Do You Own a Business in Michigan?

If you own a business in Michigan, you must have a business succession plan in place. A Bloomfield Hills estate planning lawyer will work with you to prepare the succession plan that’s right for your business and meets your needs.

What is a business succession plan, what does it entail, and why is a succession plan so essential for business owners in Michigan? A business succession plan is a legal document prepared by a business owner with the advice and assistance of an estate planning attorney.

The document spells out the business owner’s instructions for any change of ownership. Preparing the right business succession plan will allow you and your Michigan business to operate with confidence in the years to come.

When Should a Business Succession Plan Be Prepared?

No business can survive without a capable and active manager or owner. If that person passes away suddenly, becomes incapacitated, or can’t guide the operation for any reason, the business could be burdened with unpaid debts and unmet obligations.

No one can know what tomorrow may bring, so you should have a Bloomfield Hills estate planning attorney prepare your business succession plan as soon as possible. If something unexpected happens, the plan tells others what steps to take and may even keep the business alive.

As your business grows, having a concise and thoughtful business succession plan is increasingly important. The best succession plan empowers not only the current business owner but also the next owner or owners, and it takes into account the interests and needs of employees and customers.

What Can a Business Succession Plan Do for a Family Business?

Your business succession plan can name your company’s next owner or owners, or you may instead leave instructions for selling the business – to one or more employees, a third party, or someone who is already a co-owner.

Small, family-owned businesses face unique challenges. If the family member who manages the business suddenly passes away or becomes incapacitated, others will need directions and details immediately to continue operating the business or to sell it.

A Bloomfield Hills business lawyer can help families with business formation, planning, and succession. If a business owner has not prepared a succession plan, the owner’s stake usually passes to his or her heirs (as part of the owner’s estate) or to the other shareholders (if an owner has no heirs).

What Can a Business Succession Plan Do for a Larger Business?

For larger businesses, succession planning can help a business identify and develop potential future leaders and ensure that the business continues without interruption when key employees leave or pass away. The right plan helps a business maintain its reputation, values, and longevity.

Whether you are developing a succession plan for a small family business or a larger company, it’s generally a good idea to include potential successors in the planning process so that they’re comfortable with the plan and understand what will be expected.

For a family-owned business, succession planning takes some time and effort, but without a business succession plan, disputes sometimes emerge among family members. A family member may feel entitled to more than other family members who were less involved with the business.

Will You Sell Your Business or Leave It in the Family?

If you intend to sell a family business, your succession plan needs to explain clearly the company’s operating procedures. A Bloomfield Hills estate planning lawyer can offer the advice you need and guide you through each step of the business succession planning process.

If you’re not intending to sell your family business, you may choose simply to give it to one or more family members. It’s an effective way to provide for loved ones when that time comes, but planning for an heir to inherit your business entails its own complications.

You may also transfer your owner’s or shareholder’s interest in the operation into one or more trusts that will pay out to family members over time. If you wish, assets may also be divided and distributed among employees.

For a corporation, if there’s no succession plan, shareholders may not be able to buy an incapacitated or deceased shareholder’s shares. Disputes may lead to declining profits. When a key individual must be replaced quickly, a corporation must have a plan ready and in place.

What Should a Succession Plan Include?

Because every Michigan business is unique, your business succession plan needs to be customized. Nonetheless, every good succession plan should include the following:

  1. The determination of a timeline: Your business succession plan can take effect on a specific date or upon the death or incapacitation of the owner.
  2. The naming of a successor (or successors): If you leave the business to a family member (or members), you must name that person (or persons) in the succession plan.
  3. Instructions for selling the business: If you are selling the business rather than leaving it to your family, have it valuated regularly so that it is sold for what it is worth.
  4. Precision and details: Your Bloomfield Hills estate planning attorney will ensure that your business succession plan is sufficiently detailed, precise, and addresses the matters that need to be addressed.

Preparing the succession plan that is right for you and your business requires a knowledgeable lawyer’s insights and assistance. But how can you locate an estate planning lawyer in the Detroit area who will prepare the business succession plan that’s right for you?

Put Kendal Law Group to Work for You

Bloomfield Hills estate planning attorney Aaron B. Kendal has over 20 years of experience helping his Detroit-area clients plan their estates and provide for their loved ones. The Kendal Law Group serves clients in Wayne, Macomb, and Oakland counties.

Attorney Aaron B. Kendal assists clients with every aspect of the estate planning process. He is also a business lawyer who assists his clients with business planning, contract disputes, and business litigation. He is ready to prepare your business succession plan.

To learn more about business succession planning or estate planning – or to begin the planning process now – contact Kendal Law Group by calling 248-609-1718 to schedule your no-cost, no-obligation first legal consultation.