Generally, many people see Estate Planning as a way of making sure their assets go to Beneficiaries of their choice when they are no longer around, with minimal issues and delays. Though correct, this is not exhaustive. A comprehensive Estate Plan also incorporates a succession plan for your various businesses and holdings; especially when it becomes practically impossible for you to continue managing them actively due to incapacitation or death. Business succession planning is therefore, the process of deciding the methods and timing of the transfer of ownership in a business and the transition and training of the management of that business.
For your businesses to continue to run in your absence, succession planning is critical. How do you want the business to run? Do you want your children to take charge of running your business, or one of your partners or an employee? Without a written plan, the funding to make it happen and careful grooming of the right successor, the business you spent most of your life building and running may not survive without you.
10 critical questions must be answered when developing your business succession plan;
1) What factors will determine new ownership of the business?
2) Will the business be carried on or sold to a third party?
3) Who will manage the business if it isn’t to be sold?
4) If sold, will the original management be retained or will new outside managers take control?
5) How and when should ownership and management be transferred?
6) Should transfer of the business be during one’s lifetime or thereafter?
7) Is there sufficient income for retirement?
8) What happens in the event of sudden death or disability of yourself or key management?
9) What tax consequences of the business should you be aware of?
10) What options are available for tax savings?
In summary, business planning is key to your entire Estate Plan. Next week, we will review how to use Trust as part of your Business Succession Plan. Look out for the post on this page next Thursday.
In the interim, if you have questions on our subject this week, do speak with a professional Estate Planner at FBN Trustees and we will be happy to offer advice on how you may go about the succession planning aspect of your Estate Planning.
Send us any additional questions you may have on Estate Planning, Trusts, Wills, Executorship and Estate Administration via SMS to 0706 1331 146, Twitter (@fbnquest), LinkedIn or Facebook (fbnquest). You may also tune in to listen to the Legacy Series radio programme on Classic 97.3 FM Lagos by 7pm on Mondays or Cool 96.9FM Abuja, by 8.30am on Tuesdays.
Visit www.fbnquest.com/legacyseries for more information.
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