Small businesses were once the backbone of the American economy. That was before “big business” started to take over just about every market available with “superstores” and chain stores cropping up on every other street corner. Ironically, the recent recession faced by the country resulted in a dramatic increase, once again, in the number of small businesses cropping up throughout the country. If you are a small business owner it is imperative that you include your business in your overall estate plan by including business succession planning strategies in your overall estate plan.
Statistically speaking your small business only has a 20 percent chance of successfully making the transition from this generation to the next. Creating a business succession plan within your comprehensive estate plan can significantly increase those odds. Although each business succession plan is as unique as the individual creating the plan, there are some common questions that should be answered in your plan, including:
What type of business entity is best for your business?
When do you wish to start turning over the day to day control of the business?
Who do you want to run the business after you are gone?
Does your intended successor have an interest in the business?
What are the tax implications of the various succession options?
What will happen to your business should you become incapacitated?
If you are in a partnership, will your partner(s) buy you out when you die?
What funds will your partner use to buy you out?
Who will receive the “buy-out” funds?
The overall goal of business succession planning is to create a long range roadmap for your business that contemplates your eventual death and the possibility of your incapacity. In either event, someone must take over then “helm” if your business is to continue to operate. Even if you are not concerned about the continuation of your business, you likely have a considerable amount of time and money invested in the enterprise that you would not want to lose. To ensure that your wishes with regard to the business are carried out, whatever they may be, you must reduce those wishes to writing in the form of a business succession plan.
If you have additional questions about business succession planning, or your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.
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