Question: Can You Give Us An Example Of Where Business Estate Planning Should Have Been Used?

According to the Small Business Administration, almost 90% of businesses in the United States are owned or controlled by families.

Shockingly, 70% of these businesses fail to pass successfully to the second generation.

Even more shocking is that less than 15% of these businesses are successfully passed to their generation.

The sad truth is that very few business owners ever establish a plan in writing for what will happen to their business after they start their companies. In part, it’s because the process can numb the mind and be time-consuming as well.

The business lawyers at the IncorporationAttorney.com deal with company founders and this kind of planning on a regular basis.

Answer: Yes, Let’s take the case of Mary…

Business Estate Planning – Orange County Small Business Lawyer

There can be all kinds of unexpected consequences as a result of failing to plan properly for the business to succeed after the death of the founder.

Let’s take the case of Mary whose husband was the successful owner of a manufacturing business with 15 employees and $5 million in revenue.

Mary’s husband Bob died unexpectedly at the age of 45. Mary was busy raising three young children and running her own business. She never really got to know anything about Bob’s business. Fred and Jerry were the key employees in Bob’s business. Bob relied heavily on them to take care of the day-to-day activities.

Fred and Jerry filed suit against the estate claiming unfulfilled promises of them taking over the business after Bob passed away. At the same time, they started their own business to compete with Bob’s manufacturing business. Fred and Jerry took a lot of the intellectual property, employees, and the customers along with them. Bob’s old business lost substantial value after his death.

Now, Mary is facing a lot of problems that could have been avoided. The Small business attorneys at IncorporationAttorney.com would have implemented a succession plan which would have removed all of Mary’s stress and worry.

The business estate plan would have created a structure for Mary to rely on using trusted advisers and key employees to transition the business to new ownership while maintaining the value of the business created by Bob.

Is A Succession Plan Appropriate For Your Business?

Our small business attorneys assist our clients in determining whether or not a succession plan is appropriate in light of the client’s circumstances. During the initial interview with the client, it may become apparent that a succession plan is not indicated at the present time. On the other hand, the client interview could uncover the myriad of objectives the founders of most family businesses want and need to take into consideration in forming their business succession plans.

What Are The Most Common Goals In Succession Planning For A Small Business?

For example, the most common goals are:

• The owner’s exit strategy;

• Transfer of wealth from generation to generation and continuing support of family members;

• Continuation of the business.

What Is The Smartest Thing To Do?

One of the smartest things that any small business owner can do, is meet on a regular basis with their trusted advisers.

As small business lawyers, we act as the trusted legal adviser for all of our clients. If you would like us to become your trusted adviser please call us at 714-634-4838.