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4 steps to plan for small business succession

You own your own business, so estate planning is about more than your personal assets. You also have to plan for the future of your company.

Below are four key steps to remember when doing so.

1. Pick the successor.

The most natural choice may be to pick a family member, perhaps one who has been working with you for years. However, it does pay to consider employees, as well. Be sure you pick someone who has the skills, education and desire to run the company.

2. Train the successor.

Ideally, you're not going to pick someone and turn the company over immediately. You want to have a solid training program in place. This can take years. You must get that person ready to do your job as well as you do it, and passing on the knowledge you've accumulated over the years is critical.

3. Create a timeline.

Once you know that the person is going to be ready, set up a timeline. Remember that you don't have to walk away all at once. You could set things up so that your successor works with you for a year before you leave.

4. Set up a personal retirement plan.

Since you're leaving the business, be sure you have your own retirement plan in place. Do you get a pension? What financial assets do you need and what stays with the company?

Of course, all businesses and situations are different. These four steps may not be all that you need to do, but they serve as an excellent baseline so that you can start learning about your legal options and how to secure the success of the company for the next generation.

Source: FindLaw, "Succession Planning for Small Businesses," accessed Sep. 21, 2017

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