Estate planning for business owners in Cape Coral is not complete without a succession plan. After all, you have spent years cultivating a successful business, so it only makes sense to ensure that business continues as you wish once you are no longer a part of it. There are several steps to take when business succession planning.
First: business valuation
First, you’ll want to have the business, and your share in it, valued. Certified public accountants can assist in these matters or an attorney can help business partners reach an agreement as to the business’ worth. If the company is a corporation, the current market value of the publicly-traded stock may be used.
Second: selecting a successor
Second, if you want your business to continue running after you have left it, you’ll have to choose a successor. For a family business, the successor is often a younger family member. It is important that you discuss your choice of successor with the entire family, so your wishes are understood. This can also help alleviate resentment that those who are not chosen may hold.
Life insurance as a means of passing on the business
If the business is a partnership, and the partners do not have a buy-sell agreement in place, life insurance may be purchased as a means of passing the business on to the remaining partners, if that is the end goal. Cross-purchase agreements and entity-purchase agreements are two options worth considering.
Include your business succession plan in your estate plan
A business is a complex entity and thus there are special considerations business owners must keep in mind when estate planning. Attorneys are valuable in such situations, especially if they have experience in multiple areas of law. Sometimes business succession is accomplished through a simple will or trust, while in other circumstances a life insurance policy is the right vehicle for the job. Ultimately, business owners should consider succession planning sooner, rather than later, so that their wishes are met, and the future of the business is not placed in limbo once they leave it.