We’ll help you plan the future of your business when family is involved.
SUCCESSION PLAN/FAMILY BUSINESS SUCCESSION PLAN
While most families assume that their family-owned business will remain in their family in perpetuity, statistics show that most family businesses do not survive multi-generations. In fact, less than 3% of all family businesses survive more than three generations. One way to ensure that your family-owned business continues to remain strong and viable is to have a solid succession plan in place.
In most cases, it is generally a good idea to create a succession plan when you start your business. One of the primary reasons for doing so is that we never know what curveballs we may have to anticipate. A sudden death in a family could cause a business to close its doors almost immediately if no plan is in place to continue.
When multiple family members work at one business, there may be disagreements that arise as to who should take over in the event the primary business owner should pass away. These types of disagreements can be minimized by having a succession plan in place. While not all succession plans will prevent all disputes, they can certainly minimize them.
DRAFTING A SUCCESSION PLAN
One of the reasons it is often difficult to draft a succession plan is that few people wish to consider their own deaths. However, if your business is going to continue to thrive after you are gone, having a succession plan in place is crucial. Most businesses will maintain key man life insurance policies that will allow the business to stay liquid. However, if there is not a plan in place to keep the business running, no matter how liquid it is, failure may occur.
Solomon Richman P.C. has had years of experience in dealing with businesses of all sizes and types. We understand how critical a succession plan can be to the long-term success of your business. We can work with you to draft a succession plan that will ensure your business stays strong into the next generation.
BUILDING IN CONTINGENCIES
As unlikely as it may seem, there are instances when the person or persons who were taking over a business predecease the existing owner. Because of this, it is generally a good idea to build contingencies into a succession plan. Additionally, contingencies may be used in the event that the person named to take over is unable to for any reason including their own personal health.
Succession planning should not be taken lightly, as it is very serious. In order to ensure you have the right person taking over your business, you will want to discuss with them beforehand what your expectations and hopes are. It is also a good idea to discuss their interest in taking over the business. Otherwise, the best succession plan can still fail.
Whether you are just starting a business, have a long established business, or you are considering retirement, a succession plan can be crafted to help your business continue. Call Solomon Richman, P.C. at (516) 437-6443 and schedule a consultation with one of our business estate planning attorneys.