Nobody Lives Forever: Succession Planning Vital to Protect Your Business and Family
It’s never pleasant. But planning for your death or serious illness is a vital part of owning a business. No matter how much you exercise and eat healthy, you can’t predict if and when the bus will hit you. In his latest Huffington Post column, attorney Jack Garson writes that planning for the future is critical and the challenges of succession – both professionally and personally – don’t go away if you ignore them.
In Hit By a Bus, How to Protect Your Business, Your Family and Yourself, Garson writes that you need a succession plan that takes into account the particular needs of your business, such as:
- The tax consequences your estate will face and how that might force a sale of the company.
- Structuring your company’s loan covenants so that succession does not accelerate loan repayment. Involve your likely successor and executive team with your lenders so that any transition will be seamless.
Garson also has these suggestions:
- Avoid or phase-out your personal guarantees of any company contracts.
- Create an agreement that provides for the orderly transfer of your interest in the company. This agreement may involve the sale of your interest in the company to existing partners or to other company leaders.
- Provide your successor and other executives with increasing responsibility, especially tasks and projects that will build relations and confidence with your company’s key stakeholders.
With these and other considerations in mind, as well as the assistance of your advisors, board of directors and executives, you can create an effective succession plan.
The need for planning exists. The results are worse if you ignore the difficulty. On the bright side, many people take great comfort in knowing that they have thoughtfully planned for the business and people they cherish.
For more information about Jack Garson visit www.garsonlaw.com.