The concept of business succession planning and estate planning must be taken together for anyone who owns a company. There are many different ways that businesses can be transitioned after the sole owner exits. Many people fail to consider that exiting on purpose is not the only way that someone could leave a business.
A sudden divorce or incapacitation could present unique challenges in the business owner’s life, meaning a sudden departure. Many people still wish to actively control their businesses until they pass away, and therefore succession must be addressed in their estate planning documents in terms of their personal representatives. Others may have a clear transfer of power opportunity during their lifetime and may be able to continue as an employee or consultant of the business or retire completely. In certain situations, when power is transferred the business may be sold but there are other situations in which ownership may be retained.
The most difficult way for a client to leave a business is to sell it over the course of his or her lifetime, and then either retire or start a new venture. All of these different options are available to those who are contemplating the benefits of estate planning and business succession planning, and these should always be discussed with a knowledgeable lawyer.