A business owner in Minnesota may find it beneficial to set up a business succession plan to take effect incrementally over the coming years and decades. Some business creators will provide assurances for smooth generational transitions to selected younger members of their families. The process of estate planning and the preparation of an estate plan is an integral part of that transition.
One thing to do early in the planning stage is to confirm that the successor is in fact interested in taking over the company. Choosing a successor or successor team early in the process is vital to knowing that the planning is not going to be futile. In addition, the owner will usually be providing training to guide the successor forward.
The succession will be easier if totally internal to the business. If that is the case and the transfer will be to a family member or someone else from within the company, the training can start as early as possible. It should never be considered too early to train from within the company.
Transitioning from within allows for the gradual endowment of decisional power to the successor or successors, even over a period of years. In addition to these considerations, legal planning must also be done. With a small, closed corporation, for example, the family member who is the successor can be gradually provided with a growing percentage of company stock, thus increasing the person’s voting power.
Estate planning under Minnesota law will be incorporated into the transitional path. This involves the preparation of an owner’s estate plan that may, among other things, provide the additional financial resources to the chosen successor. A business strategic plan is also recommended because it will outline the future path and growth of the company. Of course, the future will not be cast in cement but will flexibly allow for changes by the successor. There are several other key considerations, making it prudent to consult with an estate planning business attorney to learn all of the options, rights and duties that can be involved.
Source: businessnewsdaily.com, “Succession Planning: 3 Steps to Secure Your Company’s Future“, Karina Fabian, Oct. 18, 2016