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Posting by: Joel Susco
Date: July 16, 2009
Many of us prefer not to think about what will happen upon our death; we say, “Let someone else deal with it.” But none of us are immortal, and failure to make proper plans can mean that we leave behind a mess which needs to be sorted out by our loved ones. At a time when they are emotionally vulnerable, such failure to properly plan could potentially lead to great expense and consume a significant amount of time, or worse.
For many of our business owners, the practices they have built are their most valuable asset. Some owners believe they have plenty of time to arrange for succession. All too often business owners cannot stand the idea of letting go or planning for the next generation of an entity they created. For family business owners, failure to properly plan could be the end of the era for the family business they so cherished. The moment someone passes away, the line forms with those who wish to stake a claim or seize control of the financial empire.
Succession planning, like tax planning, makes good business sense and should be a natural part of regular business practices. Shortly after taking out life insurance policies to protect their assets for dependents left behind, business owners should think about succession planning. Unfortunately, succession planning forces owners to agonize over who should be left the business.
A general rule of thumb, business owners should begin developing a succession plan at least five years before the time the owners hopes to step aside. Business owners are the only players who must consider succession planning; those who have accumulated significant amount of wealth must take the steps necessary to assure that their assets and cherished possessions are protected in the event of an untimely death.
Just recently, we see the battles beginning for control of Michael Jackson’s estate. The formation of advisors, agents, lawyers and assorted helpers, to the late “King of Pop” is on one side, against the Jackson family on the other. At stake: control of the Jackson financial empire, custody of his children and the right to a potential insurance payout of tens of millions of dollars. With proper planning, most, if not all, of the disputes can be avoided.
With the stakes too great, it is important to spend the time, invest the emotional pains and develop a succession plan to help minimize the potential disaster that awaits if you let someone else “deal with it” after you are gone.
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