When it comes to sorting out a plan with an Estate lawyer in Geelong, most people often overlook including a business succession plan. People often believe that their business will automatically pass on to their family or executors of the estate in the event of their death or loss of agency. However, transferring a business’s assets is a lot more complicated. In fact, family members and loved ones have little to no control over your business assets when you pass unless you have a sound business succession plan.
How does a business succession plan work?
A business succession plan mitigates the risks of a business changing hands. This can be due to death, a partner leaving, or unexpected circumstances. It outlines each owner’s legal interests in the business and values the business. The structure of your business and the number of owners will determine your business succession plan.
Sole trader
If operating as a sole trader, you are solely responsible for your business assets, debts, and liabilities. This makes succession straightforward. You can outline in your Will how you would like your business to be passed on to your beneficiaries. If your beneficiaries have no interest in running the business, you can include a clause in the Will stipulating what to do.
Partnership
In a partnership, a business is run by two or more people who distribute their income and debts. Typically in a partnership, your business lawyer in Geelong will recommend having a partnership agreement to outline the succession plan. If a partner dies or decides to leave, the assets and liabilities can be distributed among the other partners. They can also be reinvested into the business without involving anyone else. This is done in accordance with a sound legal agreement that has been made prior to a partner dying.
Company
Typically, the individuals who operate a company hold shares in the business, and the company acts as a separate legal entity. If you own shares in a company, you can pass them on to your beneficiaries through your Will. You can also allow them to offer your shares to other shareholders in the company. Therefore, it’s important to clearly define with the other shareholders who take your place in the company if you pass.
Have your business valued
When drafting a business succession plan, it’s essential to have your business valued. This activity helps establish the worth of your business and outlines the distribution of assets in the event of a partner leaving or the sale of the business.
Business lawyers in Geelong
To ensure the future of your business, consult one of our business lawyers regarding your succession plan. Book an appointment with WJM’s business lawyers by calling (03) 5222 2077 or email info@wjmlawyers.com.au.
