Family Comes First In Succession Planning

A written plan can help protect those who depend on your business for their livelihood


When it comes to succession planning, entrepreneurs generally have similar interests at stake: a strong desire to protect their families, first and foremost.

Often, the main concern is that the business continues to support the family members who rely on it for their livelihood, says Missy Epperson, Senior Vice President and Area Wealth Executive with Regions Private Wealth Management. "The business either can remain family-owned or family members can receive some of the wealth associated with the business when ownership changes hands," Epperson says.

If you plan to pass on the business to a family member upon death or retirement, make sure she or he wants it, according to Epperson: "Just because your kids work there doesn't mean they want to take over."

Candid conversations are critical

"You need to have candid conversations early on and often about succession specifically," she says. "Routine business conversations about cash flow and operations don't yield the information you need to make this critical decision."

If no family member has the interest or talent to take over, you can still establish trusts or other financial provisions for your family.

In addition, your customers, employees, suppliers, and community supporters all have a stake in the continued success of your business. A written succession plan may also help safeguard their interests against business disruption and potential ownership disputes.

A succession plan, however, is not enough: for the sake of stability, small business owners at a minimum should help guard their worth with life and disability insurance. Other protections then can be put in place to aid a smooth transition and continuity of everything from cash flow to culture. “If a company’s values and culture change, employees may disengage or defect,” Epperson says.

When contemplating a sale, consider this

Selling your business to a co-owner or a trusted employee groomed to lead the company can help ensure that your values—and your valued relationships—persist. An employee stock ownership plan, or ESOP, is another values-driven succession strategy to consider.

If you sell to a third party, the sales agreement can include covenants so that the leadership stays consistent with your mission.

Whether your business stays in the family or you sell to a co-owner, an employee, or a third party, various transfer options exist.

Last but not least: “Make sure your succession plan provides you with a steady income stream throughout your lifetime,” Epperson says.

“There are various ways for you to take money off the table for your next phase in life but still keep the business going. Your advisor can help you choose which options best meet your needs and desires for yourself and your business.”


This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.