Why have a business succession plan in place?
Even before a business owner sells their business or retires, things happen that can require the business owner to have a structure in place to ensure the business can continue without significant difficulty in the absence of the owner or owners. To avoid any potential problems, it's essential to have a plan - sometimes called a professional will - which lays out what happens with your practice if you die or become incapacitated. (If you work for an organization, your employer will have its own policies.) Similar to a personal will, a professional will names a trusted colleague as your professional executor or agent and provides the information that person will need to either run or close down your practice.
Generally, this type of planning is called "Succession Planning" but it encompasses three primary areas of the business - what we call the three "O's":
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Operations
- Who will take on the responsibilities of the business owner?
- Who can sign checks, withdraw funds, or access bank accounts?
- Who has access to passwords, keys?
- Who may access personnel files?
- If a professional practice, who will see patients or clients?
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Ownership
- What happens to the ownership interest if the owner dies or is incapacitated?
- The ownership interest is an asset - will the LLC interest or stock go into the business owner's estate?
- Does the estate executor or trustee of a revocable living trust have the requisite professional license?
- Ethical Obligations
- Who may access client files?
- Who is authorized to transfer client files?
- Who will see patients or clients?
- Who can access client trust funds in a legal practice?
- What notice is required to be sent to clients or patients?
Each type of business and professional license requires different structures to ensure your business and your practice can continue, when you can't. We can help you put together a plan for your business and ease your mind.