plan.
To understand why you need a business succession plan it helps to consider what could happen without one. Ask yourself the following questions:
What would happen to your business if you died tomorrow?
What would happen to your business if you were in a catastrophic accident next week and were incapacitated as a result?
Who will take over your business when you retire, die, or become incapacitated?
Is your successor prepared to step into your shoes?
Are there sufficient liquid assets to cover the tax implications of your death?
Do your children know your plans for your business?
Will there be conflict because of your chosen successor?
These are just a few of the questions that a business succession plan attempts to answer. The reality is that only a small fraction of all small businesses make the transition to the next generation. A major contributing factor to the failure of most small businesses making the transition is lack of planning. If sufficient liquid assets are not available to cover the taxes due when the owner dies, for example, crucial assets must be sold to cover the debt. The next generation never even has the chance to try and run and grow the business.
By including a business succession plan in your estate plan, however, you can plan for things that are likely to occur upon your retirement, death, incapacity, divorce, or even bankruptcy. Each of these events could dramatically impact your business. With a business succession plan in place though your business will be prepared and will be able to withstand the impact.
If you are a small business owner or partner, or the owner of a family business, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment to discuss your business succession plan.