Succession Planning for any Business Size

Would it surprise you to know that roughly 90 percent of all businesses in America are family-owned?  Perhaps even more surprising is the fact that only 30 percent of them are passed on the next generation within the family.  Of that small 30 percent, less than half make it to a third generation.  It is a shame that so many family businesses get lost, absorbed or simply abandoned once the original creator dies or retires.  One way that can greatly protect a business for generations is creating and implementing a succession plan.  This article is going to cover some key aspects of a succession plan and questions that should be answered as part of creating this document.

Why a succession plan doesn’t always happen

One of the largest reasons a succession plan is not created when it should be is simply because planning for the future can be difficult.  Ideally, a succession plan should be created when an owner and entrepreneur is young so they can mentor the next generation to take over the business.  This is true whether the apprentice is a family member, a trusted employee or a partner.  Many owners find it difficult to face the reality that they may one day have to pass the torch to another.  Many companies arise from years of hard work, dedication, and sacrifice.  It is therefore important to find peace of mind by knowing that a succession plan addresses who will be in control of the business, and how it will be operated in the future.

Questions this plan should address

Who will take over when the owner/operator is gone?

Ideally, this will only happen once an owner is ready to retire and can comfortably pass control when they are ready.  As we all know, life can be hard to predict and unexpected tragedy can strike.  Succession plans should address who should take over if the owner dies from an accident or unforeseen health concern.

How much control would you like to retain?

One key item to consider is certain gifting strategies that will business owners to transfer portions of a business into a trust account for beneficiaries and children to protect wealth for future generations.  You can implement these trusts while still maintaining as much or as little control over the business as you would like.  Certain estate planning documents will address if your children will one day take over the business, and how they will gain the necessary management experience to do so successfully.

Contact Bowen Law Professional Group for any questions or concerns regarding a business succession plan.  This is true whether you need one, or have one that is in need of modification.  Our experienced staff can help you address key items such as income streams, tax considerations, capital gains, and many other financial planning items along with the general planning tasks mentioned above.

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How to Protect Items of Sentimental Value in Estate Planning

When we think of estate planning or writing a will, we often think of big-ticket items.  This includes items such as real estate, expensive items, vehicles, retirement plans, business, and personal investments.  While these items have a monetary value associated with them, they are not always the most important possessions in a persons’ life.  It is vital that when a person passes away, they know their Items that have sentimental value have been considered as well.  This includes things like family heirlooms, paintings, jewelry, antiques or anything that has an emotional attachment associated with the property.  Many individuals seek peace of mind by knowing that their wishes as followed and that the desired party receives the items that were meant for them.  Below is information about a personal property memorandum and how this document can be easier and more direct than a traditional will when it comes to sentimental items.

Why a personal property memorandum can be an ideal choice

A will or trust can become a lengthy and cumbersome document to constantly change or make addendums to.  This is especially the case if you are an active collector and need to add specific directions with each new addition.  The process of updating a will or trust usually requires a formal codicil or trust amendment for even minor changes to go into effect.  If you utilize a personal property memorandum, you can transform these legacies without worrying about all the traditional formalities.  It’s typically much less complicated to merely remove an old memorandum and replace it with a brand-new one when you want to make changes.  This can also avoid potential conflict in the future because the dispersal of personal property can be outlined.

It is important to realize that the validity and use of a personal property memorandum is handled on a state law basis.  Some states require that the memorandum needs to be specially stated in your last will and testament or revocable living trust, while others just won’t recognize this sort of a casual checklist in any way.  Making a list of your most treasured items and deciding which family members and friends will receive them can be highly beneficial.

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