When it comes to the future of your business, having an estate plan is essential to ensure your company transitions to a new owner. When crafting your strategy, it is crucial to consider possible events that might trigger a succession, especially those that happen out of your control.
Here are some potential scenarios that are worth addressing in a business succession plan.
Your voluntary retirement
If you anticipate stepping down as owner, there are various options open to you depending on the structure of your enterprise. You may pass the business to a child, a sibling or a more distant relative. Alternatively, you can sell your share in the company to a partner or an outside party, perhaps another entrepreneur or even another business.
Finally, you could close the business down, though this may not be easy. The Small Business Administration describes many steps that are often necessary to end a business, such as filing dissolution documents, paying remaining debts, and canceling licenses and permits. These are important to consider in your plans.
Your death or incapacitation
It is possible you will die before you retire, or suffer an injury or illness that renders you unable to carry on your duties. You can lay out a plan to transfer control to a partner or trusted relative in the event of your incapacitation. Should you die, your retirement options might also be enough to transfer ownership of your business following your death.
With a solid succession strategy in place, you can address many situations in advance so you do not leave your family or your company wondering what to do if the unexpected happens.
