What Is the Connection between Estate and Succession Planning?

Estate and succession planning put measures in place to support family members and protect company legacies after someone dies. People who own businesses, play a major role in a family business, or are considered key to an organization may need to include succession planning in their overall strategy to prepare for death. Estate planning is also important to protect legacies, limit tax liability, and make sure family members are cared for as intended. Attorneys can assist with the estate and succession planning process, as can financial planners and accountants.

Going beyond a will, estate planning involves thinking ahead about the disposition of assets. People may strategically purchase or sell assets to facilitate the settling of an estate after death, and can also give some parts of an estate away before death. This may be done to protect people from tax burdens or to ensure that a bequest goes to the right person. Part of estate planning also involves developing and updating a clear will that will withstand legal challenges if it contains controversial elements.

Businesses need succession planning to survive the deaths of key members. People who own businesses and want them to continue after they die may need to think ahead about who they want to take their place and how to handle staffing needs. The same goes for key members of a family business or another company that might falter after someone’s death. In succession planning, people may train people who can take over, develop clear documentation to help people run the business, and issue directives to make their wishes for the company clear.

Combinations of estate and succession planning can be necessary for people who have both personal and business needs. They want to make sure their legacies are directed appropriately, and also structure their estates to avoid entanglements. If a business incurs debts, for example, estate and succession planning can ensure that creditors do not go after a decedent’s personal estate. Likewise, people may want to protect a business from family members who want to sell it and divide up the profits, and can do through a clear succession planning scheme.

Business owners and key personnel considering estate and succession planning can discuss the legalities and financial issues with an expert consultant in this field. It is important to work with someone who is familiar with regional laws and can draft appropriate documents. An informal conversation at the start of the planning process can provide a framework with goals which may be used to build a more specific plan for managing an estate and developing a smooth succession process for a business.