In this article, you can discover…
- How to hand down your business successfully.
- Whether or not to inform employees of your succession plans.
- How an attorney can help you and your family navigate succession plans.
Is Business Succession Planning Only For Large Companies?
Business succession planning is actually more critical for smaller businesses than it is for larger ones. This is because larger companies typically have formal structures and plans in place since there tend to be multiple stakeholders involved, such as stockholders or LLC arrangements. Small businesses, on the other hand, often lack these predefined systems, which can lead to significant complications when a key owner or leader exits unexpectedly.
For example, in a small business, there may be uncertainty over who owns assets like the company vehicle or whether those assets could become liabilities for remaining partners. Without a clear succession plan, such ambiguities can create unnecessary disputes and headaches for everyone involved.
Is It True That My Business Will Automatically Go To My Family?
While business interests, such as stock certificates or membership shares, are part of your estate and may pass to your family through probate, this process is not automatic. Without a proper estate plan, the court determines how your business is distributed according to state law, which may not align with your wishes.
It’s essential to include specific instructions in your estate plan, such as through a will, trust, or buy-sell agreement, to ensure your business transitions smoothly to your desired beneficiaries. This can avoid probate delays and protect the business’s continuity.
Do I Need To Pick Only One Successor For My Business?
You can choose multiple successors if doing so suits your business needs. The decision is case-specific and depends on the size and complexity of your business. For example, one person might handle administrative tasks like paying bills while another manages day-to-day operations.
Sam Mansoor of Legacy Law Centers has years of experience helping small business owners in Virginia navigate the hurdles associated with succession planning. His tailored strategies address concerns unique to family-owned and closely held businesses, from identifying successors to minimizing tax burdens. Sam has guided numerous clients in creating plans that preserve business continuity and family harmony and is ready to do the same for you.
If you’re ready to protect your business’s future and avoid unnecessary complications, contact Legacy Law Centers to craft a customized succession plan today.
Is It A Myth That I Shouldn’t Keep My Succession Plan Private From Employees?
Key employees, especially those named as successors or involved in leadership, should be informed of the succession plan. This ensures clarity and preparedness. Sharing the plan with all employees, especially those not directly affected, may not be necessary and could create unnecessary speculation or concern. A balanced approach will allow for transparency where it matters most while maintaining confidentiality to avoid unnecessary disruption from occurring.
Do All Succession Plans Involve Selling The Business?
Not all succession plans require selling the business. You can retain ownership within the family while appointing a trusted employee or manager to run daily operations. In many cases, the successor may receive incentives, such as increased pay or equity, to ensure effective management. Succession can be tailored to meet your goals, whether through continued family ownership, leadership transfers, or other arrangements. Selling is only one option among many.
How Do You Address Clients’ Concerns When They Believe That Creating A Succession Plan Will Cause Unnecessary Conflict Or Tension Within The Family?
Addressing family conflict concerns in succession planning requires a case-specific approach. For example, if a father and one son run a successful painting business while another son has no interest in it, a fair solution may be crafted: the father could plan for the son involved in the business to inherit it while the uninvolved son receives a cash equivalent from the estate to equalize their shares.
Timing is also critical. If the son inherits the business after the father’s passing, he benefits from a step-up in basis, minimizing capital gains tax. Receiving it earlier could lead to significant tax liabilities based on the original, lower basis. Balancing fairness and financial strategy significantly helps reduce family tension and ensures equitable outcomes.
Still Have Questions? Ready To Get Started?
For more information on Common Myths About Virginia Business Succession Planning, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (571) 260-0827 today.
Sam Mansoor of Legacy Law Centers has years of experience helping small business owners in Virginia navigate the hurdles associated with succession planning. His tailored strategies address concerns unique to family-owned and closely held businesses, from identifying successors to minimizing tax burdens. Sam has guided numerous clients in creating plans that preserve business continuity and family harmony and is ready to do the same for you.
If you’re ready to protect your business’s future and avoid unnecessary complications, contact Legacy Law Centers to craft a customized succession plan today.
