If you’re a business owner, estate planning is important, but another type of planning may also be important -- succession planning. Succession planning is planning related to the carrying on of a business, either after a key person’s retirement or after their death.
Some businesses simply won’t survive the death of a business owner. For example, if the owner of a one-person consulting business dies, that business will almost certainly die with the owner. There may still be assets left in the business, but the business will no longer be operational in the sense of being able to provide services to clients.
However, other businesses, such as family farms or restaurants or manufacturing businesses, may continue to operate long after the deaths of their owners or key shareholders. For such a business, succession planning is essential, so that the business doesn’t end up falling apart just because the owner or a key shareholder died unexpectedly.
Succession planning can be complex. It can involve the drafting of unanimous shareholder agreements, the purchasing of key-person life insurance, and the preparation of plans for certain people within a business to take over the operations of the business upon certain events transpiring.
A lawyer with experience in estate planning may or may not have experience with business succession planning, but you should definitely discuss succession planning issues with your lawyer when you’re engaged in estate planning. If your estate planning lawyer can’t assist you, they may be able to refer you to someone who can.