The purpose of an estate plan is simple: to provide guidance and directions to a person’s surviving family members as to how the person would like his or her financial and other affairs handled upon the person’s death. A good estate plan will eliminate uncertainty and provide clarity, giving grieving family members one less thing that they need to worry about as they say goodbye to their loved one.
Wills and trusts do not instantaneously provide this certainty and direction, though. Whether a will or trust achieves this intended goal will depend on the thought and care put into creating these documents and the comprehensiveness of the overall estate plan. Where an estate plan does not touch on all areas or affairs of a person’s life, confusion and disagreements can still be present after a person passes away.
What is Succession Planning and Who Benefits From It?
One area that can easily be overlooked in estate planning is succession planning for any business or ongoing enterprise in which the person has a substantial interest or role. Succession planning may not be needed, for example, if a person only owns a few shares of an extremely large corporation. But if the person is a sole proprietor, one of only a few owners of a limited liability company, or part of a closely-held corporation, succession planning may be highly-advisable to help ensure that these business enterprises continue to operate following a person’s death. Even family farms can benefit from a solid succession plan.
What Goes Into a Succession Plan?
Good succession plains do not only cover what happens to a business or enterprise upon a person’s death, but also should cover what happens in the event a person becomes disabled, impaired, or divorced as well. In cases where the person is the sole owner or person in charge of a business, the succession plan may be as simple as designating a person who is to step into that leadership role and assume responsibility for either continuing the business or winding it down.
Where there are more than one owner, a succession plan will usually provide for a mechanism whereby the remaining owners can “buy back” the ownership interest of the affected person. For example, suppose a decedent owned 25 percent of a business and was one of four owners. A succession plan may give the remaining owners the first opportunity to purchase the deceased owner’s shares or ownership interest from the decedent’s estate. This allows the business to continue its operations even while the decedent’s estate is going through the probate process.
Are Succession Plans Enforceable in Ohio?
Provided that a succession plan has been entered into by the relevant parties freely and with full knowledge of the contents of the plan, the succession plan will usually be enforceable just as any other contract. Nonetheless, it is helpful to have legal assistance in crafting such a plan to help ensure there are few (if any) challenges to the plan’s enforceability.
Dawes Legal, LLC Can Help You Prepare a Solid Succession Plan
As part of our estate planning services, Dawes Legal, LLC will ask about any family businesses or business interests you may have so that we can help you craft an estate plan and succession plan that leaves nothing to chance. We help our clients craft comprehensive estate plans for the benefit of their families as well as for the businesses of which they are a part. Let us help you plan for the future – for your family and for your business. Call Dawes Legal, LLC at (614) 733-9999.