Planning for the Future: 6 Reasons You Should Have a Succession Plan in Place

It may seem unnecessary to create a succession plan for your business if you’re in good health and you plan on running your business for decades to come, but you should always prepare for unexpected circumstances. If you don’t specifically address your company’s needs in your estate planning, your business could suffer.

1. Your Minor Children Could End Up Owning Your Business

When you own a business, it is considered personal property. If your Will doesn’t cover what will happen to your business after your passing, it falls under the residuary clause. This means that your next of kin will automatically become the owner of your business. As a result, your business could end up in the ownership of your minor children, creating unneeded stress for those left to manage your estate.

2. Your Business Could End Up at the Center of a Complicated Legal Battle

Even worse, consider what could happen if you don’t have a Will at all. When there is no Will, family members might agree on how assets should be divided—or they could fight bitterly over your money and assets. There could be multiple people vying for your business, leaving it in limbo until the ensuing legal battle ends.

3. Your Employees and Customers Depend On You

Consider the implications of a legal battle or ownership conflict. Your employees depend on your business for their livelihood and your customers rely on you to meet their needs. During a protracted legal battle, operations could slow down or cease entirely. Your business could lose its customer base and decrease in value, or you could leave employees and customers in a difficult position.

4. You May Have to Follow Strict Ownership Restrictions

Additional restrictions apply when you own a franchise. While planning your estate, you should carefully review the terms of your franchise agreement. Many agreements have specific requirements that franchise owners must meet. If your Will does not pass ownership of the franchise to a qualified individual, your business could be in danger.

5. Your Family May Not Want to Run Your Business

When an estate doesn’t have a specific plan for a business, family members may have to unexpectedly take over a company’s operations. However, consider this: your family might not want to run your business after you pass. If you truly want your business to thrive after you pass, create a plan that accommodates the needs of everyone involved and puts business operations in the hands of a capable, dedicated individual.

6. You Know What You Want for Your Business

The bottom line is that you know what you want for your company. The best way to ensure that your business has the chance to grow after your passing is comprehensive estate planning that plans for a variety of situations and circumstances.

You’ve worked hard to build your business—make sure your efforts continue to pay off when you’re no longer able to run your company. Call (804) 864-5268 to schedule a consultation with Wilson Law Group, PLC.

The following two tabs change content below.

Wilson Law Group

Jim Wilson is the founder and principal attorney of the Wilson Law Group. For the past 25 years he has been combining legal dexterity with an entrepreneurial mindset to help aspiring and established business owners start, finance, buy, sell, and run their companies.

Latest posts by Wilson Law Group (see all)