Succession Planning Lawyers in Melrose Assisting Clients to Ensure the Continued Success of Their Business for Future Generations
Often when individuals hear the term “succession planning,” they assume that it involves the same aspects as estate planning. This is actually a fairly common misconception. However, if you own a business, succession plans are vital to ensuring the continued sustainability of the business after you retire or pass away. It is interesting to note that many successful business owners find succession planning to be extremely difficult, even to a greater extent than making major business decisions.
The term succession planning, unlike estate planning, actually relates solely to the business itself. A well-thought-out succession plan can help to make certain that the business operates effortlessly as it is transitioned to future generations of successors. As a matter of reference, estate planning relates to all assets such as personal property and money in an individual’s estate. This also includes any ownership interests that an individual may have in businesses.
Our skillful succession planning attorneys can sit down and help you determine a succession plan that works for your individual needs and circumstances.
Should Estate Equalization be a Priority?
If you are a business owner who has children involved in the family business as well as those who are not, then estate equalization should be a priority. In order to successfully coordinate this among all members of your family, proper foresight in regard to a succession plan along with an estate plan needs to be completed well in advance.
This will definitely be a matter of great concern for the children who are not a part of the daily workings of the business and who still wish to receive their share of the estate. If the estate is subject to estate taxes but is financially stressed by doing so, this could cause the uninvolved children to end up with no assets while the other children end up keeping the business. In a worst-case scenario, the business may have to be sold in order to pay the taxes if a succession plan is not determined and put into place well ahead of time.
What are Some of the Adverse Conditions That Could Affect The Future of the Business Without a Succession Plan?
If you lack a well-thought-out succession plan, that can result in potentially adverse conditions for the future of the business. Some of the potentially harmful situations include:
- An unclear direction for the business without an clear leader
- Lack of faith by employees in company leadership
- Internal power struggles by management
- Disagreements among family members that cause a rift in their personal relationships
- Unforeseen estate tax liability
- A delay in the distribution of assets and resolution of the estate
- The potential for expensive legal proceedings in order to resolve disagreements among family members
What are Some of the Challenges of Succession Planning?
Of course, even with careful forethought, there still may be challenges involved with a succession plan. Some of the most common include the following issues:
Deciding who should advance: This can be a tricky area as often children of a business founder or those who have been involved in the business for a long period of time feel that they should be promoted as a part of a natural evolution of the company. Unfortunately, being related or having a lifetime of service with the business does not equate to being involved in next-generation leadership. This could potentially cause internal issues; however, careful pre-planning can help the correct person advance without the potential to offend other candidates.
Prohibiting Inequality: In the business world, there is a tendency for individuals to hire those who they feel are like themselves. All too frequently, we see cases where men only want to hire other men, and the same often holds true of women desiring to only hire other women. This is why it is crucial that a succession plan identify the key factors of leadership that are desired for roles within the company that will help the business continue to be profitable. This means hiring the best candidate based on skills and other qualifications rather than personal preferences.
Promoting Company Morale: In order to avoid the potential negative impact succession can have on the business and its employees, it is vital that there be a frank and honest discussion about who may be retiring, who will take the reins of leadership, and the direction of the business once a successor is in place. Understanding and exploring these options with the employees ahead of time can help greatly ease their fears and any apprehension they may have about the future of the business.
What are the Benefits of Hiring a Succession Planning Attorney?
Over the years, you have worked diligently to grow your business into a success. You have seen your hard work and determination benefit not just you and your family but the lives of your employees as well. When it comes time for you to retire or pass the business on to a new successor after your death, you want to ensure that the business maintains its standards and continues to benefit all that work there or utilize the services that the company offers.
It is critical that you take time to design a succession plan that will allow for the various goals that you feel are vital in order for the company to be prosperous. The succession planning attorneys of the Martino Law Group, LLC of Melrose, MA, have the necessary skill and experience needed to craft a succession plan that is tailor-made to suit your own personal objectives and help the company continue its success.
Contact our law group by calling (781) 531-8673 and ask to schedule a free consultation with a qualified member of our legal team who can advise you of potential options and help you determine the best strategy to move forward with your plan.