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Do you have a succession plan in place for your small business?

On Behalf of | Feb 15, 2022 | Wills And Estate Planning

As an Indiana small business owner, have you thought about what happens to your company if you become incapacitated or pass away unexpectedly? Will your business survive? You can take steps now that can help ensure it becomes your legacy.

According to the U.S. Small Business Administration, business succession is a long-term process, not an event. It enables the transfer of the management and ownership of an organization. When the founder of a small business dies, the family often sells the organization or shutters it. However, if you want the business to remain in the family, you can ensure that happens.

Durable power of attorney

Have you spent your life building your company and overseeing the operational details? A durable power of attorney can help you make plans to stay until the end or step away from the company in your golden years. It is a legal document where you appoint an agent who can make decisions on your behalf and becomes active if you become incapacitated. You can determine who has power of attorney and define the extent of their authority.

Business succession planning

Whether you prefer selling the business or passing it on as part of your estate, having a plan in place is critical. The durable power of attorney helps fill a gap in the business temporarily. A business succession plan is a more permanent step. It addresses various questions, such as the following:

  • Will the company take on new employees as a result of your absence?
  • If you have intellectual capital, how will it transfer?
  • Who will own your share of the business?
  • How should the organization address the tax implications associated with the transfer of ownership?

If an unexpected event occurs and you do not appoint a power of attorney, your company’s operating agreement may force your business partners to a standstill. Your family may have to pursue Guardianship, which might also put your business on hold. A comprehensive estate plan can help ensure you can continue caring for your family, partners and employees after you pass away.