Why is Business Succession Planning Relevant?

With three decades of estate planning experience, Edgar Whitmore has served in several leadership positions in financial institutions. Edgar Whitmore is currently a partner at Lenox Advisors, assisting and advising clients in matters related to estate planning, insurance, and business succession planning.

Estate planning refers to creating a plan in which the possessions of an individual or company are given a destination after the person passes away or faces difficulties. It can include life insurance, instructions for passing valuables (such as a will), and instructions for business transference when the owner is retired, injured, or dead.

Business succession planning is within estate planning, and it is specifically targeted for those who own a family business. Business succession is critical for a successful transition of a company to the next generation – and planning for a successor is a step that can be taken at any moment of the owner's life.

During the process of business succession planning, the owner must choose how the ownership will be transferred. Of course, it can be a gift, but they may decide to sell the business or part of it to use the money for themselves or other beneficiaries. In this case it may be best to create a buy-sell agreement ahead of time. Getting advice on business succession also helps owners to minimize estate taxes during the transference of the business.