If you have a small business, and you would like it to perpetuate in the event of your death, or if you retire, it is important to create a business succession plan. As the name would suggest, it is a document that is designed to ensure that your business will continue to function in your absence. Many people do this because they have family members that are going to take over the business legally from them if they decide to retire, or if they die. Here are the benefits of creating a business succession plan, legal documents that will make sure that family members will be able to take over for you in the event of your death or retirement.
How Does A Business Succession Plan Work?
This type of plan is designed to appoint an assistant, or a family member, that will replace you as the owner. As with any type of asset after death, without the proper paperwork to designate who gets the asset, it can become a substantial legal and social problem. By not designating a particular person to take over, this could involve years of litigation between family members or business partners that believe they should be the one to own and operate the business. You can work with a lawyer that can prepare all of the documentation for you so that, after you leave, the proper person will be in your place.
Components Of The Business Succession Planning
The components of this plan will evaluate the type of business that you have, how much it is worth, and the current stock valuation of the company if any. It will then state specifically who will take over, and if that person is not available, who the alternates will be in subsequent order. Once this is drawn up, and you are agreeable to the wording, you can sign this and it will be officially filed. By doing so, you can make sure that your business will continue long after you are gone, operated by someone that you have chosen.
This is a very important document to have if you are getting older, and you need to make sure certain family members or friends are the ones that will take over for you. People typically leave this to their sons or daughters, although it could be a partner that they are working with. Either way, once the documentation has been filed, the possibility of litigating decisions that people do not like will be null and void. It will ensure that your wishes for your business to continue, and that it will be headed by the person of your choice, will come to pass after you are no longer part of that company.