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Including succession plans in estate planning

Many small business owners in Nevada do not have succession plans in place for their companies. Without them, owners run the risk of their business either not transferring to the next generation or failing. They may be able to avoid this issue by drafting a succession plan that will work for their firms and their families.

Small businesses are in most cases illiquid assets. When they are passed successfully, theowners will have transferred sometimes the largest assets they own. Unfortunately, 70 percent of small businesses are either sold or fail before they can be passed on to succeeding generations.

A good succession plan should address who will lead the company, how the finances will be transferred and how the business will be managed. Owners should have their businesses valued and question whether they will need to draw money from them for retirement purposes. They should then work to protect their value so that the businesses may survive. Planning when the succession will occur is also important. Involuntary events, such as a sudden death or a divorce, could wreak havoc on the transferability of a business.

Business owners may want to include succession planning as a part of their overall estate planning process. Having a sound succession plan in place may help to make certain that the business will survive into the next generation. Owners may want to discuss succession plans for their businesses with their estate planning attorney in order to determine the types of documentation as well as advance planning will be necessary or appropriate.

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