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Reasons to Consider a California Business Succession Plan

Posted on in Estate Planning

San Franciso estate planning attorneyStarting your own company and being your own boss can be a dream come true for many people. However, being a business owner is a major responsibility. Before embarking on this type of endeavor, it is crucial that you understand business law and also prepare for the future. Although some individuals may not like to think about it, there will eventually come a time when you are no longer on this Earth. Planning ahead ensures your wishes are carried out in the event of your death or if you become incapacitated during your lifetime. Even if you have a family businesses that goes back several generations, it is essential that you set up a plan for transition. A business succession plan is a legally binding document that outlines who receives ownership of your company. A skilled estate planning attorney can help you create this important legal document.  

Protecting Your Interests

A business succession plan gives you control in determining what happens to your company, such as an agreeable price for the business. It may also eliminate the need for a business valuation upon your death. In addition, it can designate the steps for determining how the value will be determined upon either death or retirement from the business and how those funds will be paid. Life insurance may be included in the plan, which means the full policy benefits can be instantly accessible so the funds can be used to pay for your part of the business. This will help protect the business from being sold as a way to cover your interest costs. A will or a trust may also be used to designate how a business will be transferred from owner to owner. Regardless of the transfer method, it is critical that any successor has the proper training, preparation, and access to any documentation or records in order to operate the business successfully after you are gone. 

In some cases, your business partner(s) may purchase your share of the business after you pass away. Selling the business upon your death may be an attractive option since it can provide for your family, and they do not have the responsibility of running the business. Selling to a trusted individual or organization can give you a peace of mind that the business will continue and thrive, as opposed to having a stranger take it over.

Here are a few of the main issues to carefully consider when making your business succession plan:

  • Assign ownership (within the family or an outside party, such as a business partner).
  • Write down goals for the company (future growth, profit). 
  • Determine a dispute resolution method.
  • Identify successors (spouse, child, sibling).
  • Include transition details (financing if purchased by another party, implementation timeline).

Contact a Sunset District Estate Planning Lawyer 

A business succession plan is vital to protect your company since it most likely took you a long time to build it. A knowledgeable San Francisco County estate planning attorney can assist you in drafting this essential piece of your estate plan. Attorney Martin Alperen is known as “The Rolling Attorney,” and he has proven success in both the government and private sectors, including all areas of estate planning. For your convenience, Attorney Alperen will meet clients wherever they are for confidential appointments, and he also offers virtual meetings. Call 415-534-1200 to schedule your free consultation. 

Sources:

https://www.calhr.ca.gov/workforce-planning/Pages/Current-Workforce-and-Succession-Plan-Status.aspx

https://www.calhr.ca.gov/state-hr-professionals/Pages/State-of-California-Succession-Management-Model.aspx

https://www.courts.ca.gov/8865.htm?rdeLocaleAttr=en

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