Succession planning is the process of identifying and implementing strategies that will allow you to transfer your business while preserving its value. You may be looking ahead to retirement, or planning for the succession of your business in the event of your disability or death. You may want to transfer the business to family members, your business partners, current employees, or outside buyers.
Whatever the case, the first question you must ask yourself is whether you plan to sell your business or give it away. The answer may depend on your current financial needs and your choice of successor. Next, you must decide whether you want to transfer your business during your lifetime or upon your death.
The succession plan you choose may include an outright sale of the business, implementation of a buy-sell agreement that is contingent on triggering events (e.g., retirement, death, disability), transfer of the business using lifetime gifts, and/or transfer of your business through a will or trust. Each of these choices has certain strengths and tradeoffs. Any of them, if implemented in a timely and proper fashion, can help you achieve your financial goals and ensure a smooth transition of business ownership to your successors.