Wednesday, July 20, 2011

Business Succession Must Include Estate Planning

Reading in today's Wall Street Journal about Steve Jobs and Apple's business succession discussions, I was reminded how important it is to include estate planning in any good business succession plan.

There is a fine line in ensuring a business does not die with the originator and making sure the decedent's family members receive their inheritance. One of the best ways to ensure both sides are not harmed at the death of a business owner is to have a buy/sell agreement that includes insurance on the owner(s) of the business. Insurance is a simple way of compensating family members at the death of an owner without forcing the business or other business owners to come up with funds to buy out the deceased owner's business interests.

If the business is a family business, it is essential that business succession include estate planning. At Hughes Estate Group, we have seen situations where siblings that did not stay in the family business and children running the family business fight over inheritance issues involving the business once the owner/parent dies. Estate planning that included insurance to equalize inheritance shares could have prevented these family fights.

There are many issues involving the transition of a business once the owner can no longer run the business. Good estate planning will address those issues and help protect a business from going bankrupt while protecting the rights of heirs. It is important to counsel with an estate lawyer and include good estate planning when considering business succession.

Check out our site here to learn more about business succession planning.

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