If you have spent a lifetime building up a successful business in Texas, you probably have an idea of what you expect to happen to that business when you die. Many people want their loved ones to continue to profit from the company they created without taking any concrete steps to ensure that happens.
Business owners who don’t plan for their death as part of their business strategy could wind up doing their company, their staff and their family a great disservice. Without an actionable succession plan, your business could close before the probate court ever handles your estate.
What is a succession plan?
At its most basic, a succession plan is a combination of directions on how to operate the business and documents granting the legal authority to do so. A succession plan can name someone to take over your position in the event that you die or can no longer run the business. Your plan can also transfer your ownership rights to someone else. However you handle it, you want to have one in place as part of your estate plan and as part of your business plan.
How do you transfer the business?
Deciding how to transfer the company will vary on your ownership position, whether it is shared and the overall structure of your company. You can give someone stock, in some cases, or just name them on critical documents.
Many times, you may choose to split your ownership interest among several family members. You can make your plan as unique as your company and the people who will run it after you die. It is also possible to create a succession plan that addresses the potential for death or incapacitation. You want to have power of attorney documents in your succession plan so that people can legally access your business accounts and make business decisions if you become unable to manage the company.
Create a manual for someone to take over your position
Just giving someone the legal right to access your bank account won’t do the business any good if those people don’t know how to run the business itself. Creating a step-by-step guide to your daily workflow and operations for the company may seem tedious, but that work will prove invaluable to your family and loved ones if something happens to you.
With thorough and accurate documentation, they will know what assets and accounts you have, what bills are due and when to handle different concerns throughout the month. The more thorough you are in documenting your daily workflow and allocating rights and responsibilities to individuals you trust, the less likely it is for your business to experience major issues if anything happens to you.