Whether you own a small business, family farm, or even a profitable side business, you’ll want to make sure that you prepare for transitioning out of the business as part of creating a broader estate plan. While you can create an estate plan separate from a business transition plan, many of the questions and issues you face in both will be the same, and it’s much more effective to create a transition plan at the same time.
The first part of creating any transition plan is to take an inventory of your business and your own values and goals. Many, if not most, business owners find it difficult to separate themselves from their work. If your business is an indelible part of your life, you need to be honest with yourself about what you take away from the experience. You probably won’t be the kind of person who will easily step away into the leisure of retirement, so making a plan that allows you to maintain some kind of role in the company might be a good idea.
The next step is to consider what you want to do with the business. There are two or three main options most people face. First, you can sell the business to an investor or a buyer, second, you can dissolve the business, and third, you can transfer the management and day-to-day operations to someone else. Each of these choices involves a completely different process, and discussing the options with your family, coworkers, and employees is always something you should consider.