The Point Where Business Plans and Estate Planning Intersect

As the owner or executive of a business, you are probably very familiar with contract and planning documents. You likely review and execute paperwork constantly in your professional life. You may also have taken steps to protect yourself and your loved ones in your personal life, like estate planning.

Even if you already have a comprehensive estate plan and business succession or continuity plans in place, have you explored the intersection of those two separate rooms? Specifically, have you integrated how you intend to pass the business to someone else into your succession and continuity plans?

Coordinating your instructions between personal and business plans

A continuity plan helps a business withstand an emergency or unexpected issue, such as the sudden loss of leadership. It focuses on the most crucial and time-sensitive steps that the company’s management must take to keep the business operational, like filing taxes, paying rent and key infrastructure maintenance.

A succession plan for your position at the company will enable a smooth transfer of ownership and responsibilities from you to someone else. A succession plan would explain in detail the responsibilities that you perform and provide the new person taking over with crucial information, like passwords and account information. Both of these plans focus primarily on logistics and the transfer of information.

An estate plan, on the other hand, deals primarily in the transfer of assets and ownership. The structure of business and how many people have an ownership interest in the company will influence the way that you plan to transfer ownership in your estate plan. You want to make sure that you structure your succession plan to reflect that mode of transfer. You also want your estate plan to reflect the needs of the company, such as a period of mandatory training for your successor before they take control.

It may be time to revisit personal and business plans

The more time and effort you put into planning for the transfer of control and education of your replacement, the easier it will be for that person to step into your role. Careful transition planning can also help protect the business you’ve invested so much in from the shock that often comes with a change in leadership.

Updating both your business plans and documents and your personal estate plan to reflect each other can optimize the benefits you receive from each set of plans.