Last month, we posted about our Business Legal Checkup and the recently released U.S. Trust's 2013 survey, Insights on Wealth and Worth, specifically the Fact Sheet on Business Owners. Both documents discussed the importance of creating a business succession plan; it's a crucial part of business planning, and estate planning.
First, a look at some results from the U.S. Trust study about business owners: Compared to non-business owners, 57 percent of business owners, especially 'baby boomers, take on the financial responsibility of long-term care for their extended family members. The notable part of this is that most of them don't have a financial plan in place to help them budget for this often expensive endeavor.
Although paying for a family member's special needs isn't a cost limited to business owners, 44 percent of them expect to financially support their parents or in-laws at one point, while 31-percent of non-business owners plan to, according to the study results.
Older business owners may be especially likely to support family members, but they are less likely than their younger counterparts to pass on their business to the next generation. The study found that 47 percent of Gen Y, 35 percent of Gen X and 27 percent of business owners over age 68 plan to pass on their business to a successor(s), compared to only 18 percent of Baby Boomer business owners.
More than half of the business owners who participated in the survey reported that they don't have a business succession plan in place, the top three reasons for which were:
- they have no intention of retiring any time soon;
- they are misinformed or don't have much knowledge about the succession planning process;
- important decisions regarding the management of the business going forward have yet to be determined.
Our Checkup for Nevada business owners asks the questions that need to be answered in order to perform an honest assessment of your business' legal health. A plan for passing on your business in certain circumstances is a necessary component to the smooth operation or sale/closing of your business should something unexpected happen. For example, does the business have a buy-sell agreement with its owners in the event of a disability, divorce, death or dissolution (bankruptcy) of an owner? Did you establish who the natural or preferred successors to the business ownership and/or management would be? Find these and other questions and tips in our Checkup. If you have any questions or concerns regarding your business succession plan or lack thereof, contact the Nevada Law Office of Attorney S. Craig Stone at 877-905-0890.