The Importance of Succession Planning

By: Rudman Winchell Attorney Tracy J. Roberts

We all know we should have an estate plan to ensure our assets go to the people and organizations we want to have them with as little delay and cost as possible. But have you considered who will take your place when you are no longer able to fulfill your responsibilities due to incapacity or death?

Consider all the areas in your life that would need someone to step in and take your place in your absence. Do you own a business? Do you care for a disabled child or an aging parent? Do you have minor children? Here are some areas you should think about:

            Your business. If you own a business, it likely impacts your family, your employees and the clients you serve. Business succession planning is critical for the business to continue in your absence and upon your death.  Often a family business owner wants the business to be run by one of his or her children, or, when this is not plausible, by a business partner or an important employee. In order to ensure that your business does not crumble without you, it is imperative that you have a written plan, the funding to back up your plan, and careful grooming of the right successor.

For a good article regarding 5 steps to create a viable succession plan for your family business see:http://www.forbes.com/sites/allbusiness/2013/08/28/5-steps-to-create-a-      viable-succession-plan-for-your-family-business/. See “Most small-business owners aren’t planning ahead” at http://www.cnbc.com/id/101769793#.

            Your family. Your family is likely the place where you hold significant responsibilities. These responsibilities are amplified if you provide financially or physically for an aging parent, spouse, or disabled child. If you are unable to fulfill your responsibilities who will care for your loved one? Is there another family member who can provide this care? Will the loved one need to move to a care facility? The more you can plan for a successor, the smoother the transition in your absence. For more information regarding pitfalls in estate planning for a loved one with special needs see:       http://www.maineelderlaw.com/articles/estate-planning-for-a-loved-one-with-special-needs.

            Your minor children. If you have young children, it is imperative that you name a successor (guardian) to raise them in your absence. If you don’t do this and something happens to both parents, you will have no control over who petitions the court to become guardian of your children and a judge who does not know you or your children will choose someone to raise them. In your estate plan, your Will should name who you nominate as a guardian for your children. Other important considerations when you have minor children relate to finances. Do you have enough assets to provide for your family if something happens to you? Would your spouse be able to make it without your income? What if something happens to both parents? Who will control the assets you likely have left for your children? A well thought out estate plan can ensure that these questions are answered by you well before the time comes that they are applicable.

A well designed estate plan and succession plan is crucial to ensure that your wishes are carried through upon your death or incapacity. We welcome the opportunity to assist you with your estate plan and succession plan, whether creating a new plan or updating an existing plan.