How to Make a Succession Easier
Write a Will
A will is a simple succession instrument that allows for the distribution of business-related assets to beneficiaries. However, a will is a relatively simple document. Without any further contingencies, your business assets could become entangled in probate or litigation.
Delegate the Business Powers of Attorney
If you are ever incapacitated by an injury, disease, or illness, you might need a loved one to temporarily assume limited control of your business assets. The business power of attorney allows another individual to make specific financial and business-related decisions on your behalf. Anyone delegated this power of attorney is considered a fiduciary, meaning they have a legal responsibility to act in the best interest of the company.
Create a Revocable Living Trust
A trust can be considered a superior alternative—even a replacement—to a traditional will. When you establish a trust, you can transfer personal and business assets into its possession. While you are still alive, you will retain total control over all trust assets. However, unlike assets distributed through a will, trust assets are exempt from probate.
Create a Grantor Retained Annuity Trust (GRAT)
A GRAT allows the founder to make a one-time, irrevocable transfer of property to the trust, after which you receive a fixed amount of money for a pre-specified period of time. Once the trust lapses, the remaining assets are distributed to your named heirs.
Consider Structural Changes
You might consider reforming your business entity as a limited liability corporation (LLC), which enables you to nominate heirs as business partners. An LLC could also provide concrete tax benefits while you are still alive.
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