A Legacy of Experience

A succession plan must be up to date

On Behalf of | Mar 3, 2020 | Estate Planning |

Many sources, including this blog, advise business owners on how important it is to begin succession planning early. After all, an effective succession plan is not only a plan for a business owner’s retirement. It is also a plan to protect the business’s assets and ventures – as well as the business itself.

However, business owners need to understand that succession planning is a process, not one event.

Treat the succession plan as a living document

Just like any other estate planning document, business owners should review and update a succession plan as needed. That means that business owners must continually evaluate:

  • How the company is performing;
  • Where there is room for improvement;
  • How the goal of the succession plan matches the business’s needs; and
  • If the business has the tools to succeed.

Businesses must constantly change with the market and consumer needs to succeed. And as the business changes, so must the succession plan.

What needs updating?

While business owners must update the goals and strategy of their succession plan to meet their business’s needs, they must also update the technical aspects of their succession plan to help ensure the business’s and successor’s future success.

For example, a succession plan should include:

  • The most recent tax returns and information;
  • Updated financial information and documents;
  • An updated inventory of all the business’s assets; and
  • Contracts and agreements with employees, partners and shareholders.

Ensuring all of this information is up to date can prevent business partners and the successor from scrambling to find the proper information. It can also proactively prevent potential disputes. Essentially, a properly updated succession plan can help ensure the smoothest transition possible for business ownership.