Law Office of Rick Todd Blog

Saturday, June 4, 2016

Succession Planning

It sounds like something having to do with running a country. Succession planning isn’t just something kings and presidents worry about: people who run businesses are always worried about whether or not their business will live on after they die. After all, can you trust someone to run things as well as you do? For many business owners in Columbia and throughout Howard County, this is an issue.

When discussing succession planning with an attorney, you should be advised of more than just who will inherit your business. You should be made aware that the person you select to own your business after you die will be responsible for its management, at least at a very broad and high level. You don’t want your business to die after you pass on.

Succession planning can mean the use of a buy/sell agreement if you have a business with more than one owner. It enables one owner of a company to require the other owner(s) to purchase his stake upon his death. These are legally binding and are a great way to ensure that a business owner’s family is adequately compensated for their ownership stake. It can also set the price for that future purchase of the owner’s stake.

Succession planning is a part of estate planning, so keep in mind that a program does actually need to be put into place to make sure that your business lives beyond your own lifespan. Not only are family members possibly dependent on its revenue, but also the employees of the company are also counting on your business’ continuing survival.

That means you need to identify the person or people who are going to succeed you! Whoever you select has to be available to take on a leadership role, and if they aren’t, then you must name successors. If your children are not able to succeed you in the business because they have gone on to careers in other areas, you need to let them know before you pass on that your company will be managed by others. 

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The Law Offices of Rick Todd has offices located in Columbia, Chevy Chase, Fairfax, Virginia, and Maryland and serves clients throughout Clarksville, Columbia, Ellicott City, Fulton, Rockville, Bethesda, Potomac, Laurel, Howard County, Montgomery County, and Washington D.C.

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