How Do I Pass Along My Business to Someone I Trust?

One of the most important questions any business owner has to consider is about the succession of their business: Who will take over for you? A trusted employee? Your children? What if only one child is currently working in the business? What is fair?  

That is why every business owner, whether they are running a shop, farm, tech start-up, or food truck, should have a Business Succession Plan. 

So… What is a Business Success Plan and why do I need one?

A Business Succession Plan is simply a plan for what you want to happen to your business when you retire, when you are gone, or in the event that you are injured or ill. Having a Business Succession Plan in place allows you to be prepared if something were to happen to you, or a loved one, which would result in you no longer running the business. That is why it is important to have a plan in place from when you first start your business, and not just when you are thinking about retirement. 

What is an easy mistake to avoid?

People make the common mistake of not including their Business Succession Plan inside their Estate Plan. An Estate Plan outlines what will happen to your assets (money and investments) and estate (property including businesses) after you pass away. An Estate Plan is critical to ensuring that the courts and your family know your wishes and follow them. 

For instance, if a father owns and operates a family business or family farm and does not include in his Estate Plan that he wants a particular son to take over for him, that son may lose ownership or control of the business or farm, and the family may instead sell it and divide the proceeds.

Why do I need an attorney? 

Creating a Business Succession Plan can be complicated and if you make a mistake on it, it can leave your business vulnerable to disaster. 

The right attorney understands how to integrate your Estate Plan with your desires for the future of your business, and how to create a framework that will ensure your Business Succession Plan succeeds. Simply leaving a note in your Will that passes your business along may leave that ownership vulnerable to legal challenges. 

An experienced attorney recognizes these risks and knows the importance of creating companion documents that are consistent with your vision and clearly outline how you would like the business to be run, including Buy-Sell Agreements and Operating Agreements. Your companion documents can be as simple as saying you want your son to have complete control or as complicated as putting systems in place to ensure continued operations. Think of your Business Success Plan as a key to the kingdom that includes an owner’s manual.

Let Us Help

At Grabitske Law, we love helping business owners pass along the businesses that they have built. Contact us today to get started a conversation about your Business Success Plan. We can help!