By Charles Moster & Rick Ressler
As a small business owner with limited assets and savings I’ve put off succession planning?  Is that a good idea?

Absolutely not!  Succession planning is critical whether you own a small business or major corporation.  By “succession planning” I am referring to your plans to continue your business after you retire or involuntarily pass over to the next dimension.  Either way a vacancy is created.

If you have worked hard to build your business over the years you may have an interest in continuing its operation after you have departed.  Typically in family businesses, the owners have discussed this issue with the kids and know if the answer is yay or nay.  If yay, it is important to discuss with your lawyers what legal steps need to be taken to amend your corporate documents to allow for a smooth and uncontested succession.  The mechanics of this should be addressed if it is your intention to bypass another individual (often a non-family member) who believes he or she is next in line.  The absence of planning can disrupt the operation of your business or worse- shut it down.  I’ve seen this happen in my practice when the lack of succession planning leads to an expensive court battle between family members.

It is also important to consult with your attorney regarding estate planning as the status of succession issues should be addressed in your will or trust documents.  One last issue to remember is planning for incapacitation which occurs more frequently than people realize.  What happens if the CEO has a stroke or is otherwise incapable of performing duties?  This should be specifically addressed in your corporate papers such as shareholder and operating agreements.