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What Should a Business Estate Plan Include?

If you are a business owner, creating an estate plan is essential to protect your business and your legacy. Your estate plan preserves your business assets for future generations, ensuring that your family members continue to reap the benefits of your hard work even after you pass. There are many things that a business estate plan can include, and some of them may be more relevant to your business than others.

Below are the main documents that a business estate plan can include:

  • Financial power of attorney: gives another individual the power to make financial decisions about your business in the event of your incapacitation.

  • Trust: trusts help minimize tax liability and pass assets to loved ones without going through the probate process.

  • Buy-sell agreement: a contract that specifies how a partner’s share of the business should be reassigned after retirement or death.

  • Life insurance policy: provides liquid assets so the business can keep running even after a leadership change.

As your business grows, you may add estate planning documents or revise the ones you already have. If you are a business owner and would like to create an estate plan, it is never too early to start. Contact our law firm for more information by calling 510-901-5375.

What is a Business Succession Plan?

A business succession plan assigns a person to take over your business if you retire, pass away, or become incapacitated due to illness or injury. A business succession plan is crucial when creating an estate plan for your business because it helps reduce conflict between family members and makes the transition much smoother if you are no longer in charge. Depending on your wishes and how your business is structured, you can use a business succession plan to pass along your business to a family member, sell your shares to a third party, or even close the business.

Our team can help you create a business succession plan to do the following:

  • Provide structure for a smooth transition between owners

  • Ensure business continuity after you pass away

  • Provide directions for the future of your business

  • Protect your business interests

  • Create a dialogue between you and your successor

  • Avoid tax liabilities

  • Minimize disputes between family members

  • Increase your business value

Once the plan has been created, it is essential to review it regularly as your business expands and changes. You may need to adjust your plan or change your successor as you grow your company and train new people. It is also vital to create a training plan to ensure your successors can take over the business with confidence. For more information about a business succession plan, contact our team of attorneys.

What’s the Difference Between an Internal and External Succession Plan?

When creating a succession plan, you can choose between an internal plan and an external one. Internal succession is transferring ownership to family members or key employees, while external succession is selling the business to an outside party.

Below are some of the key differences between internal and external planning:

Internal Succession

Family succession is a popular internal succession option. It involves passing the business to a family member with careful estate planning and communication. Family succession can include mentoring, gradual ownership transfer, and training. Other beneficiaries could receive gifts, like partial ownership of the business.

A management buyout is another internal succession option. Instead of leaving the business to a family member, you can sell it to key employees who understand your business and its goals. A management buyout is an attractive option for those with loyal employees who have been around for a long time.

External Succession

If you would like to sell your business, external succession is a good option. Selling to a competitor or a strategic buyer can benefit your business and the other party. Similarly, partnering with a private equity firm can grow your business while allowing you to either remain a partial owner or exit the business entirely. If you are interested in selling your business to a third party, our team can advise you of your options and make recommendations based on your financial goals.

Can You Combine Internal and External Succession?

In some cases, you may want to combine both internal and external succession planning options. These strategies are becoming more popular, especially among business owners who wish to maximize their business potential and value.

Below are the most common hybrid succession plans:

  • Employee Stock Ownership Plan (ESOP): allows employees to acquire ownership over time through a trust that holds shares for them. This plan benefits employees financially while aligning their interests with the company’s success.

  • Partnership with a Strategic Investor: strategic investors give the business insight into their expertise and resources while still remaining independent. This plan facilitates the business’s long-term goals while still retaining partial ownership.

If you would like to minimize your tax liability while maximizing your profits, a hybrid succession plan may be right for you. Our team will review your financials and make a recommendation so you can meet your goals while creating a succession plan for your business.

Should I Consult an Estate Planning Lawyer?

As a business owner, you understand just how important it is to have the right person take over your duties and responsibilities. With the right estate plan in place, you can ensure your business maintains its profits and reputation long after you retire or pass away. An estate planning lawyer on our team will advise you on the right business succession plan and other estate planning documents to give you the peace of mind you are after. For a free consultation and to learn more about our services, contact The Singh Law Firm today by calling 510-901-5375.


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